Cash Flow Analysis

Cash from Operations

DVD by mail is still considered to have significant influence

Netflix's ability to supply varying market segment interests and keep it propel growth

Three Tiers of Membership

domestic contribution margin - grown 9% to 36%

international contribution margin - negative 10%

Domestic memberships are 49,431 - stagnant growth

International memberships are 44,365 - strong growth

  • CF 2014 - Provided $16 million
  • CF 2015 - Used $750 million
  • CF 2016 - Used $1.47 billion

working capital - $1.13 billion - covers 1.6x months (2016)

working capital - $1.9 billion - covers 3.5x months (2015)

Cash from Investing

  • Inflow of $50 million in 2016
  • Cost $180 million in 2015
  • Cost $42 million in 2014

Sold $200 million of government securities - wise

Increased capital work in progress costs for leasehold improvements of $100 million for the two facilities in California.

Cash from Financing

issued $1.48 billion in debt during 2015 at 5.5% and 5.9%

issued $990 million in debt during 2016 at 4.4%

Approximately $3.4 billion of debt outstanding

  • CF in 2014 - provided $541.7 million of funding
  • CF in 2015 - provided $1.64 billion of funding
  • CF in 2016 - provided $1.09.6 billion of funding

Does not pay dividends

Leasehold costs have increased

Free Cash Flow

Free Cash Flow

"cash provided by (used in) operating and investing activities excluding non-operational cash flows from purchases, maturities and sales of short term investments" (Netflix 10K)

  • FCF 2014 - negative $126.7 million
  • FCF 2015 - negative $920.5 million
  • FCF 2016 - negative $1.66 billion

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