Netflix Q1 sales up, losses widen

Sales up 80% from same period last year to over $100 mil

High-flying online DVD rental shop Netflix posted another boffo quarter of sales growth, though it came at the expense of a wider net loss thanks to its more aggressive marketing push.

Reporting quarterly sales up a hefty 80% from the same period a year ago to just over $100 million, Los Gatos, Calif.-based Netflix said it also succeeded in trimming churn from 5.8% to 4.7%. Finishing the first quarter with 1.9 million subscribers, company chalked up a net loss of $5.8 million for the first three months of 2004, up from $2.4 million a year earlier.

For the full year, however, company is confident of generating a net profit of $10 million-$18.5 million on sales of $485 million-$535 million. That’s due in part to a forthcoming price increase from $19.95 to $21.99 a month for all the DVDs you can rent. Netflix expects to have 2.14 million subs by the end of June, with as many as 2.7 million by year’s end.

Company justifies new price point, which goes into effect June 15, by pointing to the fact that its typical sub now views seven discs a month.

CEO Reed Hastings told analysts on a conference call Thursday that his online rental shop also was responsible for helping studios expand the market for some films, thanks to software that makes suggestions to members based on previous viewing habits. Service helps distribs reach new markets for titles that otherwise may have trouble finding their widest audience. Citing arthouse hit “Whale Rider” as an example, Hastings said Netflix can “make a $26 million film perform like a $100 million film.”

“We actually had more turns of Whale Rider than The Hulk, and they came out in the same week,” Hastings told Daily Variety.

Hastings confirmed plans to launch Netflix in the U.K. in the fourth quarter of 2004 and in Canada in 2005, subject to completion of studio purchasing agreements in those territories. He also said plans for electronic distribution of films is on track for 2005.

Netflix has been a stock market wunderkind in recent months. Its shares have soared a whopping 128% since its spring 2002 flotation.

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