Netflix Inc.

10/17/2024 | Press release | Distributed by Public on 10/17/2024 14:01

Third Quarter 2024 Financial Statements

Income Statement

Netflix, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended Three Months Ended Nine Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, September 30,
2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024
Revenues $ 7,867,767 $ 7,970,141 $ 7,925,589 $ 7,852,053 $ 31,615,550 $ 8,161,503 $ 8,187,301 $ 8,541,668 $ 8,832,825 $ 33,723,297 $ 9,370,440 $ 9,559,310 $ 9,824,703 $ 28,754,453
Cost of revenues 4,284,705 4,690,755 4,788,665 5,404,160 19,168,285 4,803,625 4,673,470 4,930,788 5,307,485 19,715,368 4,977,073 5,174,143 5,119,884 15,271,100
Marketing 555,978 574,960 567,954 831,610 2,530,502 555,362 627,168 558,736 916,617 2,657,883 654,340 644,084 642,926 1,941,350
Technology and development 657,530 716,846 662,739 673,926 2,711,041 687,275 657,983 657,159 673,341 2,675,758 702,473 711,254 735,063 2,148,790
General and administrative 397,928 409,297 373,213 392,453 1,572,891 400,924 401,497 478,591 439,273 1,720,285 404,020 426,992 417,353 1,248,365
Operating income 1,971,626 1,578,283 1,533,018 549,904 5,632,831 1,714,317 1,827,183 1,916,394 1,496,109 6,954,003 2,632,534 2,602,837 2,909,477 8,144,848
Other income (expense):
Interest expense (187,579) (175,455) (172,575) (170,603) (706,212) (174,239) (174,812) (175,563) (175,212) (699,826) (173,314) (167,986) (184,830) (526,130)
Interest and other income (expense) 195,645 220,226 261,404 (339,965) 337,310 (71,204) 26,961 168,218 (172,747) (48,772) 155,359 79,005 (21,693) 212,671
Income before income taxes 1,979,692 1,623,054 1,621,847 39,336 5,263,929 1,468,874 1,679,332 1,909,049 1,148,150 6,205,405 2,614,579 2,513,856 2,702,954 7,831,389
Benefit from (provision for) income taxes (382,245) (182,103) (223,605) 15,948 (772,005) (163,754) (191,722) (231,627) (210,312) (797,415) (282,370) (366,550) (339,445) (988,365)
Net income $ 1,597,447 $ 1,440,951 $ 1,398,242 $ 55,284 $ 4,491,924 $ 1,305,120 $ 1,487,610 $ 1,677,422 $ 937,838 $ 5,407,990 $ 2,332,209 $ 2,147,306 $ 2,363,509 $ 6,843,024
Earnings per share:
Basic $ 3.60 $ 3.24 $ 3.14 $ 0.12 $ 10.10 $ 2.93 $ 3.35 $ 3.80 $ 2.15 $ 12.25 $ 5.40 $ 4.99 $ 5.52 $ 15.91
Diluted $ 3.53 $ 3.20 $ 3.10 $ 0.12 $ 9.95 $ 2.88 $ 3.29 $ 3.73 $ 2.11 $ 12.03 $ 5.28 $ 4.88 $ 5.40 $ 15.56
Weighted-average shares of common stock outstanding:
Basic 444,146 444,557 444,878 445,200 444,698 445,244 443,881 441,537 435,923 441,571 432,090 430,065 428,239 430,125
Diluted 452,984 450,169 450,344 451,649 451,290 452,417 451,572 450,011 444,292 449,498 441,654 439,739 437,898 439,757

Balance Sheet

Netflix, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands)
March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30,
2022 2022 2022 2022 2023 2023 2023 2023 2024 2024 2024
Assets
Current assets:
Cash and cash equivalents $ 6,008,946 $ 5,819,449 $ 6,113,733 $ 5,147,176 $ 6,714,594 $ 7,662,788 $ 7,353,245 $ 7,116,913 $ 7,024,766 $ 6,624,939 $ 7,457,025
Short-term investments - 0 - 0 - 0 911,276 1,112,910 914,201 514,201 20,973 20,973 30,973 1,766,902
Other current assets 2,089,069 2,021,329 2,703,170 3,208,021 2,655,119 2,929,347 2,912,028 2,780,247 2,875,574 2,959,641 2,905,172
Total current assets 8,098,015 7,840,778 8,816,903 9,266,473 10,482,623 11,506,336 10,779,474 9,918,133 9,921,313 9,615,553 12,129,099
Content assets, net 31,191,920 32,533,199 32,777,340 32,736,713 32,349,184 32,520,774 31,749,861 31,658,056 31,662,100 31,927,355 32,175,382
Property and equipment, net 1,383,763 1,361,920 1,372,754 1,398,257 1,413,094 1,471,968 1,498,391 1,491,444 1,501,168 1,510,958 1,568,212
Other non-current assets 4,657,206 4,615,038 4,595,190 5,193,325 5,245,444 5,318,395 5,474,060 5,664,359 5,743,140 6,045,029 6,409,151
Total assets $ 45,330,904 $ 46,350,935 $ 47,562,187 $ 48,594,768 $ 49,490,345 $ 50,817,473 $ 49,501,786 $ 48,731,992 $ 48,827,721 $ 49,098,895 $ 52,281,844
Liabilities and Stockholders' Equity
Current liabilities:
Current content liabilities $ 4,066,289 $ 4,174,966 $ 4,225,890 $ 4,480,150 $ 4,344,580 $ 4,440,412 $ 4,259,582 $ 4,466,470 $ 4,436,021 $ 4,391,437 $ 4,489,971
Accounts payable 617,202 504,278 560,156 671,513 591,987 615,374 534,429 747,412 607,348 598,557 641,953
Accrued expenses and other liabilities 1,817,117 1,596,035 1,803,555 1,514,650 1,718,069 1,908,714 1,838,908 1,803,960 1,977,428 1,876,244 2,241,758
Deferred revenue 1,239,048 1,224,743 1,176,323 1,264,661 1,262,271 1,311,918 1,306,185 1,442,969 1,469,484 1,473,720 1,513,048
Short-term debt - 0 - 0 - 0 - 0 399,163 399,387 399,614 399,844 798,936 1,800,041 1,820,396
Total current liabilities 7,739,656 7,500,022 7,765,924 7,930,974 8,316,070 8,675,805 8,338,718 8,860,655 9,289,217 10,139,999 10,707,126
Non-current content liabilities 2,945,221 2,989,961 2,955,368 3,081,277 2,908,029 2,849,387 2,668,472 2,578,173 2,370,692 2,028,782 1,918,089
Long-term debt 14,534,561 14,233,303 13,888,117 14,353,076 14,037,965 14,070,151 13,900,754 14,143,417 13,217,038 12,180,024 14,160,932
Other non-current liabilities 2,567,427 2,551,675 2,424,637 2,452,040 2,400,085 2,389,915 2,486,215 2,561,434 2,585,364 2,637,397 2,774,961
Total liabilities 27,786,865 27,274,961 27,034,046 27,817,367 27,662,149 27,985,258 27,394,159 28,143,679 27,462,311 26,986,202 29,561,108
Stockholders' equity:
Common stock 4,155,580 4,316,870 4,473,962 4,637,601 4,762,395 4,874,208 5,011,427 5,145,172 5,489,850 5,680,061 5,887,903
Treasury stock at cost (824,190) (824,190) (824,190) (824,190) (1,228,920) (1,876,753) (4,399,677) (6,922,200) (8,934,056) (10,547,055) (12,254,855)
Accumulated other comprehensive loss (74,170) (144,476) (247,643) (217,306) (191,695) (139,266) (155,571) (223,945) (111,879) (89,114) (344,622)
Retained earnings 14,286,819 15,727,770 17,126,012 17,181,296 18,486,416 19,974,026 21,651,448 22,589,286 24,921,495 27,068,801 29,432,310
Total stockholders' equity 17,544,039 19,075,974 20,528,141 20,777,401 21,828,196 22,832,215 22,107,627 20,588,313 21,365,410 22,112,693 22,720,736
Total liabilities and stockholders' equity $ 45,330,904 $ 46,350,935 $ 47,562,187 $ 48,594,768 $ 49,490,345 $ 50,817,473 $ 49,501,786 $ 48,731,992 $ 48,827,721 $ 49,098,895 $ 52,281,844

Cashflow

Netflix, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended Three Months Ended Nine Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, September 30,
2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024
Cash flows from operating activities:
Net income $ 1,597,447 $ 1,440,951 $ 1,398,242 $ 55,284 $ 4,491,924 $ 1,305,120 $ 1,487,610 $ 1,677,422 $ 937,838 $ 5,407,990 $ 2,332,209 $ 2,147,306 $ 2,363,509 $ 6,843,024
Adjustments to reconcile net income to net cash
provided by operating activities:
Additions to content assets (3,584,164) (4,687,011) (4,582,671) (3,985,192) (16,839,038) (2,458,666) (3,683,007) (2,883,839) (3,529,191) (12,554,703) (3,728,967) (4,048,852) (4,016,396) (11,794,215)
Change in content liabilities (347,149) 191,228 60,867 274,364 179,310 (354,791) 46,119 (325,989) 49,059 (585,602) (189,441) (366,572) (83,585) (639,598)
Amortization of content assets 3,166,365 3,261,348 3,653,592 3,944,827 14,026,132 3,459,984 3,410,021 3,573,353 3,754,079 14,197,437 3,670,805 3,769,690 3,699,521 11,140,016
Depreciation and amortization of property, equipment and intangibles 74,602 83,505 85,188 93,387 336,682 90,335 89,385 90,660 86,567 356,947 87,234 81,227 80,914 249,375
Stock-based compensation expense 119,209 150,392 152,062 153,789 575,452 99,099 78,030 79,720 82,519 339,368 76,345 68,766 65,650 210,761
Foreign currency remeasurement loss (gain) on debt (161,821) (304,513) (348,458) 461,681 (353,111) 80,651 28,952 (172,678) 239,371 176,296 (130,801) (42,692) 104,809 (68,684)
Other non-cash items 101,968 205,374 102,513 123,688 533,543 120,008 121,483 115,688 154,896 512,075 97,181 138,588 128,082 363,851
Deferred income taxes (68,906) (115,820) (57,797) 75,973 (166,550) (98,782) (103,172) (86,277) (171,128) (459,359) (107,077) (209,387) (200,982) (517,446)
Changes in operating assets and liabilities:
Other current assets 41,157 123,399 (120,071) (398,319) (353,834) (88,522) (183,049) 103,766 (13,198) (181,003) 38,049 (28,959) 54,956 64,046
Accounts payable (215,444) (122,048) 53,875 125,074 (158,543) (89,668) 38,332 (68,390) 213,228 93,502 (145,265) (19,358) 30,597 (134,026)
Accrued expenses and other liabilities 350,763 (238,719) 212,072 (379,629) (55,513) 185,299 177,831 (65,029) (194,536) 103,565 251,782 (114,303) 179,011 316,490
Deferred revenue 16,743 (10,376) (48,420) 69,409 27,356 (2,390) 49,647 (5,733) 137,184 178,708 26,515 4,236 39,328 70,079
Other non-current assets and liabilities (167,931) 125,040 (4,184) (170,478) (217,553) (68,937) (117,950) (40,359) (83,674) (310,920) (66,047) (88,843) (124,313) (279,203)
Net cash provided by operating activities 922,839 102,750 556,810 443,858 2,026,257 2,178,740 1,440,232 1,992,315 1,663,014 7,274,301 2,212,522 1,290,847 2,321,101 5,824,470
Cash flows from investing activities:
Purchases of property and equipment (121,158) (90,018) (84,960) (111,593) (407,729) (62,019) (100,972) (103,929) (81,632) (348,552) (75,714) (78,287) (126,863) (280,864)
Acquisitions (124,521) (68,876) - 0 (563,990) (757,387) - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Purchases of investments - 0 - 0 - 0 (911,276) (911,276) (201,634) (303,228) - 0 - 0 (504,862) - 0 - 0 (1,742,246) (1,742,246)
Proceeds from maturities of investments - 0 - 0 - 0 - 0 - 0 - 0 501,937 400,000 493,228 1,395,165 - 0 - 0 - 0 - 0
Net cash provided by (used in) investing activities (245,679) (158,894) (84,960) (1,586,859) (2,076,392) (263,653) 97,737 296,071 411,596 541,751 (75,714) (78,287) (1,869,109) (2,023,110)
Cash flows from financing activities:
Proceeds from issuance of debt - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 1,794,460 1,794,460
Repayments of debt (700,000) - 0 - 0 - 0 (700,000) - 0 - 0 - 0 - 0 - 0 (400,000) - 0 - 0 (400,000)
Proceeds from issuance of common stock 13,678 11,250 4,113 6,705 35,746 26,028 34,717 57,818 51,427 169,990 268,881 118,750 143,244 530,875
Repurchases of common stock - 0 - 0 - 0 - 0 - 0 (400,101) (645,146) (2,500,100) (2,500,000) (6,045,347) (2,000,000) (1,599,998) (1,700,000) (5,299,998)
Taxes paid related to net share settlement of equity awards - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 (1,825) (1,883) (2,024) (5,732)
Other financing activities - 0 - 0 - 0 - 0 - 0 - 0 (38,920) (32,826) (3,700) (75,446) - 0 (6,250) (9,084) (15,334)
Net cash provided by (used in) financing activities (686,322) 11,250 4,113 6,705 (664,254) (374,073) (649,349) (2,475,108) (2,452,273) (5,950,803) (2,132,944) (1,489,381) 226,596 (3,395,729)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (11,448) (145,198) (180,058) 166,564 (170,140) 26,423 39,626 (122,707) 139,342 82,684 (95,790) (122,723) 153,452 (65,061)
Net increase (decrease) in cash, cash equivalents, and restricted cash (20,610) (190,092) 295,905 (969,732) (884,529) 1,567,437 928,246 (309,429) (238,321) 1,947,933 (91,926) (399,544) 832,040 340,570
Cash, cash equivalents, and restricted cash beginning of period 6,055,111 6,034,501 5,844,409 6,140,314 6,055,111 5,170,582 6,738,019 7,666,265 7,356,836 5,170,582 7,118,515 7,026,589 6,627,045 7,118,515
Cash, cash equivalents, and restricted cash end of period $ 6,034,501 $ 5,844,409 $ 6,140,314 $ 5,170,582 $ 5,170,582 $ 6,738,019 $ 7,666,265 $ 7,356,836 $ 7,118,515 $ 7,118,515 $ 7,026,589 $ 6,627,045 $ 7,459,085 $ 7,459,085
Non-GAAP free cash flow reconciliation:
Net cash provided by operating activities $ 922,839 $ 102,750 $ 556,810 $ 443,858 $ 2,026,257 $ 2,178,740 $ 1,440,232 $ 1,992,315 $ 1,663,014 $ 7,274,301 $ 2,212,522 $ 1,290,847 $ 2,321,101 $ 5,824,470
Purchases of property and equipment (121,158) (90,018) (84,960) (111,593) (407,729) (62,019) (100,972) (103,929) (81,632) (348,552) (75,714) (78,287) (126,863) (280,864)
Non-GAAP free cash flow $ 801,681 $ 12,732 $ 471,850 $ 332,265 $ 1,618,528 $ 2,116,721 $ 1,339,260 $ 1,888,386 $ 1,581,382 $ 6,925,749 $ 2,136,808 $ 1,212,560 $ 2,194,238 $ 5,543,606

Regional Information

Netflix, Inc.
Streaming Revenue and Membership Information by Region
(unaudited)
(in thousands, except for average revenue per membership and percentages)
As of / Three Months Ended As of / Year Ended As of / Three Months Ended As of / Year Ended As of / Three Months Ended As of / Nine Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, September 30,
2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024
United States and Canada (UCAN)
Revenues (1) $ 3,350,424 $ 3,537,863 $ 3,601,565 $ 3,594,791 $ 14,084,643 $ 3,608,645 $ 3,599,448 $ 3,735,133 $ 3,930,557 $ 14,873,783 $ 4,224,315 $ 4,295,560 $ 4,322,476 $ 12,842,351
Paid net membership additions (losses) (636) (1,296) 104 909 (919) 102 1,173 1,750 2,807 5,832 2,530 1,451 694 4,675
Paid memberships at end of period 74,579 73,283 73,387 74,296 74,296 74,398 75,571 77,321 80,128 80,128 82,658 84,109 84,803 84,803
Average paying memberships 74,897 73,931 73,335 73,842 74,001 74,347 74,985 76,446 78,725 76,126 81,393 83,384 84,456 83,078
Average revenue per membership (2) $14.91 $15.95 $16.37 $16.23 $15.86 $16.18 $16.00 $16.29 $16.64 $16.28 $17.30 $17.17 $17.06 $17.18
% change as compared to prior-year period 5% 10% 12% 10% 9% 9% 0% 0% 3% 3% 7% 7% 5% 6%
Constant currency % change as compared to prior-year period* 5% 10% 12% 10% 9% 9% 1% 0% 3% 3% 7% 7% 5% 6%
Europe, Middle East and Africa (EMEA)
Revenues $ 2,561,831 $ 2,457,235 $ 2,375,814 $ 2,350,135 $ 9,745,015 $ 2,517,641 $ 2,562,170 $ 2,693,146 $ 2,783,530 $ 10,556,487 $ 2,958,193 $ 3,007,772 $ 3,133,466 $ 9,099,431
Paid net membership additions (losses) (303) (767) 568 3,195 2,693 644 2,434 3,953 5,053 12,084 2,916 2,235 2,167 7,318
Paid memberships at end of period 73,733 72,966 73,534 76,729 76,729 77,373 79,807 83,760 88,813 88,813 91,729 93,964 96,131 96,131
Average paying memberships 73,885 73,350 73,250 75,132 73,904 77,051 78,590 81,784 86,287 80,928 90,271 92,847 95,048 92,722
Average revenue per membership (2) $11.56 $11.17 $10.81 $10.43 $10.99 $10.89 $10.87 $10.98 $10.75 $10.87 $10.92 $10.80 $10.99 $10.90
% change as compared to prior-year period 0% -4% -7% -10% -6% -6% -3% 2% 3% -1% 0% -1% 0% 0%
Constant currency % change as compared to prior-year period* 6% 6% 7% 5% 6% 1% -1% -2% -1% -1% 0% 1% 1% 1%
Latin America (LATAM)
Revenues $ 998,948 $ 1,030,234 $ 1,023,945 $ 1,016,846 $ 4,069,973 $ 1,070,192 $ 1,077,435 $ 1,142,811 $ 1,156,023 $ 4,446,461 $ 1,165,008 $ 1,204,145 $ 1,240,892 $ 3,610,045
Paid net membership additions (losses) (351) 14 312 1,763 1,738 (450) 1,217 1,179 2,352 4,298 1,723 1,530 (68) 3,185
Paid memberships at end of period 39,610 39,624 39,936 41,699 41,699 41,249 42,466 43,645 45,997 45,997 47,720 49,250 49,182 49,182
Average paying memberships 39,786 39,617 39,780 40,818 40,000 41,474 41,858 43,056 44,821 42,802 46,859 48,485 49,216 48,187
Average revenue per membership (2) $8.37 $8.67 $8.58 $8.30 $8.48 $8.60 $8.58 $8.85 $8.60 $8.66 $8.29 $8.28 $8.40 $8.32
% change as compared to prior-year period 13% 16% 9% 2% 10% 3% -1% 3% 4% 2% -4% -3% -5% -4%
Constant currency % change as compared to prior-year period* 20% 15% 16% 7% 14% 8% 8% 8% 16% 10% 16% 24% 27% 23%
Asia-Pacific (APAC)
Revenues $ 916,754 $ 907,719 $ 889,037 $ 856,711 $ 3,570,221 $ 933,523 $ 919,273 $ 948,216 $ 962,715 $ 3,763,727 $ 1,022,924 $ 1,051,833 $ 1,127,869 $ 3,202,626
Paid net membership additions 1,087 1,080 1,429 1,795 5,391 1,455 1,068 1,881 2,911 7,315 2,157 2,829 2,280 7,266
Paid memberships at end of period 33,719 34,799 36,228 38,023 38,023 39,478 40,546 42,427 45,338 45,338 47,495 50,324 52,604 52,604
Average paying memberships 33,176 34,259 35,514 37,126 35,019 38,751 40,012 41,487 43,883 41,033 46,417 48,910 51,464 48,930
Average revenue per membership (2) $9.21 $8.83 $8.34 $7.69 $8.50 $8.03 $7.66 $7.62 $7.31 $7.64 $7.35 $7.17 $7.31 $7.27
% change as compared to prior-year period -5% -9% -13% -17% -11% -13% -13% -9% -5% -10% -8% -6% -4% -6%
Constant currency % change as compared to prior-year period* 1% -2% -3% -4% -2% -6% -7% -6% -4% -6% -4% -3% -2% -3%
(1) Excludes DVD revenues of $146 million and $83 million for the years ended December 31, 2022 and 2023, respectively. Total US revenues for the years ended December 31, 2022, 2023, and the three and nine months ended September 30, 2024 were $13.0 billion, $13.8 billion, $4.0 billion and $11.9 billion, respectively.
(2) Average revenue per membership (ARM) is defined as streaming revenue divided by the average number of streaming paid memberships divided by the number of months in the period. These figures do not include sales taxes or VAT.
* The Company believes the non-GAAP financial measure of constant currency revenue is useful in analyzing the underlying trends in ARM absent foreign currency fluctuations. However, this non-GAAP financial measure should be considered in addition to, not as a substitute for, or superior to other financial measures prepared in accordance with GAAP. In order to exclude the effect of foreign currency rate fluctuations on ARM, we calculate current period revenue assuming foreign exchange rates had remained constant with foreign exchange rates from each of the corresponding months of the prior-year period and exclude the impact of hedging gains or losses realized as revenues. Constant currency percentage change in ARM is calculated as the percentage change between current period constant currency ARM and the prior comparative period ARM. The impact of hedging gains or losses is excluded from both the current and prior periods.