Netflix grows profit faster than sales but flags expense-timing benefits

Netflix ($NFLX) reported quarterly revenue of $12.874 billion, an increase of 11.8%, and operating income of $4.459 billion, up 37%. Operating margin reached 34.6%, compared with 28.2% a year earlier. Net income rose 44% to $3.664 billion, earnings per share increased to $0.87 and free cash flow reached $2.884 billion. The results show substantial profit growth alongside continued expansion in revenue.

The company nevertheless attributed much of its margin outperformance to the timing of expenses rather than a wholly permanent improvement in costs. Its full-year outlook calls for $51.1 billion of revenue and a 31.5% operating margin. Fourth-quarter revenue is forecast at approximately $13.4 billion, with a 26% operating margin that includes a 120-basis-point effect from previously announced layoffs. Those forward figures remain guidance, not completed performance.

Sources:

• Netflix — quarterly results reproduced by StockTitan