NETFLIX Inc. (NASDAQ: NFLX) yesterday released its earnings results via its investor relations website for the first time – and despite intense market interest the process went off without a hitch.
About 35% of Netflix’s total share volume for the day, or just over 3 million shares, traded after the company posted its earnings release on its website at 4:05 pm ET. Netflix’s average daily trading volume is 3.7 million shares, according to Reuters.
Netflix, which beat earnings expectations and gained 10.5% to end at $202.19 in after-hours trading, alerted investors that it had posted its earnings information on its website in a short advisory release distributed by PR Newswire. The news was also submitted to the SEC on a From 8-K.
Format “well received”
Large PR wire services have been vocal opponents of companies using their websites and SEC filings to report their results. They stand to lose millions in revenues if their clients use shorter advisory releases or bypass their services completely.
Business Wire Chief Information Officer Steve Messick wrote in a recent blog post that advisory releases “impede the information pipeline.” Ironically, Business Wire used an advisory release to promote Messick’s blog post.
However, the speed with which the market reacted to the Netflix news, coupled with the substantial after-hours trading activity, suggests that the company’s new process was effective.
“The new format was well received,” Netflix Vice President of Corporate Communications Steve Swasey told IR Web Report.
IR Web Report’s own research found no evidence that investors or the media had trouble obtaining and responding to the company’s news.
First word of the results appeared on StockTwits, the public messaging service for investors, 1 minute after the news was posted, which is typical for earnings releases.
Simpler, saves time, more control
Netflix posted its earnings release on its IR website in the form of a shareholder letter that included tables, charts and photographs (see embed below). The financial statements were also provided in an Excel spreadsheet.
Later, the company webcast a Q&A session based on questions that investors had submitted via email, a process that Netflix investors have praised as democratic and more insightful (see transcript).
A growing number of companies are using advisory releases rather than full-text releases to announce earnings and other news. Others, like Google Inc. and Microsoft Corp are posting their news exclusively on their websites and on EDGAR.
Companies making the change say that in addition to being less expensive, the process is simpler and saves time coordinating edits and proofing between PR wires and the company. It also enables companies to maintain tighter control over their sensitive information because they are not sending it to outside vendors.
Netflix’s Shareholder Letter is embedded below: