Netflix (NFLX) Raises $400M Through Common Stock and Conv. Notes Offering, Warns of a 2012 Loss
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Revenue Growth %: +17.2%
Financial Fact:
Net income: 2.69M
Today's EPS Names:
ANF, DXLG, FL, More
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Netflix, Inc. (Nasdaq: NFLX) priced a concurrent $400 million offering; $200 million through the sale of common stock and $200 million in convertible notes. The company also warned that it expects a loss in 2012, before returning to profitability the following year.
The common stock was sold to certain mutual funds and accounts managed by T. Rowe Price Associates, Inc. and the private placement of convertible notes was to funds affiliated with Technology Crossover Ventures (TCV).
In the stock offering, Netflix sold approximately 2.86 million shares at $70.00 per share.
For the convertible notes, TCV has agreed to purchase $200 million aggregate principal amount of Zero Coupon Convertible Senior Notes due 2018 in a private placement. The Notes will be convertible into shares of Netflix common stock at an initial conversion rate of 11.6553 shares of common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $85.80 per share of common stock, subject to adjustment upon the occurrence of certain events.
"With this additional capital from two long-term oriented investors, we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. in 2012," said David Wells, Chief Financial Officer.
Commenting on its guidance in the prospectus the company stated:
Consistent with our Q4 guidance, our domestic streaming and DVD gross cancellations continued to steadily decline in October and the first half of November, while gross additions of new streaming subscribers remained strong. As a result, consistent with our prior guidance, we continue to expect our domestic streaming net additions to be about flat for November as a whole and strongly positive for December. We expect that consolidated quarterly revenue will be relatively flat until we can achieve positive net subscriber additions. As a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we expect to incur consolidated net losses for the year ending December 31, 2012. We cannot assure you that our domestic streaming cancellations will continue to decline or that gross new additions will remain strong. If we are unable to repair the damage to our brand and reverse negative subscriber growth, our business, results of operations, including cash flows, and financial condition will continue to be adversely affected.
The comments of an expected loss in FY12 would compare negatively to the Wall Street consensus of a profit of $1.11.
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The common stock was sold to certain mutual funds and accounts managed by T. Rowe Price Associates, Inc. and the private placement of convertible notes was to funds affiliated with Technology Crossover Ventures (TCV).
In the stock offering, Netflix sold approximately 2.86 million shares at $70.00 per share.
For the convertible notes, TCV has agreed to purchase $200 million aggregate principal amount of Zero Coupon Convertible Senior Notes due 2018 in a private placement. The Notes will be convertible into shares of Netflix common stock at an initial conversion rate of 11.6553 shares of common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $85.80 per share of common stock, subject to adjustment upon the occurrence of certain events.
"With this additional capital from two long-term oriented investors, we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. in 2012," said David Wells, Chief Financial Officer.
Commenting on its guidance in the prospectus the company stated:
Consistent with our Q4 guidance, our domestic streaming and DVD gross cancellations continued to steadily decline in October and the first half of November, while gross additions of new streaming subscribers remained strong. As a result, consistent with our prior guidance, we continue to expect our domestic streaming net additions to be about flat for November as a whole and strongly positive for December. We expect that consolidated quarterly revenue will be relatively flat until we can achieve positive net subscriber additions. As a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we expect to incur consolidated net losses for the year ending December 31, 2012. We cannot assure you that our domestic streaming cancellations will continue to decline or that gross new additions will remain strong. If we are unable to repair the damage to our brand and reverse negative subscriber growth, our business, results of operations, including cash flows, and financial condition will continue to be adversely affected.
The comments of an expected loss in FY12 would compare negatively to the Wall Street consensus of a profit of $1.11.
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