Stock Analysis on Net

Netflix Inc. (NASDAQ:NFLX) 

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Netflix Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1 8,600,341 5,437,546 4,988,408 6,078,640 3,693,653
Cost of capital2 16.67% 16.35% 15.98% 15.78% 16.15%
Invested capital3 40,712,328 37,926,586 37,782,560 34,785,312 29,762,011
 
Economic profit4 1,812,316 (762,225) (1,047,873) 591,206 (1,112,650)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,600,34116.67% × 40,712,328 = 1,812,316


Net Operating Profit after Taxes (NOPAT)

Netflix Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income 8,711,631 5,407,990 4,491,924 5,116,228 2,761,395
Deferred income tax expense (benefit)1 (591,370) (542,978) (134,527) 199,519 70,066
Increase (decrease) in deferred revenue2 77,844 178,308 55,319 91,350 193,247
Increase (decrease) in equity equivalents3 (513,526) (364,670) (79,208) 290,869 263,313
Interest expense 718,733 699,826 706,212 765,620 767,499
Interest expense, operating lease liability4 84,426 80,194 82,512 84,434 79,267
Adjusted interest expense 803,159 780,020 788,724 850,054 846,766
Tax benefit of interest expense5 (168,663) (163,804) (165,632) (178,511) (177,821)
Adjusted interest expense, after taxes6 634,496 616,216 623,092 671,543 668,945
Interest income (294,000) (281,000) (60,000)
Investment income, before taxes (294,000) (281,000) (60,000)
Tax expense (benefit) of investment income7 61,740 59,010 12,600
Investment income, after taxes8 (232,260) (221,990) (47,400)
Net operating profit after taxes (NOPAT) 8,600,341 5,437,546 4,988,408 6,078,640 3,693,653

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

3 Addition of increase (decrease) in equity equivalents to net income.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,412,170 × 3.50% = 84,426

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 803,159 × 21.00% = 168,663

6 Addition of after taxes interest expense to net income.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 294,000 × 21.00% = 61,740

8 Elimination of after taxes investment income.


Net Income
The net income displayed a significant overall growth trend over the analyzed period. Starting at approximately 2.76 billion US dollars in 2020, it nearly doubled by 2021 reaching around 5.12 billion. A slight decline occurred in 2022 to about 4.49 billion, followed by a recovery in 2023 to roughly 5.41 billion. The most notable increase was observed in 2024, with net income rising sharply to approximately 8.71 billion, representing substantial profitability expansion toward the end of the period.
Net Operating Profit After Taxes (NOPAT)
NOPAT also exhibited a strong upward trend, beginning at roughly 3.69 billion US dollars in 2020. It increased markedly to about 6.08 billion in 2021 before experiencing a decrease in 2022 to around 4.99 billion. The figure rebounded slightly in 2023, reaching approximately 5.44 billion, and then surged considerably in 2024 to approximately 8.60 billion. This pattern reflects similar movements to net income, indicating consistent operational profitability progression, with a particularly strong performance in the final year.
Summary of Trends
Both net income and NOPAT show parallel trends with peaks in 2021, followed by declines in 2022 and subsequent recoveries. The data reflects a strong recovery and growth phase culminating in significant financial improvement in 2024. The increases in 2024 imply enhanced efficiency in core operations and improved bottom-line results. Minor fluctuations in the middle years suggest potential operational or market challenges that were ultimately overcome.

Cash Operating Taxes

Netflix Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes 1,254,026 797,415 772,005 723,875 437,954
Less: Deferred income tax expense (benefit) (591,370) (542,978) (134,527) 199,519 70,066
Add: Tax savings from interest expense 168,663 163,804 165,632 178,511 177,821
Less: Tax imposed on investment income 61,740 59,010 12,600
Cash operating taxes 1,952,319 1,445,187 1,059,564 702,867 545,709

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data reveals a consistent upward trend in both the provision for income taxes and cash operating taxes over the five-year period from 2020 to 2024.

Provision for Income Taxes
This figure increased steadily each year, starting at 437,954 thousand US dollars in 2020 and rising to 1,254,026 thousand US dollars in 2024. The growth suggests a rising taxable income base or changes in tax liabilities, with the most significant increase occurring between 2023 and 2024.
Cash Operating Taxes
Cash operating taxes also exhibited a persistent increase year over year, moving from 545,709 thousand US dollars in 2020 to 1,952,319 thousand US dollars in 2024. The increase was particularly sharp in the later years, indicating higher cash outflows related to taxation, which may impact liquidity considerations.

The concurrent rises in both provision for income taxes and cash operating taxes indicate growing tax obligations generally aligned with operational or profitability expansion. The substantial increases in the 2023 to 2024 period could warrant further analysis regarding tax planning, cash flow management, and potential impacts on net income and operational financing.


Invested Capital

Netflix Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term debt 1,784,453 399,844 699,823 499,878
Long-term debt 13,798,351 14,143,417 14,353,076 14,693,072 15,809,095
Operating lease liability1 2,412,170 2,430,113 2,578,488 2,723,675 2,201,853
Total reported debt & leases 17,994,974 16,973,374 16,931,564 18,116,570 18,510,826
Stockholders’ equity 24,743,567 20,588,313 20,777,401 15,849,248 11,065,240
Net deferred tax (assets) liabilities2 (1,177,558) (874,550) (261,541) (148,095) (589,091)
Deferred revenue3 1,520,813 1,442,969 1,264,661 1,209,342 1,117,992
Equity equivalents4 343,255 568,419 1,003,120 1,061,247 528,901
Accumulated other comprehensive (income) loss, net of tax5 (362,162) 223,945 217,306 40,495 (44,398)
Adjusted stockholders’ equity 24,724,660 21,380,677 21,997,827 16,950,990 11,549,743
Capital work-in-progress6 (228,300) (406,492) (235,555) (282,248) (298,558)
Short-term investments7 (1,779,006) (20,973) (911,276)
Invested capital 40,712,328 37,926,586 37,782,560 34,785,312 29,762,011

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of deferred revenue.

4 Addition of equity equivalents to stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of capital work-in-progress.

7 Subtraction of short-term investments.


The financial data reveals several noteworthy trends related to the capital structure and equity position over the five-year period analyzed.

Total reported debt & leases
This liability category shows a general decline from 2020 to 2022, decreasing from approximately 18.51 billion USD to 16.93 billion USD. Following this reduction, the figure remains relatively stable in 2023 before experiencing an increase in 2024, reaching nearly 18.00 billion USD. The initial reduction could indicate active debt management or repayment, while the subsequent rise suggests renewed borrowing or lease obligations arising during the latest year.
Stockholders’ equity
Stockholders’ equity demonstrates a consistent and substantial increase throughout the period. Starting from approximately 11.07 billion USD in 2020, the equity nearly doubles by the end of 2022, reaching over 20.78 billion USD. It remains stable in 2023 and then attains a new peak in 2024, exceeding 24.74 billion USD. This upward trend indicates strong retained earnings growth, equity issuances, or other comprehensive income components that strengthen the company's net asset position.
Invested capital
Invested capital, representing the total capital deployed in business operations, follows an upward trajectory across all five periods. Beginning at roughly 29.76 billion USD in 2020, it increases steadily to over 40.71 billion USD by 2024. The growth in invested capital aligns with the rise in equity, supported by generally stable debt levels, implying ongoing investment in operational assets or acquisitions expanding the company's capital base.
Summary
Overall, the company exhibits a strengthening financial position characterized by rising equity and invested capital. While debt levels declined initially, a slight increase in the most recent year suggests a potential strategic shift or operational financing need. The equity surge significantly outpaces debt growth, indicative of robust internal capital generation or equity financing, thus potentially improving solvency and financial flexibility over time.

Cost of Capital

Netflix Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 415,732,848 415,732,848 ÷ 434,093,018 = 0.96 0.96 × 17.25% = 16.52%
Senior Notes3 15,948,000 15,948,000 ÷ 434,093,018 = 0.04 0.04 × 4.76% × (1 – 21.00%) = 0.14%
Operating lease liability4 2,412,170 2,412,170 ÷ 434,093,018 = 0.01 0.01 × 3.50% × (1 – 21.00%) = 0.02%
Total: 434,093,018 1.00 16.67%

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in thousands

2 Equity. See details »

3 Senior Notes. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 246,854,722 246,854,722 ÷ 264,302,835 = 0.93 0.93 × 17.25% = 16.11%
Senior Notes3 15,018,000 15,018,000 ÷ 264,302,835 = 0.06 0.06 × 4.73% × (1 – 21.00%) = 0.21%
Operating lease liability4 2,430,113 2,430,113 ÷ 264,302,835 = 0.01 0.01 × 3.30% × (1 – 21.00%) = 0.02%
Total: 264,302,835 1.00 16.35%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in thousands

2 Equity. See details »

3 Senior Notes. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 162,493,678 162,493,678 ÷ 179,155,166 = 0.91 0.91 × 17.25% = 15.65%
Senior Notes3 14,083,000 14,083,000 ÷ 179,155,166 = 0.08 0.08 × 4.75% × (1 – 21.00%) = 0.29%
Operating lease liability4 2,578,488 2,578,488 ÷ 179,155,166 = 0.01 0.01 × 3.20% × (1 – 21.00%) = 0.04%
Total: 179,155,166 1.00 15.98%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in thousands

2 Equity. See details »

3 Senior Notes. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 171,680,533 171,680,533 ÷ 192,434,208 = 0.89 0.89 × 17.25% = 15.39%
Senior Notes3 18,030,000 18,030,000 ÷ 192,434,208 = 0.09 0.09 × 4.75% × (1 – 21.00%) = 0.35%
Operating lease liability4 2,723,675 2,723,675 ÷ 192,434,208 = 0.01 0.01 × 3.10% × (1 – 21.00%) = 0.03%
Total: 192,434,208 1.00 15.78%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

2 Equity. See details »

3 Senior Notes. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 238,543,388 238,543,388 ÷ 259,550,241 = 0.92 0.92 × 17.25% = 15.85%
Senior Notes3 18,805,000 18,805,000 ÷ 259,550,241 = 0.07 0.07 × 4.75% × (1 – 21.00%) = 0.27%
Operating lease liability4 2,201,853 2,201,853 ÷ 259,550,241 = 0.01 0.01 × 3.60% × (1 – 21.00%) = 0.02%
Total: 259,550,241 1.00 16.15%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Equity. See details »

3 Senior Notes. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Netflix Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Economic profit1 1,812,316 (762,225) (1,047,873) 591,206 (1,112,650)
Invested capital2 40,712,328 37,926,586 37,782,560 34,785,312 29,762,011
Performance Ratio
Economic spread ratio3 4.45% -2.01% -2.77% 1.70% -3.74%
Benchmarks
Economic Spread Ratio, Competitors4
Alphabet Inc. 26.52% 19.87% 11.46% 30.77% 13.78%
Comcast Corp. -1.11% -2.97% -7.43% -2.42% -4.07%
Meta Platforms Inc. 18.01% 10.91% 4.57% 26.98% 18.18%
Walt Disney Co. -11.23% -12.84% -10.69% -13.52% -15.78%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,812,316 ÷ 40,712,328 = 4.45%

4 Click competitor name to see calculations.


Economic Profit Margin

Netflix Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Economic profit1 1,812,316 (762,225) (1,047,873) 591,206 (1,112,650)
 
Revenues 39,000,966 33,723,297 31,615,550 29,697,844 24,996,056
Add: Increase (decrease) in deferred revenue 77,844 178,308 55,319 91,350 193,247
Adjusted revenues 39,078,810 33,901,605 31,670,869 29,789,194 25,189,303
Performance Ratio
Economic profit margin2 4.64% -2.25% -3.31% 1.98% -4.42%
Benchmarks
Economic Profit Margin, Competitors3
Alphabet Inc. 17.23% 12.25% 8.18% 20.41% 10.96%
Comcast Corp. -1.92% -5.14% -13.14% -4.77% -8.77%
Meta Platforms Inc. 18.16% 11.41% 3.99% 21.19% 17.10%
Walt Disney Co. -20.44% -25.07% -22.00% -34.45% -42.43%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 1,812,316 ÷ 39,078,810 = 4.64%

3 Click competitor name to see calculations.