| Statement Of Income (USD $) | |||||||||||||||||||
| In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||
| Revenues | $423,120 | $341,269 | $1,225,727 | $1,005,066 | |||||||||||||||
| Cost of revenues: | |||||||||||||||||||
| Subscription | 233,091 | 186,573 | 677,863 | 567,498 | |||||||||||||||
| Fulfillment expenses | 42,183 | [1] | 37,923 | [1] | 125,922 | [1] | 109,890 | [1] | |||||||||||
| Total cost of revenues | 275,274 | 224,496 | 803,785 | 677,388 | |||||||||||||||
| Gross profit | 147,846 | 116,773 | 421,942 | 327,678 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Technology and development | 30,014 | [1] | 23,368 | [1] | 81,333 | [1] | 65,821 | [1] | |||||||||||
| Marketing | 58,556 | [1] | 49,217 | [1] | 167,029 | [1] | 144,096 | [1] | |||||||||||
| General and administrative | 11,543 | [1] | 11,742 | [1] | 37,809 | [1] | 38,900 | [1] | |||||||||||
| Gain on disposal of DVDs | (1,604) | (1,628) | (2,819) | (4,724) | |||||||||||||||
| Total operating expenses | 98,509 | 82,699 | 283,352 | 244,093 | |||||||||||||||
| Operating income | 49,337 | 34,074 | 138,590 | 83,585 | |||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense on lease financing obligations | (674) | (677) | (2,018) | (1,781) | |||||||||||||||
| Interest and other income (expense) | 1,808 | 1,536 | 4,284 | 11,600 | |||||||||||||||
| Income before income taxes | 50,471 | 34,933 | 140,856 | 93,404 | |||||||||||||||
| Provision for income taxes | 20,330 | 14,562 | 55,909 | 33,110 | |||||||||||||||
| Net income | $30,141 | $20,371 | $84,947 | $60,294 | |||||||||||||||
| Net income per share: | |||||||||||||||||||
| Basic | 0.54 | 0.34 | 1.48 | 0.98 | |||||||||||||||
| Diluted | 0.52 | 0.33 | 1.43 | 0.95 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 56,146 | 60,408 | 57,576 | 61,651 | |||||||||||||||
| Diluted | 57,938 | 62,272 | 59,427 | 63,658 | |||||||||||||||
| [1] Stock-based compensation included in expense line items: Fulfillment expenses $ 99 $ 126 $ 321 $ 340 Technology and development 1,169 950 3,430 2,795 Marketing 452 460 1,353 1,424 General and administrative 1,512 1,499 4,538 4,511 | |||||||||||||||||||
| Statement Of Financial Position Classified (USD $) | ||
| In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Dec. 31, 2008 |
| Current assets: | ||
| Cash and cash equivalents | $55,717 | $139,881 |
| Short-term investments | 99,745 | 157,390 |
| Prepaid expenses | 11,947 | 8,122 |
| Prepaid revenue sharing expenses | 10,671 | 18,417 |
| Current content library, net | 32,937 | 18,691 |
| Deferred tax assets | 5,706 | 5,617 |
| Other current assets | 18,239 | 13,329 |
| Total current assets | 234,962 | 361,447 |
| Content library, net | 104,539 | 98,547 |
| Property and equipment, net | 122,119 | 124,948 |
| Deferred tax assets | 17,244 | 22,409 |
| Other assets | 13,267 | 10,595 |
| Total assets | 492,131 | 617,946 |
| Current liabilities: | ||
| Accounts payable | 93,451 | 100,344 |
| Accrued expenses | 29,606 | 31,394 |
| Current portion of lease financing obligations | 1,342 | 1,152 |
| Deferred revenue | 79,123 | 83,127 |
| Total current liabilities | 203,522 | 216,017 |
| Lease financing obligations, excluding current portion | 36,940 | 37,988 |
| Other liabilities | 19,467 | 16,786 |
| Total liabilities | 259,929 | 270,791 |
| Commitments and contingencies | - | - |
| Stockholders' equity: | ||
| Common stock, $0.001 par value; 160,000,000 shares authorized at September 30, 2009 and December 31, 2008; 54,642,694 and 58,862,478 issued and outstanding at September 30, 2009 and December 31, 2008, respectively | 64 | 62 |
| Additional paid-in capital | 378,549 | 338,577 |
| Treasury stock at cost (9,144,939 and 3,491,084 shares at September 30, 2009 and December 31, 2008, respectively) | (340,362) | (100,020) |
| Accumulated other comprehensive income, net | 552 | 84 |
| Retained earnings | 193,399 | 108,452 |
| Total stockholders' equity | 232,202 | 347,155 |
| Total liabilities and stockholders' equity | $492,131 | $617,946 |
| Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
| Sep. 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 | 54,642,694 | 58,862,478 |
| Treasury stock, shares | 9,144,939 | 3,491,084 |
| Statement Of Cash Flows Indirect (USD $) | ||||
| In Thousands | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Cash flows from operating activities: | ||||
| Net income | $30,141 | $20,371 | $84,947 | $60,294 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization of property, equipment, and intangibles | 9,618 | 8,643 | 27,806 | 23,313 |
| Amortization of content library | 56,690 | 47,596 | 159,229 | 162,178 |
| Amortization of discounts and premiums on investments | 126 | 122 | 439 | 438 |
| Stock-based compensation expense | 3,232 | 3,035 | 9,642 | 9,070 |
| Excess tax benefits from stock-based compensation | (1,600) | (1,093) | (9,099) | (4,467) |
| (Gain) loss on disposal of property and equipment | 0 | (1) | 254 | 101 |
| (Gain) loss on sale of short-term investments | (984) | 494 | (1,455) | (3,748) |
| Gain on disposal of DVDs | (2,491) | (3,205) | (5,030) | (9,856) |
| Deferred taxes | (71) | (3,894) | 4,710 | (7,255) |
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses and other current assets | 7,625 | (7,022) | (1,611) | (15,219) |
| Content library | (9,998) | (5,773) | (41,432) | (37,167) |
| Accounts payable | (13,173) | (744) | (11,150) | 15,028 |
| Accrued expenses | 2,175 | 4,730 | 6,272 | (1,994) |
| Deferred revenue | (1,372) | (1,989) | (4,004) | (5,768) |
| Other assets and liabilities | (1,607) | (775) | (272) | 6,989 |
| Net cash provided by operating activities | 78,311 | 60,495 | 219,246 | 191,937 |
| Cash flows from investing activities: | ||||
| Purchases of short-term investments | (21,006) | (22,950) | (102,159) | (180,841) |
| Proceeds from sale of short-term investments | 85,904 | 50,004 | 130,669 | 245,440 |
| Proceeds from maturities of short-term investments | 3,480 | 605 | 30,985 | 2,170 |
| Purchases of property and equipment | (9,994) | (9,226) | (23,499) | (36,319) |
| Acquisition of intangible asset | 0 | (62) | (200) | (1,062) |
| Acquisitions of content library | (46,273) | (28,828) | (135,996) | (124,554) |
| Proceeds from sale of DVDs | 3,345 | 3,787 | 7,230 | 13,673 |
| Investment in business | 0 | 0 | 0 | (6,000) |
| Other assets | 134 | 3 | 143 | 31 |
| Net cash provided by (used in) investing activities | 15,590 | (6,667) | (92,827) | (87,462) |
| Cash flows from financing activities: | ||||
| Principal payments of lease financing obligations | (294) | (234) | (858) | (586) |
| Proceeds from issuance of common stock | 2,725 | 2,576 | 26,092 | 15,642 |
| Excess tax benefits from stock-based compensation | 1,600 | 1,093 | 9,099 | 4,467 |
| Repurchases of common stock | (129,686) | (90,028) | (244,916) | (189,913) |
| Net cash used in financing activities | (125,655) | (86,593) | (210,583) | (170,390) |
| Net decrease in cash and cash equivalents | (31,754) | (32,765) | (84,164) | (65,915) |
| Cash and cash equivalents, beginning of period | 87,471 | 144,289 | 139,881 | 177,439 |
| Cash and cash equivalents, end of period | $55,717 | $111,524 | $55,717 | $111,524 |
| 1. Basis of Presentation and Summary of Significant Accounting Policies | |
| 9 Months Ended
Sep. 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. Certain prior period amounts have been reclassified to conform to current period presentation. The Company has evaluated subsequent events through October23, 2009, the date which these financial statements were available to be issued. There have been no material changes in the Companys significant accounting policies as compared to the significant accounting policies described in the Companys Annual Report on Form10-K for the year ended December31, 2008, except for the adoption on April1, 2009 of authoritative guidance issued by the Financial Accounting Standards Board (FASB) related to the determination of fair value when the volume and level of activity for an asset or liability has significantly decreased, the identification of transactions that are not orderly, the recognition and presentation of other-than-temporary impairments, and the disclosure of the fair value of financial instruments on an interim basis. Recent Accounting Pronouncements In August 2009, the FASB issued Accounting Standards Update (ASU) No.2009-05, Fair Value Measurements and Disclosures (Topic 820) - Measuring Liabilities at Fair Value. This update provides clarification for the fair value measurement of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available. This update is effective for interim periods beginning after August28, 2009. The Company does not expect the adoption of this standard to have a material effect on its financial position or results of operations. In June2009, the FASB issued au |
| 2. Net Income Per Share | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 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 Nine months ended September30, 2009 September30, 2008 September30, 2009 September30, 2008 (in thousands, except per share data) Basic earnings per share: Net income $ 30,141 $ 20,371 $ 84,947 $ 60,294 Shares used in computation: Weighted-average common shares outstanding 56,146 60,408 57,576 61,651 Basic earnings per share $ 0.54 $ 0.34 $ 1.48 $ 0.98 Diluted earnings per share: Net income $ 30,141 $ 20,371 $ 84,947 $ 60,294 Shares used in computation: Weighted-average common shares outstanding 56,146 60,408 57,576 61,651 Employee stock options and employee stock purchase plan shares 1,792 1,864 1,851 2,007 Weighted-average number of shares 57,938 62,272 59,427 63,658 Diluted earnings per share $ 0.52 $ 0.33 $ 1.43 $ 0.95 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: Three months ended Nine months ended September30, 2009 September30, 2008 September30, 2009 September30, 2008 (in thousands) Employee stock options 78 555 81 458 |
| 3. Short-Term Investments and Fair Value Measurement | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 3. Short-Term Investments and Fair Value Measurement | 3. Short-Term Investments and Fair Value Measurement 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: September30, 2009 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Corporate debt securities $ 73,026 $ 1,084 $ (36 ) $ 74,074 Government and agency securities 17,265 176 (16 ) 17,425 Asset and mortgage backed securities 8,533 132 (419 ) 8,246 $ 98,824 $ 1,392 $ (471 ) $ 99,745 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 that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: As of September30, 2009 Less Than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) Corporate debt securities $ 13,534 $ (36 ) $ $ $ 13,534 $ (36 ) Government and agency securities 3,618 (16 ) 3,618 (16 ) Asset and mortgage backed securities 362 (41 ) 2,162 (378 ) 2,524 (419 ) $ 13,896 $ (77 ) $ 5,780 $ (394 ) $ 19,676 $ (471 ) As of December31, 2008 Less Than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) Corporate debt securities $ 22,806 $ (692 ) $ 1,316 $ (35 ) $ 24,122 $ (727 ) Government and agency securities 12,128 (244 ) 12,128 (244 ) Asset and mortgage backed securities 15,511 (1,212 ) 15,511 (1,212 ) |
| 4. Other Comprehensive Income | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 4. Other Comprehensive Income | 4. Other Comprehensive Income 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 Nine months ended September30, 2009 September30, 2008 September30, 2009 September30, 2008 (in thousands) (in thousands) Net income $ 30,141 $ 20,371 $ 84,947 $ 60,294 Other comprehensive income: Change in unrealized gain (loss) on available-for-sale securities, net of tax (173 ) (1,596 ) 468 (4,021 ) Comprehensive income $ 29,968 $ 18,775 $ 85,415 $ 56,273 |
| 5. Stockholders' Equity | |
| 1/1/2009 - 9/30/2009
USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 5. Stockholders' Equity | 5. Stockholders Equity Stock Repurchases On August6, 2009, the Company announced that its Board of Directors authorized a stock repurchase plan that enables the Company to repurchase up to $300 million of its common stock through the end of 2010. 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 September30, 2009, under this program, the Company repurchased 1,579,700 shares of common stock at an average price of approximately $44 per share for an aggregate amount of approximately $70 million. Of this amount, 1,480,000 shares repurchased are held as treasury stock and accordingly repurchases were accounted for at cost under the treasury method. The remaining 99,700 shares repurchased during the three months ended September30, 2009 have been retired. Subsequent to September30, 2009, the Company repurchased 1,147,383 shares of common stock at an average price of approximately $46 per share for an aggregate amount of $52 million. On January26, 2009, the Company announced that its Board of Directors authorized a stock repurchase program for 2009. During the three months ended September30, 2009, under this program, the Company repurchased 1,369,866 shares of common stock at an average price of approximately $44 per share for an aggregate amount of approximately $60 million. During the nine months ended September30, 2009, under this program, the Company repurchased 4,173,855 shares of common stock at an average price of approximately $42 per share for an aggregate amount of approximately $175 million. Shares repurchased under this program are held as treasury stock and accordingly repurchases were accounted for at cost under the treasury method. This program terminated on August6, 2009. There were transactions to repurchase a total of 234,629 shares unsettled at September30, 2009. Stock-Based Compensation A summary of option activity during the nine months ended September30, 2009 is as follows: Options Outstanding SharesAvailable for Grant Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in Years) Aggregate IntrinsicValue (inThousands) Balances as of December31, 2008 3,192,515 5,365,016 $ 18.81 Granted (477,843 ) 477,843 39.06 Exercised (1,381,496 ) 16.70 Canceled 1,133 (1,133 ) 12.69 Expired (716 ) Balances as of September30, 2009 2,715,089 4,460,230 21.64 6.29 $ 109,413 VestedandexercisableatSeptember 30, 2009 4,460,230 21.64 6.29 $ 109,413 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 third quarter of 2009 and the exercise price, multiplied by the number of in-the-money options) that woul |
| 6. Income Taxes | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 6. Income Taxes | 6. Income Taxes The effective tax rate for the three months ended September30, 2009 and 2008 is 40.3% and 41.7%, respectively. The effective tax rate for the nine months ended September30, 2009 and 2008 is 39.7% and 35.4%, respectively. The decrease in the effective tax rate for the three months ended September30, 2009 as compared to the same prior year period was primarily attributable to provision to tax return adjustments reflected in the three months ended September30, 2008 which resulted in a 1.2% increase to the effective tax rate. The increase in the effective tax rate for the nine months ended September30, 2009 as compared to the same prior-year period was primarily attributable to the absence of a cumulative benefit for prior period research and development 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 nine months ended September30, 2009, the Company had an increase in gross unrecognized tax benefits of approximately $1.8 million. The gross uncertain tax positions, if recognized by the Company, will result in a reduction of approximately $10.2 million to the tax provision which will favorably impact the Companys effective tax rate. The Company anticipates settling $0.2 million of its unrecognized tax benefits over the next twelve months. As a result, this amount was included in 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. |
| 7. Commitments and Contingencies | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 7. Commitments and Contingencies | 7. Commitments and Contingencies Credit Agreement In September 2009, the Company entered into a credit agreement which provides for a $100 million three-year revolving credit facility. The Company may request that an additional $50 million of borrowing capacity be added to the revolving line of credit, subject to receipt of lending commitments and other conditions. Subject to certain conditions stated in the credit agreement, the Company may borrow, prepay and re-borrow amounts under the credit facility at any time during the term of the credit agreement. The Company may prepay the loans under the credit agreement in whole or in part at any time without premium or penalty. In addition, the Company is required to prepay the obligations under the credit agreement with the proceeds of certain asset sales and debt issuances and certain insurance and condemnation proceeds. Loans under the credit agreement will bear interest, at the Companys option, at either: (i)LIBOR plus a spread ranging from 2.75percent to 3.25percent or (ii)a base rate determined in accordance with the credit agreement, plus a spread of 1.75% to 2.25%. Funds borrowed under the credit agreement may be used for working capital, general corporate purposes, and subject to the satisfaction of certain conditions, the purchase by the Company of its stock. The Company entered into the credit agreement in order to enhance its financial flexibility. As of September30, 2009, the Company had not borrowed any funds under the credit agreement. In October 2009, the Company borrowed $20 million under the credit agreement. The credit agreement includes, among other terms and conditions, limitations on the Companys ability to create, incur, assume or be liable for indebtedness (other than specified types of permitted indebtedness); dispose of assets outside the ordinary course (subject to specified exceptions); acquire, merge or consolidate with or into another person or entity (other than specified types of permitted acquisitions); create, incur or allow any lien on any of its property or assign any right to receive income (except for specified permitted liens); make investments (other than specified types of investments); or pay dividends or make distributions (each subject to specified exceptions), and certain financial covenants. At September30, 2009, the Company was in compliance with these covenants. Content Acquisition The Company classifies 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 $102 million of commitments at September30, 2009 related to streaming content license agreements that have been executed but for which the streaming content does not meet asset recognition criteria. 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. Moreov |
| Document Information | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2009-09-30 |
| Entity Information (USD $) | |
| 9 Months Ended
Sep. 30, 2009 | |
| Entity [Text Block] | |
| Trading Symbol | NFLX |
| Entity Registrant Name | NETFLIX INC |
| Entity Central Index Key | 0001065280 |
| Current Fiscal Year End Date | --12-31 |
| Entity Filer Category | Large Accelerated Filer |
| Entity Common Stock, Shares Outstanding | 54,642,694 |
