Netflix Announces Fourth Quarter 2002 Ending Subscribers 0f 857,000, Up 88% Over The Prior Year
LOS GATOS, CA — January 2, 2003 — Netflix, Inc. (Nasdaq: NFLX) ended the fourth quarter of 2002 with approximately 857,000 total subscribers. The Company increased its guidance for ending subscribers on December 4, 2002 to a range of 840,000 to 870,000. Subscribers grew 88 percent year-over-year from 456,000 total subscribers at the end of the fourth quarter of 2001 and 15 percent sequentially from 742,000 total subscribers at the end of the third quarter of 2002.
Paid Subscribers
Of the 857,000 total subscribers at quarter end, 93 percent or 796,000 were paying subscribers. The other 7 percent, or 61,000 subscribers, were new trial subscribers. Paying subscribers represented 88 percent of total subscribers in the fourth quarter of 2001 and 95 percent of total subscribers in the third quarter of 2002. New trial subscribers increased from the third quarter as a percent of total subscribers due to the seasonal growth in new trial subscribers late in the fourth quarter.
Household Penetration
Household penetration in the San Francisco Bay Area rose to 3.8 percent of households at the end of the fourth quarter of 2002, up from 3.5 percent at the end of the third quarter of 2002 and up from 2.1 percent at the end of the fourth quarter of 2001. Household penetration in the rest of the country reached 0.73 percent at the end of the fourth quarter of 2002, up from 0.63 percent at the end of the third quarter of 2002 and up from 0.39 percent at the end of the fourth quarter of 2001. Market research firm NPDTechWorld estimates that 44 percent of all U.S. households had a standalone DVD player as of the end of December 2002.
Subscriber Churn
The Company will report better than expected fourth quarter churn as part of its fourth quarter earnings release on January 15, 2003. On December 4, 2002 Netflix lowered its guidance for churn to 6.6 to 7.0%.
The Company intends to report churn, and new trial subscribers, a metric used to calculate churn, in all future quarterly earnings releases so that investors can interpret churn in the context of other important financial metrics like gross margin and subscriber acquisition cost.
Fourth Quarter Earnings Release
Netflix will release its fourth quarter 2002 financial results on Wednesday, January 15, 2003 after the market close. A web cast of the quarterly conference call will begin at 2 PM PST and can be accessed via the web at www.netflix.com or at www.prnewswire.com.
About Netflix
Launched in 1998, Netflix (Nasdaq: NFLX) is the world's largest online subscriptions-based DVD rental service, providing more than 850,000 subscribers with access to a comprehensive library of more than 13,500 DVD titles. For $19.95 a month, Netflix subscribers can rent as many DVDs as they want, with three movies out at a time, and keep them for as long as they like. There are no due dates and no late fees. DVDs are delivered directly to the subscriber's address by first-class mail from distribution centers throughout the United States. Netflix can reach more than half of its subscribers with next-day service. The Company also provides background information on DVD releases, including reviews, member reviews and ratings and personalized movie recommendations. For more information on the company, visit www.netflix.com.