| Statement Of Income (USD $) | |||||||||||||||||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | |||||||||||||||
| Revenues | $408,509 | $337,614 | $802,607 | $663,797 | |||||||||||||||
| Cost of revenues: | |||||||||||||||||||
| Subscription | 224,858 | 193,769 | 440,157 | 380,925 | |||||||||||||||
| Fulfillment expenses | 44,385 | [1] | 36,318 | [1] | 88,354 | [1] | 71,967 | [1] | |||||||||||
| Total cost of revenues | 269,243 | 230,087 | 528,511 | 452,892 | |||||||||||||||
| Gross profit | 139,266 | 107,527 | 274,096 | 210,905 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Technology and development | 27,119 | [1] | 22,186 | [1] | 51,319 | [1] | 42,453 | [1] | |||||||||||
| Marketing | 46,231 | [1] | 39,984 | [1] | 108,473 | [1] | 94,879 | [1] | |||||||||||
| General and administrative | 13,252 | [1] | 13,419 | [1] | 26,266 | [1] | 27,158 | [1] | |||||||||||
| Gain on disposal of DVDs | (118) | (2,263) | (1,215) | (3,096) | |||||||||||||||
| Total operating expenses | 86,484 | 73,326 | 184,843 | 161,394 | |||||||||||||||
| Operating income | 52,782 | 34,201 | 89,253 | 49,511 | |||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense on lease financing obligations | (674) | (681) | (1,344) | (1,104) | |||||||||||||||
| Interest and other income (expense) | 866 | 2,404 | 2,476 | 10,064 | |||||||||||||||
| Income before income taxes | 52,974 | 35,924 | 90,385 | 58,471 | |||||||||||||||
| Provision for income taxes | 20,531 | 9,345 | 35,579 | 18,548 | |||||||||||||||
| Net income | $32,443 | $26,579 | $54,806 | $39,923 | |||||||||||||||
| Net income per share: | |||||||||||||||||||
| Basic | 0.56 | 0.43 | 0.94 | 0.64 | |||||||||||||||
| Diluted | 0.54 | 0.42 | 0.91 | 0.62 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 57,872 | 61,782 | 58,301 | 62,262 | |||||||||||||||
| Diluted | 59,660 | 63,857 | 60,182 | 64,341 | |||||||||||||||
| [1] Stock-based compensation included in expense line items: Fulfillment expenses $102 $108 $222 $214 Technology and development 1,190 849 2,261 1,845 Marketing 458 455 901 964 General and administrative 1,528 1,493 3,026 3,012 | |||||||||||||||||||
| Statement Of Financial Position Classified (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Current assets: | ||
| Cash and cash equivalents | $87,471 | $139,881 |
| Short-term investments | 167,498 | 157,390 |
| Prepaid expenses | 11,430 | 8,122 |
| Prepaid revenue sharing expenses | 14,671 | 18,417 |
| Current content library, net | 33,519 | 18,691 |
| Deferred tax assets | 5,594 | 5,617 |
| Other current assets | 22,381 | 13,329 |
| Total current assets | 342,564 | 361,447 |
| Content library, net | 100,316 | 98,547 |
| Property and equipment, net | 120,346 | 124,948 |
| Deferred tax assets | 17,225 | 22,409 |
| Other assets | 11,542 | 10,595 |
| Total assets | 591,993 | 617,946 |
| Current liabilities: | ||
| Accounts payable | 101,634 | 100,344 |
| Accrued expenses | 27,782 | 31,394 |
| Current portion of lease financing obligations | 1,275 | 1,152 |
| Deferred revenue | 80,495 | 83,127 |
| Total current liabilities | 211,186 | 216,017 |
| Lease financing obligations, excluding current portion | 37,301 | 37,988 |
| Other liabilities | 19,135 | 16,786 |
| Total liabilities | 267,622 | 270,791 |
| Commitments and contingencies | 0 | 0 |
| Stockholders' equity: | ||
| Common stock, $0.001 par value; 160,000,000 shares authorized at June 30, 2009 and December 31, 2008; 57,415,726 and 58,862,478 issued and outstanding at June 30, 2009 and December 31, 2008, respectively | 64 | 62 |
| Additional paid-in capital | 375,574 | 338,577 |
| Treasury stock at cost (6,295,073 and 3,491,084 shares at June 30, 2009 and December 31, 2008, respectively) | (215,250) | (100,020) |
| Accumulated other comprehensive income, net | 725 | 84 |
| Retained earnings | 163,258 | 108,452 |
| Total stockholders' equity | 324,371 | 347,155 |
| Total liabilities and stockholders' equity | $591,993 | $617,946 |
| Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
| Jun. 30, 2009
| Dec. 31, 2008
| |
| Common stock, par value | 0.001 | 0.001 |
| Common stock, shares authorized | 160,000,000 | 160,000,000 |
| Common stock, issued and outstanding | 57,415,726 | 58,862,478 |
| Treasury stock, shares | 6,295,073 | 3,491,084 |
| Statement Of Cash Flows Indirect (USD $) | ||||
| In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Cash flows from operating activities: | ||||
| Net income | $32,443 | $26,579 | $54,806 | $39,923 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization of property, equipment and intangibles | 9,013 | 8,188 | 18,188 | 14,772 |
| Amortization of content library | 53,235 | 57,012 | 102,539 | 114,582 |
| Amortization of discounts and premiums on investments | 119 | 177 | 313 | 316 |
| Stock-based compensation expense | 3,278 | 2,905 | 6,410 | 6,035 |
| Excess tax benefits from stock-based compensation | (3,815) | (2,554) | (7,499) | (3,374) |
| Loss on disposal of property and equipment | 110 | 0 | 254 | 0 |
| Loss (gain) on sale of short-term investments | 101 | 78 | (471) | (4,242) |
| Gain on disposal of DVDs | (506) | (4,059) | (2,539) | (6,651) |
| Deferred taxes | 5,404 | (2,502) | 4,781 | (3,361) |
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses and other current assets | (8,845) | (10,947) | (9,236) | (8,197) |
| Content library | (9,343) | (7,982) | (31,434) | (31,394) |
| Accounts payable | (6,549) | 7,092 | 2,023 | 15,772 |
| Accrued expenses | (234) | (14,551) | 4,097 | (6,724) |
| Deferred revenue | (128) | (489) | (2,632) | (3,779) |
| Other assets and liabilities | 1,019 | 8,433 | 1,335 | 7,764 |
| Net cash provided by operating activities | 75,302 | 67,380 | 140,935 | 131,442 |
| Cash flows from investing activities: | ||||
| Purchases of short-term investments | (28,769) | (65,937) | (81,153) | (157,891) |
| Proceeds from sale of short-term investments | 7,832 | 21,017 | 44,765 | 195,436 |
| Proceeds from maturities of short-term investments | 26,175 | 665 | 27,505 | 1,565 |
| Purchases of property and equipment | (6,933) | (14,662) | (13,505) | (27,093) |
| Acquisition of intangible assets | 0 | (1,000) | (200) | (1,000) |
| Acquisitions of content library | (43,224) | (44,410) | (89,723) | (95,726) |
| Proceeds from sale of DVDs | 1,159 | 5,379 | 3,885 | 9,886 |
| Investment in business | 0 | 0 | 0 | (6,000) |
| Other assets | 11 | 20 | 9 | 28 |
| Net cash used in investing activities | (43,749) | (98,928) | (108,417) | (80,795) |
| Cash flows from financing activities: | ||||
| Principal payments of lease financing obligations | (295) | (230) | (564) | (352) |
| Proceeds from issuance of common stock | 9,778 | 4,524 | 23,367 | 13,066 |
| Excess tax benefits from stock-based compensation | 3,815 | 2,554 | 7,499 | 3,374 |
| Repurchases of common stock | (72,511) | 0 | (115,230) | (99,885) |
| Net cash (used in) provided by financing activities | (59,213) | 6,848 | (84,928) | (83,797) |
| Net decrease in cash and cash equivalents | (27,660) | (24,700) | (52,410) | (33,150) |
| Cash and cash equivalents, beginning of period | 115,131 | 168,989 | 139,881 | 177,439 |
| Cash and cash equivalents, end of period | $87,471 | $144,289 | $87,471 | $144,289 |
| Notes to Financial Statements | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 1. Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated interim financial statements of Netflix, Inc. and its wholly owned subsidiary (the Company) have been prepared in conformity with accounting principles generally accepted in the United States (U.S.) and are consistent in all material respects with those applied in the Companys Annual Report on Form 10-K for the year ended December31, 2008. The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Examples include the estimates of useful lives and residual value of the Companys content library, the valuation of stock-based compensation and the recognition and measurement of income tax assets and liabilities. The actual results experienced by the Company may differ from managements estimates. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Companys Annual Report on Form 10-K for the year ended December31, 2008 filed with the Securities and Exchange Commission (the SEC) on February25, 2009. Interim results are not necessarily indicative of the results for a full year. The Company has evaluated subsequent events through July31, 2009, the date which these financial statements were both available to be issued and were issued. There have been no material changes in our significant accounting policies, except for the adoption of the Financial Accounting Standards Board (FASB) Staff Positions (FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability has Significantly Decreased and Identifying Transactions That Are Not Orderly, No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments and No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, as compared to the significant accounting policies described in the Companys Annual Report on Form10-K for the year ended December31, 2008. Recent Accounting Pronouncements In June 2009, the FASB issued Statement of Financial Accounting Standard (SFAS) No.168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No.162. SFAS No.168 replaces SFAS No.162 and establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with GAAP. All guidance included in the Codification will be considered authoritative at that time, even guidance that comes from what is currently deemed to be a non-authoritative section of a |
| 2. Net Income Per Share | 2. Net Income Per Share Basic net income per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential common shares outstanding during the period. Potential common shares consist primarily of incremental shares issuable upon the assumed exercise of stock options and shares currently purchasable pursuant to the Companys employee stock purchase plan using the treasury stock method. The computation of net income per share is as follows: Three months ended Six months ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in thousands, except per share data) Basic earnings per share: Net income $ 32,443 $ 26,579 $ 54,806 $ 39,923 Shares used in computation: Weighted-average common shares outstanding 57,872 61,782 58,301 62,262 Basic earnings per share $ 0.56 $ 0.43 $ 0.94 $ 0.64 Diluted earnings per share: Net income $ 32,443 $ 26,579 $ 54,806 $ 39,923 Shares used in computation: Weighted-average common shares outstanding 57,872 61,782 58,301 62,262 Employee stock options and employee stock purchase plan shares 1,788 2,075 1,881 2,079 Weighted-average number of shares 59,660 63,857 60,182 64,341 Diluted earnings per share $ 0.54 $ 0.42 $ 0.91 $ 0.62 Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation: Threemonthsended Six months ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in thousands) Employee stock options 79 355 82 409 |
| 3. Short-Term Investments and Fair Value Measurement | 3. Short-Term Investments and Fair Value Measurement On April1, 2009, the Company adopted FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability has Significantly Decreased and Identifying Transactions That Are Not Orderly, No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments and No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. FSP FAS No.157-4 provides additional guidance for estimating fair value in accordance with SFAS No.157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. FSP No. FAS 115-2 and FAS 124-2 modifies the requirements for recognizing other-than-temporary impairments of debt securities, changes the existing impairment model for those securities, and modifies the presentation and frequency of related disclosures. FSP No. FAS 107-1 and APB 28-1amends FAS No.107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No.28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. The adoption of these standards did not have a material effect on the Companys financial position or results of operations. The Companys investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Companys policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. Short-term investments are therefore classified as available-for-sale securities and are reported at fair value as follows: June30, 2009 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Corporate debt securities $ 76,442 $ 1,120 $ (35 ) $ 77,527 Government and agency securities 78,097 703 (43 ) 78,757 Asset and mortgage backed securities 11,807 184 (777 ) 11,214 $ 166,346 $ 2,007 $ (855 ) $ 167,498 December 31, 2008 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Corporate debt securities $ 45,482 $ 440 $ (727 ) $ 45,195 Government and agency securities 92,378 1,812 (244 ) 93,946 Asset and mortgage backed securities 19,446 15 (1,212 ) 18,249 $ 157,306 $ 2,267 $ (2,183 ) $ 157,390 The following tables show the gross unrealized losses and fair value of the Companys investments with unrealized losses th |
| 4. Content Library | 4. Content Library Content library and accumulated amortization are as follows: As of June30, 2009 December31, 2008 (in thousands) Content library, gross $ 676,611 $ 637,336 Less accumulated amortization (542,776 ) (520,098 ) 133,835 117,238 Less: Current content library, net 33,519 18,691 Content library, net $ 100,316 $ 98,547 |
| 5. Other Comprehensive Income | 5. Other Comprehensive Income The Company reports comprehensive income or loss in accordance with the provisions of SFAS No.130, Reporting Comprehensive Income, which establishes standards for reporting comprehensive income and its components in the financial statements. Other comprehensive income consists of unrealized gains and losses on available-for-sale securities, net of tax. The components of comprehensive income are as follows: Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 (in thousands) (in thousands) Net income $ 32,443 $ 26,579 $ 54,806 $ 39,923 Other comprehensive income: Change in unrealized gain (loss) on available-for-sale securities, net of tax 1,172 (1,124 ) 641 (2,425 ) Comprehensive income $ 33,615 $ 25,455 $ 55,447 $ 37,498 |
| 6. Stockholders' Equity | 6. Stockholders Equity Stock Repurchases On January26, 2009, the Company announced that its Board of Directors authorized a stock repurchase program for 2009. Under this program, the Company is authorized to repurchase up to $60 million during the third and fourth quarters of 2009. The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions. During the three months ended June30, 2009, under this program, the Company repurchased 1,627,446 shares of common stock at an average price of approximately $45 per share for an aggregate amount of approximately $73 million. During the six months ended June30, 2009, under this program, the Company repurchased 2,803,989 shares of common stock at an average price of approximately $41 per share for an aggregate amount of approximately $115 million. Shares repurchased under this program are held as treasury stock and accordingly repurchases were accounted for at cost under the treasury method. There were no unsettled share repurchases at June30, 2009. Stock-Based Compensation A summary of option activity during the six months ended June30, 2009 is as follows: SharesAvailable for Grant Options Outstanding Weighted-Average Remaining Contractual Term (in Years) Aggregate IntrinsicValue (inThousands) Number of Shares Weighted-Average Exercise Price Balances as of December31, 2008 3,192,515 5,365,016 $ 18.81 Granted (329,765 ) 329,765 37.51 Exercised (1,204,962 ) 16.88 Canceled 417 (417 ) 31.89 Balances as of June30, 2009 2,863,167 4,489,402 $ 20.70 6.37 $ 92,865 VestedandexercisableatJune30,2009 4,489,402 $ 20.70 6.37 $ 92,865 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Companys closing stock price on the last trading day of the second quarter of 2009 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June30, 2009. This amount changes based on the fair market value of the Companys common stock. Total intrinsic value of options exercised for the three months ended June30, 2009 and 2008 was $11.2 million and $6.6 million, respectively. Total intrinsic value of options exercised for the six months ended June30, 2009 and 2008 was $27.5 million and $13.2 million, respectively. Cash received from option exercises and purchases under the ESPP for the three months ended June30, 2009 and 2008 was $9.8million and $4.5 million, respectively. Cash received from option exercises and purchases under the ESPP for the six months ended June30, 2009 and 2008 was $23.4 million and $13.1 million, respectively. The following table summarizes the assumptions used to value option grants using the lattice-binomial model: |
| 7. Income Taxes | 7. Income Taxes The provision for income taxes for the three months ended June30, 2009 was $20.5 million. The effective tax rate for the three months ended June30, 2009 and 2008 is 38.8% and 26.0%, respectively. The effective tax rate for the six months ended June30, 2009 and 2008 is 39.4% and 31.7%, respectively. The increase in the effective tax rates for the three and six months ended June30, 2009 as compared to the same prior-year period was primarily attributable to the absence of a cumulative benefit for prior period RD tax credits that is reflected in the prior year. As of January1, 2009, the Company had $10.9 million gross unrecognized tax benefits. During the six months ended June30, 2009, the Company had an increase in gross unrecognized tax benefits of approximately $1.2 million. The gross uncertain tax positions, if recognized by the Company, will result in a reduction of approximately $9.7 million to the tax provision which will favorably impact the Companys effective tax rate. The Company anticipates settling $0.3 million of its unrecognized tax benefits over the next twelve months. As a result, this amount was included in the current income taxes payable. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 1997. Due to the Companys loss position for tax purposes in prior years, all tax years are open to examination in the U.S and state jurisdictions. The Company is also open to examination in various state jurisdictions for tax years 2000 and forward, none of which are individually material. |
| 8. Commitments and Contingencies | 8. Commitments and Contingencies The Company accounts for streaming content in accordance with SFAS No.63, Financial Reporting by Broadcasters, which requires classification of streaming content as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met including availability of the streaming content for its first showing. The Company has $88.5 million of commitments at June30, 2009 related to streaming content license agreements that have been executed but for which the streaming content does not meet the asset recognition criteria in SFAS No. 63. Litigation From time to time, in the normal course of its operations, the Company is a party to litigation matters and claims, including claims relating to employee relations and business practices. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and we cannot reasonably estimate the likelihood or potential dollar amount of any adverse results. The Company expenses legal fees as incurred. Listed below are material legal proceedings to which the Company is a party. An unfavorable outcome of any of these matters could have a material adverse effect on the Companys financial position, liquidity or results of operations. On April1, 2009, Jay Nunez, individually and on behalf of others similarly situated in California, filed a purported class action lawsuit against the Company in California Superior Court, County of Orange. The complaint asserts claims of unlawful, unfair and deceptive business practices and violation of the California Consumer Legal Remedies Act relating to certain of the Companys marketing statements. The complaint seeks restitution, injunction and other relief. In January through April of 2009, a number of purported anti-trust class action suits were filed against the Company. Wal-Mart Stores, Inc. and Walmart.com USA LLC (collectively, Wal-Mart) were also named as defendants in these suits. Most of the suits were filed in the United States District Court for the Northern District of California and other federal district courts around the country. A number of suits were filed in the Superior Court of the State of California, Santa Clara County. The plaintiffs, who are current or former Netflix customers, generally allege that Netflix and Wal-Mart entered into an agreement to divide the markets for sales and online rentals of DVDs in the United States, which resulted in higher Netflix subscription prices. The complaints, which assert violation of federal and/or state antitrust laws, seek injunctive relief, costs (including attorneys fees) and damages in an unspecified amount. On April10, 2009, the Judicial Panel on Multidistrict Litigation ordered all cases pending in federal court transferred to the Northern District of California to be consolidated or coordinated for pre-trial purposes. These cases have been assigned the multidistrict litigation number MDL-2029.The cases pending in the Superior Court of the State of California, Santa Clara County have been consolidated. In ad |
| Document Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Amendment Description | N.A. |
| Document Period End Date | 2009-06-30 |
| Entity Information (USD $) | ||
| 6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| |
| Entity [Text Block] | ||
| Trading Symbol | NFLX | |
| Entity Registrant Name | NETFLIX INC | |
| Entity Central Index Key | 0001065280 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Well-known Seasoned Issuer | Yes | |
| Entity Current Reporting Status | Yes | |
| Entity Voluntary Filers | No | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 57,415,726 | |
| Entity Public Float | $1,523,744,783 |
