Exhibit 99.1

January 26, 2011

Dear Fellow Shareholder,

In the closing hours of the final day of 2010, Netflix surpassed 20 million subscribers. We are thrilled to be able to report another outstanding quarter:

 

   

Subscribers – 20.01 million

 

   

Net Subscriber Additions – 3.08 million

 

   

Revenue – $596 million

 

   

Operating Income – $78 million

 

   

Net Income – $47 million

 

   

EPS – $0.87 per diluted share

To summarize Q4, we would say that our huge subscriber growth, fueled by the excitement of watching instantly, impressed even us. More subscriber growth enables us to spend more on streaming content, making the Netflix service even better in 2011.

Instead of reporting our results in several different documents, we’ll include everything in this letter. As in past quarters, we’ll also answer investor questions on a 3 p.m. PST conference call today.

To put in context the increasing strength of our business, we’ve included the table below:

Summary Results for Prior Nine Quarters

 

(in millions except per share data)    Q4 08     Q1 09     Q2 09     Q3 09     Q4 09     Q1 10     Q2 10     Q3 10     Q4 10  

Net Subscriber Additions

     0.72        0.92        0.29        0.51        1.16        1.70        1.03        1.93        3.08   

Y/Y Change

     59     20     72     95     61     85     255     278     166

Subscribers

     9.39        10.31        10.60        11.11        12.27        13.97        15.00        16.93        20.01   

Y/Y Change

     26     25     26     28     31     35     42     52     63

Revenue

   $ 360      $ 394      $ 409      $ 423      $ 445      $ 494      $ 520      $ 553      $ 596   

Y/Y Change

     19     21     21     24     24     25     27     31     34

Operating Income

   $ 38      $ 36      $ 53      $ 49      $ 53      $ 58      $ 77      $ 70      $ 78   

Y/Y Change

     87     138     54     45     39     61     45     43     47

Net Income

   $ 23      $ 22      $ 32      $ 30      $ 31      $ 32      $ 44      $ 38      $ 47   

Y/Y Change

     45     68     22     48     35     45     38     27     52

EPS

   $ 0.38      $ 0.37      $ 0.54      $ 0.52      $ 0.56      $ 0.59      $ 0.80      $ 0.70      $ 0.87   

Y/Y Change

     65     76     29     58     47     59     48     35     55

Free Cash Flow

   $ 51      $ 15      $ 26      $ 26      $ 30      $ 38      $ 34      $ 8      $ 51   

Buyback

   $ 10      $ 43      $ 73      $ 130      $ 79      $ 108      $ 45      $ 57      $ —     

Shares (FD)

     60        61        60        58        55        55        54        54        54   

 

1


The following information was filed by Netflix Inc (NFLX) on Wednesday, January 26, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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