Netflix (NFLX-US) On Tuesday (19th), the fourth quarter financial report was announced after the market. The subscriber growth rate was better than expected. It was announced that it was “very close” to the positive value of free cash flow, and the implementation of treasury stocks was considered. It is expected that cash flow will reach equilibrium this year. Soared more than 12% to 563.35 USD。
Key Financial Report Data Vs. Analyst Expectations
- EPS：1.19 USD vs. 1.39 USD (Refinitiv expected)
- Revenue: 6.64 billionUSD vs. 6.626 billionUSD (Refinitiv expected)
- Net new additions to international paid subscriptions: 8.5 million vs. 6.47 million (StreetAccount expectation)
The number of paid subscribers to Netflix in the fourth quarter exceeded 200 million for the first time. The streaming service exceeded 100 million paid subscriptions in 2017.
The expectation that Netflix’s free cash flow will soon turn positive has boosted the bulls. Netflix stated that it no longer needs to raise external funds for daily operations and has even begun to explore ways to return cash to shareholders.
Since Netflix transitioned from DVD to streaming in 2011, Netflix has never taken such a move.
Spencer Neumann, chief financial officer of Netflix, said that the execution of treasury shares does not mean that the company has withdrawn from its bold investment.
“We value the flexibility of the balance sheet, so we will continue to invest in the growth opportunities we see. This is always the most important. But beyond this point, if there is excess cash, we will repay it by executing treasury stocks. To shareholders.”
Netflix also expressed its intention to pay off more debts.Since 2011, the company has borrowed 15 billionUSD, Currently holding 8.2 billionUSDcash.
In the past three quarters, Netflix’s free cash flow has been positive, although the top management mostly attributed this to the impact of production delays during the epidemic. Due to the restart of production in some areas in the fourth quarter, free cash flow turned negative as expected, but not as large as expected. 2020 full year free cash flow is 1.9 billionUSD, Which reversed 2019’s negative free cash flow of 3.3 billionUSDSituation.
In the fourth season, Netflix must fight against some new streaming media competitors, including Apple TV+, Discovery+, Disney+, as well as WarnerMedia’s HBO Max and NBCUniversal’s Peacock, and will soon join ViacomCBS’s Paramount+.
Netflix management once stated in a shareholder letter that 2020 is the “proof” that the company will improve its platform to increase subscriber satisfaction and resist competition. They mentioned Disney (DIS-US)’S Disney+ streaming media has scored 87 million paid subscribers in the first year, and “Netflix also has the largest increase in paid members in the company’s history in 2020.”
Netflix also announced the details of some of the most popular masterpieces in the fourth season. For example, “Queen’s Gambit” (Queen’s Gambit) was watched by 62 million households in the first 28 days of airing, making it “the hottest miniseries in Netflix history”, Bringing cultural influence, and making chess sell well.
In addition, the sci-fi movie “The Midnight Sky” starring and directed by George Clooney is the most popular original movie of the fourth season. It has been watched by 72 million family members in the first four weeks of the show.
Netflix said that “most regions have already begun preparations or production.” The company previously announced that it plans to release a new original movie every week in 2021.
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