Netflix : Fourth Quarter 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	Twelve 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,	December 31,	December 31,
2018	2018	2018	2018	2018	2019	2019	2019	2019	2019	2020	2020	2020	2020	2020
Revenues	$ 3,700,856	$ 3,907,270	$ 3,999,374	$ 4,186,841	$ 15,794,341	$ 4,520,992	$ 4,923,116	$ 5,244,905	$ 5,467,434	$ 20,156,447	$ 5,767,691	$ 6,148,286	$ 6,435,637	$ 6,644,442	$ 24,996,056
Cost of revenues	2,300,579	2,402,431	2,531,128	2,733,400	9,967,538	2,870,614	3,005,657	3,097,919	3,466,023	12,440,213	3,599,701	3,643,707	3,867,751	4,165,160	15,276,319
Marketing	536,777	592,007	510,330	730,355	2,369,469	616,578	603,150	553,797	878,937	2,652,462	503,830	434,370	527,597	762,565	2,228,362
Technology and development	282,310	299,095	308,620	331,789	1,221,814	372,764	383,233	379,776	409,376	1,545,149	453,817	435,045	453,802	486,936	1,829,600
General and administrative	134,612	151,524	168,628	175,530	630,294	201,952	224,657	233,174	254,586	914,369	252,087	277,236	271,624	275,539	1,076,486
Operating income	446,578	462,213	480,668	215,767	1,605,226	459,084	706,419	980,239	458,512	2,604,254	958,256	1,357,928	1,314,863	954,242	4,585,289
Other income (expense):
Interest expense	(81,219)	(101,605)	(108,862)	(128,807)	(420,493)	(135,529)	(152,033)	(160,660)	(177,801)	(626,023)	(184,083)	(189,151)	(197,079)	(197,186)	(767,499)
Interest and other income (expense)	(65,743)	68,028	7,004	32,436	41,725	76,104	(53,470)	192,744	(131,378)	84,000	21,697	(133,175)	(256,324)	(250,639)	(618,441)
Income before income taxes	299,616	428,636	378,810	119,396	1,226,458	399,659	500,916	1,012,323	149,333	2,062,231	795,870	1,035,602	861,460	506,417	3,199,349
Benefit from (provision for) income taxes	(9,492)	(44,287)	24,025	14,538	(15,216)	(55,607)	(230,266)	(347,079)	437,637	(195,315)	(86,803)	(315,406)	(71,484)	35,739	(437,954)
Net income	$ 290,124	$ 384,349	$ 402,835	$ 133,934	$ 1,211,242	$ 344,052	$ 270,650	$ 665,244	$ 586,970	$ 1,866,916	$ 709,067	$ 720,196	$ 789,976	$ 542,156	$ 2,761,395
Earnings per share:
Basic	$ 0.67	$ 0.88	$ 0.92	$ 0.31	$ 2.78	$ 0.79	$ 0.62	$ 1.52	$ 1.34	$ 4.26	$ 1.61	$ 1.63	$ 1.79	$ 1.23	$ 6.26
Diluted	$ 0.64	$ 0.85	$ 0.89	$ 0.30	$ 2.68	$ 0.76	$ 0.60	$ 1.47	$ 1.30	$ 4.13	$ 1.57	$ 1.59	$ 1.74	$ 1.19	$ 6.08
Weighted-average common shares outstanding:
Basic	434,174	435,097	435,809	436,385	435,374	436,947	437,587	438,090	438,547	437,799	439,352	440,569	441,526	442,220	440,922
Diluted	450,359	451,552	451,919	451,116	451,244	451,922	452,195	451,552	451,367	451,765	452,494	453,945	455,088	455,283	454,208

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,	December 31,
2018	2018	2018	2018	2019	2019	2019	2019	2020	2020	2020	2020
Assets
Current assets:
Cash and cash equivalents	$ 2,593,666	$ 3,906,357	$ 3,067,534	$ 3,794,483	$ 3,348,557	$ 5,004,247	$ 4,435,018	$ 5,018,437	$ 5,151,884	$ 7,153,248	$ 8,392,391	$ 8,205,550
Current content assets, net	4,626,522	4,803,663	4,987,916	5,151,186	- 0	- 0	- 0	- 0	- 0	- 0	- 0	- 0
Other current assets	597,388	636,869	674,531	748,466	820,350	872,910	892,740	1,160,067	1,295,897	1,410,891	1,434,089	1,556,030
Total current assets	7,817,576	9,346,889	8,729,981	9,694,135	4,168,907	5,877,157	5,327,758	6,178,504	6,447,781	8,564,139	9,826,480	9,761,580
Non-current content assets, net	11,300,469	12,279,519	13,397,672	14,951,141	20,878,317	21,937,845	23,227,772	24,504,567	25,266,889	25,155,117	25,067,633	25,383,950
Property and equipment, net	341,932	349,646	371,152	418,281	434,372	452,399	481,992	565,221	650,455	751,941	828,118	960,183
Other non-current assets	692,820	687,483	867,424	910,843	1,737,036	1,903,938	1,904,189	2,727,420	2,694,785	2,704,084	2,900,312	3,174,646
Total assets	$ 20,152,797	$ 22,663,537	$ 23,366,229	$ 25,974,400	$ 27,218,632	$ 30,171,339	$ 30,941,711	$ 33,975,712	$ 35,059,910	$ 37,175,281	$ 38,622,543	$ 39,280,359
Liabilities and Stockholders' Equity
Current liabilities:
Current content liabilities	$ 4,459,391	$ 4,537,578	$ 4,609,055	$ 4,681,562	$ 4,858,899	$ 4,846,525	$ 4,857,520	$ 4,413,561	$ 4,761,585	$ 4,664,733	$ 4,599,654	$ 4,429,536
Accounts payable	436,183	448,219	441,427	562,985	439,496	442,194	444,129	674,347	545,488	446,668	541,298	656,183
Accrued expenses and other liabilities	436,121	396,104	531,035	481,874	750,720	752,488	1,040,745	843,043	1,061,090	986,595	1,259,124	1,102,196
Deferred revenue	673,892	697,740	716,723	760,899	808,692	892,777	915,506	924,745	986,753	1,029,261	1,040,202	1,117,992
Short-term debt	- 0	- 0	- 0	- 0	- 0	- 0	- 0	- 0	498,809	499,161	499,517	499,878
Total current liabilities	6,005,587	6,079,641	6,298,240	6,487,320	6,857,807	6,933,984	7,257,900	6,855,696	7,853,725	7,626,418	7,939,795	7,805,785
Non-current content liabilities	3,444,476	3,604,158	3,593,823	3,759,026	3,560,364	3,564,440	3,419,552	3,334,323	3,206,051	3,208,164	2,926,574	2,618,084
Long-term debt	6,542,373	8,342,067	8,336,586	10,360,058	10,305,023	12,594,135	12,425,746	14,759,260	14,170,692	15,294,998	15,547,616	15,809,095
Other non-current liabilities	139,631	141,071	127,927	129,231	792,380	973,232	977,008	1,444,276	1,420,148	1,710,948	1,875,235	1,982,155
Total liabilities	16,132,067	18,166,937	18,356,576	20,735,635	21,515,574	24,065,791	24,080,206	26,393,555	26,650,616	27,840,528	28,289,220	28,215,119
Stockholders' equity:
Common stock	1,995,225	2,103,437	2,215,736	2,315,988	2,439,773	2,566,365	2,677,972	2,793,929	2,935,532	3,127,813	3,303,482	3,447,698
Accumulated other comprehensive income (loss)	4,264	(12,427)	(14,508)	(19,582)	(25,600)	(20,352)	(41,246)	(23,521)	(47,054)	(34,072)	(1,147)	44,398
Retained earnings	2,021,241	2,405,590	2,808,425	2,942,359	3,288,885	3,559,535	4,224,779	4,811,749	5,520,816	6,241,012	7,030,988	7,573,144
Total stockholders' equity	4,020,730	4,496,600	5,009,653	5,238,765	5,703,058	6,105,548	6,861,505	7,582,157	8,409,294	9,334,753	10,333,323	11,065,240
Total liabilities and stockholders' equity	$ 20,152,797	$ 22,663,537	$ 23,366,229	$ 25,974,400	$ 27,218,632	$ 30,171,339	$ 30,941,711	$ 33,975,712	$ 35,059,910	$ 37,175,281	$ 38,622,543	$ 39,280,359

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	Twelve 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,	December 31,	December 31,
2018	2018	2018	2018	2018	2019	2019	2019	2019	2019	2020	2020	2020	2020	2020
Cash flows from operating activities:
Net income	$ 290,124	$ 384,349	$ 402,835	$ 133,934	$ 1,211,242	$ 344,052	$ 270,650	$ 665,244	$ 586,970	$ 1,866,916	$ 709,067	$ 720,196	$ 789,976	$ 542,156	$ 2,761,395
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Additions to content assets	(2,986,747)	(3,033,721)	(3,238,717)	(3,784,252)	(13,043,437)	(2,997,746)	(3,325,103)	(3,648,292)	(3,945,542)	(13,916,683)	(3,294,275)	(2,510,782)	(2,653,886)	(3,320,341)	(11,779,284)
Change in content liabilities	378,885	288,474	65,868	266,653	999,880	(14,698)	(12,414)	(95,548)	(571,351)	(694,011)	258,945	(108,432)	(379,458)	(528,488)	(757,433)
Amortization of content assets	1,748,844	1,817,817	1,911,767	2,053,660	7,532,088	2,124,686	2,231,915	2,279,977	2,579,669	9,216,247	2,483,385	2,607,159	2,733,743	2,982,625	10,806,912
Depreciation and amortization of property, equipment and intangibles	19,041	19,736	21,161	23,219	83,157	23,561	25,496	26,704	27,818	103,579	28,517	26,661	28,589	31,943	115,710
Stock-based compensation expense	68,395	81,232	82,316	88,714	320,657	101,200	103,848	100,262	100,066	405,376	97,019	104,210	106,357	107,594	415,180
Foreign currency remeasurement loss (gain) on debt	41,080	(85,410)	(7,670)	(21,953)	(73,953)	(57,600)	61,284	(171,360)	122,100	(45,576)	(93,060)	119,161	249,194	257,983	533,278
Other non-cash items	19,343	25,075	18,921	18,301	81,640	45,708	60,695	57,934	63,893	228,230	65,448	70,301	83,851	73,526	293,126
Deferred income taxes	(22,049)	(9,539)	(39,453)	(14,479)	(85,520)	6,627	35,519	52,105	(188,694)	(94,443)	46,619	223,308	(40,277)	(159,584)	70,066
Changes in operating assets and liabilities:
Other current assets	(55,905)	(25,564)	(30,364)	(88,359)	(200,192)	(32,076)	(24,231)	145	(195,951)	(252,113)	(127,353)	3,066	(22,974)	(40,362)	(187,623)
Accounts payable	74,083	7,733	(4,449)	121,831	199,198	(124,467)	(2,674)	(7,643)	230,847	96,063	(149,153)	(112,027)	111,677	107,898	(41,605)
Accrued expenses and other liabilities	119,049	(52,851)	134,000	(49,776)	150,422	157,647	(26,705)	260,872	(234,036)	157,778	214,191	(105,450)	266,027	(176,585)	198,183
Deferred revenue	55,270	23,848	18,983	44,176	142,277	47,793	84,085	22,729	9,239	163,846	62,008	42,508	10,941	77,790	193,247
Other non-current assets and liabilities	13,830	40,582	(25,609)	(26,741)	2,062	(4,486)	(26,119)	(44,923)	(47,003)	(122,531)	(41,446)	(38,803)	(19,999)	(93,827)	(194,075)
Net cash provided by (used in) operating activities	(236,757)	(518,239)	(690,411)	(1,235,072)	(2,680,479)	(379,799)	(543,754)	(501,794)	(1,461,975)	(2,887,322)	259,912	1,041,076	1,263,761	(137,672)	2,427,077
Cash flows from investing activities:
Purchases of property and equipment	(37,170)	(27,323)	(39,333)	(70,120)	(173,946)	(60,381)	(39,584)	(45,333)	(107,737)	(253,035)	(98,015)	(141,741)	(109,811)	(148,356)	(497,923)
Change in other assets	(12,582)	(12,993)	(129,361)	(10,238)	(165,174)	(19,722)	(10,452)	(4,021)	(99,834)	(134,029)	(288)	(260)	(8,840)	1,957	(7,431)
Net cash used in investing activities	(49,752)	(40,316)	(168,694)	(80,358)	(339,120)	(80,103)	(50,036)	(49,354)	(207,571)	(387,064)	(98,303)	(142,001)	(118,651)	(146,399)	(505,354)
Cash flows from financing activities:
Proceeds from issuance of debt	- 0	1,900,000	- 0	2,061,852	3,961,852	- 0	2,243,196	- 0	2,226,110	4,469,306	- 0	1,009,464	- 0	- 0	1,009,464
Debt issuance costs	- 0	(16,992)	- 0	(18,879)	(35,871)	- 0	(18,192)	- 0	(17,942)	(36,134)	- 0	(7,559)	- 0	- 0	(7,559)
Proceeds from issuance of common stock	56,335	26,936	29,781	11,450	124,502	22,972	21,896	11,989	15,633	72,490	43,694	89,060	68,665	33,987	235,406
Other financing activities	(321)	(532)	(544)	(559)	(1,956)	- 0	- 0	- 0	- 0	- 0	- 0	- 0	- 0	- 0	- 0
Net cash provided by financing activities	56,014	1,909,412	29,237	2,053,864	4,048,527	22,972	2,246,900	11,989	2,223,801	4,505,662	43,694	1,090,965	68,665	33,987	1,237,311
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	7,177	(36,340)	(5,562)	(4,957)	(39,682)	(5,014)	4,998	(29,325)	29,810	469	(70,902)	11,819	28,459	66,674	36,050
Net increase (decrease) in cash, cash equivalents, and restricted cash	(223,318)	1,314,517	(835,430)	733,477	989,246	(441,944)	1,658,108	(568,484)	584,065	1,231,745	134,401	2,001,859	1,242,234	(183,410)	3,195,084
Cash, cash equivalents, and restricted cash beginning of period	2,822,795	2,599,477	3,913,994	3,078,564	2,822,795	3,812,041	3,370,097	5,028,205	4,459,721	3,812,041	5,043,786	5,178,187	7,180,046	8,422,280	5,043,786
Cash, cash equivalents, and restricted cash end of period	$ 2,599,477	$ 3,913,994	$ 3,078,564	$ 3,812,041	$ 3,812,041	$ 3,370,097	$ 5,028,205	$ 4,459,721	$ 5,043,786	$ 5,043,786	$ 5,178,187	$ 7,180,046	$ 8,422,280	$ 8,238,870	$ 8,238,870
Non-GAAP free cash flow reconciliation:
Net cash provided by (used in) operating activities	$ (236,757)	$ (518,239)	$ (690,411)	$ (1,235,072)	$ (2,680,479)	$ (379,799)	$ (543,754)	$ (501,794)	$ (1,461,975)	$ (2,887,322)	$ 259,912	$ 1,041,076	$ 1,263,761	$ (137,672)	$ 2,427,077
Purchases of property and equipment	(37,170)	(27,323)	(39,333)	(70,120)	(173,946)	(60,381)	(39,584)	(45,333)	(107,737)	(253,035)	(98,015)	(141,741)	(109,811)	(148,356)	(497,923)
Change in other assets	(12,582)	(12,993)	(129,361)	(10,238)	(165,174)	(19,722)	(10,452)	(4,021)	(99,834)	(134,029)	(288)	(260)	(8,840)	1,957	(7,431)
Non-GAAP free cash flow	$ (286,509)	$ (558,555)	$ (859,105)	$ (1,315,430)	$ (3,019,599)	$ (459,902)	$ (593,790)	$ (551,148)	$ (1,669,546)	$ (3,274,386)	$ 161,609	$ 899,075	$ 1,145,110	$ (284,071)	$ 1,921,723

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 / Year 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,	December 31,	December 31,
2018	2018	2018	2018	2018	2019	2019	2019	2019	2019	2020	2020	2020	2020	2020
United States and Canada (UCAN)
Revenues (1)	$ 1,976,157	$ 2,049,546	$ 2,094,850	$ 2,160,979	$ 8,281,532	$ 2,256,851	$ 2,501,199	$ 2,621,250	$ 2,671,908	$ 10,051,208	$ 2,702,776	$ 2,839,670	$ 2,933,445	$ 2,979,505	$ 11,455,396
Paid net membership additions (losses)	2,487	961	1,140	1,747	6,335	1,876	(132)	613	548	2,905	2,307	2,935	177	855	6,274
Paid memberships at end of period	60,909	61,870	63,010	64,757	64,757	66,633	66,501	67,114	67,662	67,662	69,969	72,904	73,081	73,936	73,936
Average paying memberships	59,666	61,390	62,440	63,884	61,845	65,695	66,567	66,808	67,388	66,615	68,816	71,437	72,993	73,509	71,689
Average revenue per membership	$11.04	$11.13	$11.18	$11.28	$11.16	$11.45	$12.52	$13.08	$13.22	$12.57	$13.09	$13.25	$13.40	$13.51	$13.32
% change as compared to prior-year period	12%	13%	13%	10%	12%	4%	12%	17%	17%	13%	14%	6%	2%	2%	6%
Constant currency % change as compared to prior-year period*	12%	13%	13%	10%	12%	4%	13%	17%	17%	13%	14%	6%	3%	2%	6%
Europe, Middle East and Africa (EMEA)
Revenues	$ 886,649	$ 975,497	$ 1,004,749	$ 1,096,812	$ 3,963,707	$ 1,233,379	$ 1,319,087	$ 1,428,040	$ 1,562,561	$ 5,543,067	$ 1,723,474	$ 1,892,537	$ 2,019,083	$ 2,137,158	$ 7,772,252
Paid net membership additions	3,335	1,978	2,519	3,982	11,814	4,724	1,687	3,126	4,423	13,960	6,956	2,749	759	4,456	14,920
Paid memberships at end of period	29,339	31,317	33,836	37,818	37,818	42,542	44,229	47,355	51,778	51,778	58,734	61,483	62,242	66,698	66,698
Average paying memberships	27,672	30,328	32,577	35,827	31,601	40,180	43,386	45,792	49,567	44,731	55,256	60,109	61,863	64,470	60,425
Average revenue per membership	$10.68	$10.72	$10.28	$10.20	$10.45	$10.23	$10.13	$10.40	$10.51	$10.33	$10.40	$10.50	$10.88	$11.05	$10.72
% change as compared to prior-year period	25%	23%	11%	3%	14%	-4%	-6%	1%	3%	-1%	2%	4%	5%	5%	4%
Constant currency % change as compared to prior-year period*	11%	11%	10%	6%	9%	2%	3%	6%	7%	4%	4%	8%	3%	0%	3%
Latin America (LATAM)
Revenues	$ 540,182	$ 568,071	$ 562,307	$ 567,137	$ 2,237,697	$ 630,472	$ 677,136	$ 741,434	$ 746,392	$ 2,795,434	$ 793,453	$ 785,368	$ 789,384	$ 788,522	$ 3,156,727
Paid net membership additions	1,543	1,535	1,320	1,962	6,360	1,470	343	1,490	2,037	5,340	2,901	1,750	256	1,213	6,120
Paid memberships at end of period	21,260	22,795	24,115	26,077	26,077	27,547	27,890	29,380	31,417	31,417	34,318	36,068	36,324	37,537	37,537
Average paying memberships	20,489	22,028	23,455	25,096	22,767	26,812	27,719	28,635	30,399	28,391	32,868	35,193	36,196	36,931	35,297
Average revenue per membership	$8.79	$8.60	$7.99	$7.53	$8.19	$7.84	$8.14	$8.63	$8.18	$8.21	$8.05	$7.44	$7.27	$7.12	$7.45
% change as compared to prior-year period	18%	10%	-3%	-13%	1%	-11%	-5%	8%	9%	0%	3%	-9%	-16%	-13%	-9%
Constant currency % change as compared to prior-year period*	18%	18%	14%	6%	13%	7%	12%	17%	18%	13%	12%	13%	5%	4%	8%
Asia-Pacific (APAC)
Revenues	$ 199,117	$ 221,252	$ 248,691	$ 276,756	$ 945,816	$ 319,602	$ 349,494	$ 382,304	$ 418,121	$ 1,469,521	$ 483,660	$ 569,140	$ 634,891	$ 684,609	$ 2,372,300
Paid net membership additions	893	978	1,089	1,146	4,106	1,534	801	1,543	1,748	5,626	3,602	2,657	1,012	1,988	9,259
Paid memberships at end of period	7,394	8,372	9,461	10,607	10,607	12,141	12,942	14,485	16,233	16,233	19,835	22,492	23,504	25,492	25,492
Average paying memberships	6,948	7,883	8,917	10,034	8,446	11,374	12,542	13,714	15,359	13,247	18,034	21,164	22,998	24,498	21,674
Average revenue per membership	$9.55	$9.36	$9.30	$9.19	$9.33	$9.37	$9.29	$9.29	$9.07	$9.24	$8.94	$8.96	$9.20	$9.32	$9.12
% change as compared to prior-year period	8%	6%	3%	-4%	2%	-2%	-1%	0%	-1%	-1%	-5%	-4%	-1%	3%	-1%
Constant currency % change as compared to prior-year period*	4%	3%	5%	2%	3%	3%	5%	3%	0%	3%	-3%	1%	-1%	0%	-1%
(1) Excludes DVD revenues of $0.4 billion, $0.3 billion, and $0.2 billion for the years ended December 31, 2018, 2019 and 2020, respectively. Total US revenues for the years ended December 31, 2018, 2019 and 2020 were $8.0 billion, $9.5 billion and $10.8 billion, respectively.
* The company believes that constant currency information is useful in analyzing the underlying trends in average monthly revenue per paying membership. In order to exclude the effect of foreign currency rate fluctuations on average monthly revenue per paying membership, the Company estimates the 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.