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Jun 30, 2022
Netflix Q2 2022 Earnings Report
Q2 was better-than-expected on membership growth, and foreign exchange was worse-than-expected, resulting in 9% revenue growth.
Key Takeaways
Netflix's Q2 revenue grew by 9% year over year (13% constant currency). Global paid net additions were slightly under-forecasted. The company is focused on improving its product, content, and marketing to accelerate revenue and membership growth. They are in a strong financial position with over $30 billion in revenue and growing free cash flow.
Revenue in Q2 grew 9% year over year (or 13% excluding a -$339 million foreign currency impact).
APAC revenue grew 23% year over year, excluding F/X.
EMEA revenue and ARM increased 13% and 6% year over year, respectively, excluding F/X.
LATAM revenue grew 19% year over year excluding F/X and surpassed the $1 billion quarterly mark for the first time.
Netflix
Netflix
Netflix Revenue by Segment
Revenue by Segment
UCAN Revenue
CapyFin.comEMEA Revenue
CapyFin.comLATAM Revenue
CapyFin.comAPAC Revenue
CapyFin.com Forward Guidance
Q3 revenue growth forecast of 5% translates into 12% year over year revenue growth on a constant currency basis. The US dollar continues to strengthen meaningfully against most currencies at a historic pace, with the Euro recently falling below the US dollar for the first time in two decades, a significant headwind for all multinational US companies.
Positive Outlook
- Focus on choice and control for members influences all aspects of Netflix's strategy, creating what they believe to be a significant long term business advantage.
- Netflix's content offering is designed to satisfy a broad range of member tastes by providing an unmatched variety and quality of titles.
- Advertising can enable substantial incremental membership (through lower prices).
- Advertising can enable profit growth (through ad revenues).
- We expect annual positive FCF going forward (with substantial growth in FCF in 2023 vs. 2022) due to our increasing revenue, solid profitability, and the successful multi-year evolution of our content model.
Challenges Ahead
- The US dollar continues to strengthen meaningfully against most currencies at a historic pace, with the Euro recently falling below the US dollar for the first time in two decades, a significant headwind for all multinational US companies.
- Sluggish economic growth
- Impacts of the war in Ukraine
- Connected TV adoption slowing revenue growth
- Account sharing slowing revenue growth
Revenue & Expenses
Visualization of income flow from segment revenue to net income