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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.
Revenue by Segment
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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