Netflix back in black as OTT revenues stream but sub additions fall

Joseph O'Halloran | 25-07-2012

Following a disappoint first quarter of fiscal 2012 which resulted in the first loss in its history, over the top leader Netflix has returned to profitability on the back of rising revenues of $889 million.
This means that global revenues were up nearly $20 million on a sequential quarterly basis and $100 million year on year leading to a $6 million profit, which compared with a $5 million loss in Q1 as the company was stung by the cost of entering international markets.
Looking deeper at the number, it is clear that international business is still hurting Netflix with total non-US additions of 560,000 almost half what they were in the previous quarter. In all the international business lost $89 million for the quarter, somewhat of an improvement on the $103 million loss for Q1.
Domestic business continues to shine for the OTT leader in the face of added competition and the company reported that it made a profit of $83 million in Q2, up from £67 million in the previous three months, despite an alarming fall in net additions to just over half a million from 1.74 million in Q1. Overall the domestic subscriber base stands at 23.94 million, up half a million quarter on quarter.
Looking forward the company expects to be profitable again in Q3 but warns of a return to the red as it launches into its next international market by Q4 2012.
“We have enormous challenges ahead, and no doubt will have further ups and downs as we pioneer Internet television. We are making progress in every market we serve, and see a once-in-a-generation opportunity ahead to build the world’s most popular TV show and movie service,” said company CEO Reed Hastings.