Internet CEOs Speak: Netflix, eBay, Yahoo!, Rediff, FTD Group, CyberSource


Interesting quotes from CEOs and CFOs on recent earnings conference calls, discussing their companies and markets:

Netflix CEO Reed Hastings

One of the consequences of all this growth is that it has become clearer to all that online DVD rental is the future, and Blockbuster has refocused on this area. Their new program allows nearly unlimited free store rentals, whereas their prior program only allowed weekly free store rentals. The economics of so many free store rentals are certainly open to question, but their commitment to online rental is not.

For perspective, two years ago Blockbuster also aggressively marketed their service, cutting their $18 price to $15 and blanketing the television networks with advertising in order to gain share.

The first quarter of this effort in 2005 gave us a modest headwind, bumping up our churn by about six people in a thousand, and ticking down our net additions from the year prior. We expect a similar headwind this quarter, as our competitor spends aggressively on TV and online.

In 2005, this headwind subsided in Q2 despite their continued $15 price, because they had already captured in Q1 the few consumers most likely to switch. Similar to 2005, we expect the headwind effect this year to be less in Q2 than it is in Q1.

Why do most subscribers stay with Netflix, despite the competition? Because our website and our operational excellence are extraordinary, and being consistently great matters to consumers. Blockbuster recently said their churn for new subscribers is more than 20%. Our is under 10%. That is operational excellence and an award-winning website in action.

We invented this category. It’s all we do and we do it better than anyone on the planet, which leads us to our competitive strategy over the coming year.

Our plan is to continue to make the best online service even better. We’ll be operating over 50 distribution centers by the end of this year. We will expand our trucking network to 50 additional central post offices. Together, this will extend our reach to over 100 mail entry points, providing over 95% of our subscribers with overnight delivery.

See the full Netflix conference call transcript.

eBay CEO Meg Whitman

Q4 was a very good quarter. Buoyed by an overall active ecommerce market, the company delivered excellent results on many fronts, including turning in record net revenues of $1.72 billion. The marketplaces delivered net revenues of $1.24 billion and saw record amount of traffic to its network of sites.

On eBay, we benefited from good conversion rates and higher ASPs. In fact, on a sequential basis, we saw marked improvements in total conversion rates across virtually all countries and all categories.

PayPal continued its fantastic run by processing $11 billion of total payment volume and adding hundreds of thousands of merchants to our merchant services business in the U.S. alone.

Skype also experienced record growth, with triple-digit increases in both the total number of users and the amount of SkypeOut Minutes. The strength of these combined metrics in Q4 helped us bring 2006 to a very good close.

Let me touch on the key Q4 achievements of the three businesses, starting with marketplaces. With e-commerce even more popular this year in the U.S., people turned to eBay this holiday season more than ever when they wanted to shop. The vibrant trading activity drove eBay GMV growth up14%. Reinforced by our creative advertising, online shoppers did indeed prove that whatever it was you were looking for, eBay was the place to get it.

The consumer electronics category showed particular strength due to the feverish pitch surrounding Sony's PlayStation and the Nintendo Wii. The motors business also had a very good quarter, delivering $2.1 billion in GMV, representing accelerating year-over-year growth of 16%.

We saw similar trends on eBay sites around the world this quarter.

See the full eBay conference call transcript.

Yahoo! CEO Terry Semel

Moving on to some of our audience initiatives, we have been very active in building on our strengths in social media, video and the mobile web. In social media, we continue to enhance and extend Yahoo! Answers, one of the most successful social media properties on the Internet. Yahoo! Answers has become the largest collection of human knowledge on the web in just over a year since its initial launch, having now grown to almost 75 million unique monthly users worldwide. I believe that with the continued success of Yahoo! Answers and the sharing of human knowledge, Yahoo! has a real opportunity to change the game in search.

We are also making important acquisitions in this area that we believe will, over time, further enhance our position. We have agreed to acquire [] which is an engaging contest platform across categories such as karaoke, dance, comedy and others that will bring a whole new level of sharing, expression, interacting across Yahoo! services.

We also acquired MyBlogLog, an innovative service that is going to change the way publishers connect to their audience, and even the way people connect to each other. In the few days since we announced this acquisition, the number of sites that have adopted their badges to establish relationships with people reading their sites has taken off. In fact, yesterday was a record day with literally millions of these badges viewed across the Internet. Our ultimate goal is to encourage every user on Yahoo! to participate in the consumption and publishing of information and knowledge through tagging, reviewing, sharing and other social media activities.

See the full Yahoo! conference call transcript. CEO Ajit Balakrishnan

According to the Indian Central Statistical office, the Indian economy performed strongly during the second quarter of financial year 2006-07 with real GDP growth at 9.2% as against 8.4% in the same quarter last year. The Union Minister of Communication and Information Technology has declared 2007 as the "The Year of Broadband and PC Penetration". The Indian Department of Telecom has already announced broadband speed upgrades for subscribers of two of India's leading telecom service providers. These subscribers now have access speeds of 2 Mbps compared to 256 Kbps without any increase in charges. Broadband access charges in India at approximately $5 per month continued to be among the lowest in the world.

The Indian PC market according to IDC, International Data Corporation, an independent market research company grew 24% in terms of states volume during the quarter ended at September 2006 compared to the same quarter last year.

The Indian mobile subscriber base according to the Telecom Regulatory Authority of India grew to a $149 million at the end of December, which was 97% increase compared to the same date last year.

Our own registered user base grew to 50.7 million users at the end of December 2006, a 23% increase compared to the same date last year. Our revenues totaled $7.75 million for the quarter ended December 31, 2006, an increase of 54% compared to the same quarter last year with India Online's revenues increasing by 80% to $5.69 million and US Publishing revenues increasing by 11% to $2.06 million.

See the full conference call transcript.

FTD Group CEO Michael Soenen

Just my means of summary in the second quarter, you can read the release, but consolidated revenues were up 38.8%. It was very strong. And we saw it everywhere. ...

It won't be going on forever the rate we've been going, but they certainly helped, especially when you look at the surge in kind our online sales or excuse me, in our call centers, where we've been able to keep our product guarantee cost in line or down significantly.

And we've been able to really improve the conversion rate of our call centers that have really helped generate more orders outs of the call volumes we're getting. So I really just feel good about the way that machine is working.

See the full FTD Group conference call transcript.

CyberSource CEO Bill McKiernan

CyberSource had a very strong fourth quarter. We generated record revenue of $20.9 million, a 40% increase over the same period last year and a 20% sequential increase over the third quarter. These results were again driven by strong growth in our transaction processing and merchant acquiring businesses.

Transaction revenue was up 45% year-over-year. Transaction revenue excludes software and professional services and represents 92% of our revenue. We had another record quarter in transaction volumes as we processed over 255 million transactions, a 32% increase over the same period last year. In December alone, we processed over 100 million transactions and averaged 3.5 million transactions per day. The value of the transactions we processed was over $9.9 billion for the quarter, a 31% increase over the same quarter last year. The value of transactions where we acted, as the acquirer, was $246 million, up from $115 million last year, or a 114% increase.

CyberSource global acquiring generated approximately $7.8 million of revenue for the quarter, up 108% year-over-year. We now have approximately 1,400 customers using our acquiring services, double the number we had a year ago and global acquiring now represents about 37% of our total revenue.

During the quarter, we processed transactions in 64 different currencies, reflecting the global nature of the eCommerce.

See the full CyberSource conference call transcript.