NFLX Financial Analysis

Analysis Date: 1/23/2025

Business Model

Netflix generates revenue primarily through paid streaming subscriptions across different plans including standard, premium and ad-supported tiers

Revenue Sources

• Subscription plans (standard, premium, ad-supported)
• Advertising revenue from ad-supported tier

Revenue Distribution by Channel

• UCAN (US & Canada): $4.5B (44% of revenue)
• EMEA: $3.3B (32% of revenue)
• LATAM: $1.2B (12% of revenue)
• APAC: $1.2B (12% of revenue)

Income Statement Analysis

• Revenue grew 16% year-over-year to $10.2B driven by 19M net subscriber additions
• Operating margin of 22.2% in Q4, down from Q3's 29.6% due to higher content and marketing expenses
• Operating income increased 52% year-over-year despite sequential decline from Q3

Balance Sheet Analysis

• Strong cash position with $9.6B in cash and investments, up 34% year-over-year
• Content assets grew modestly by 2.5% to $32.5B
• Total equity increased 20% to $24.7B driven by retained earnings growth

Cash Flow Analysis

• Generated $1.4B in free cash flow despite seasonal content investments
• Full year 2024 free cash flow of $6.9B demonstrates strong cash generation
• Forecasting $8B in free cash flow for 2025

Capital Allocation

Netflix maintains a balanced capital allocation approach with $18B planned content spend in 2025, $6.2B in share repurchases in 2024, and plans to pay down $1.8B in maturing debt in 2025. Board approved additional $15B for share repurchase program.

Management Commentary

Strong Q4 performance with record 19M net subscriber additions

Ad-supported tier showing strong growth with >55% of new sign-ups

Projecting 2025 revenue growth of 12-14% with expanded 29% operating margin

Overall Sentiment: Very positive with strong execution across subscriber growth, revenue, and profitability metrics

Recommendation

Rating: Buy

Reason for Rating: Strong execution, expanding margins, and multiple growth drivers support continued outperformance

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/23/2025, 6:48:37 AM