Online DVD rental service Quickflix posted a strong performance for the March quarter, reaping the benefits of a focused investment program.
The buoyant results provide a rare positive story for Destra, the largest shareholder in Quickflix with a 19.9% stake. Destra, a digital media firm, has been caught up in the Opes Prime fallout, with many of its shareholdings diluted.
In the March quarter, revenue for Quickflix rose 14% to $1.68 million on the previous quarter, with total revenue for the first nine months of the financial year hitting $4.4 million.
Subscriber numbers rose 22% to 28,913 for the March quarter from the previous three months, thanks largely to a free trial program that netted 4000 customers. Quickflix now claims 40% of the online DVD rental market. This is double the level a year ago, with the company aiming to reach 50,000 in the next 12 months.
Managing director Simon Hodge has attributed the growth to word-of-mouth enthusiasm as existing subscribers “evangelise” their friends.
Expenditure was down 10% to $2.7 million for the three months, still leaving net cash outflows at $360,000 a month. Quickflix has outlined its plan to continue with cost savings that include; reduced staff, lower DVD library investment, and falling operating expenses.
“Long term, sustainable profitability is Quickflix’s top priority,” Hodge says.
“The time has arrived for Quickflix to move its marketing focus and spend away from brand awareness towards low cost subscriber acquisition by removing all non-essential expenditure,” Hodge said in a statement to the ASX.
To fund the expansion Quickflix has planned to raise $4.9 million via a rights issue that closes later this month.
Quickflix has a library of over 30,000 DVD titles, which are mailed out to subscribers. Its main competitor is Bigpond Movies.