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(in millions except per share data and Streaming Content Obligations) |
Q2'17 |
Q3'17 |
Q4'17 |
Q1'18 |
Q2'18 |
Q3'18 Forecast |
||||||||||||
Total (Including DVD): |
||||||||||||||||||
Revenue |
$ |
2,785 |
$ |
2,985 |
$ |
3,286 |
$ |
3,701 |
$ |
3,907 |
$ |
3,988 |
||||||
Y/Y % Growth |
32.3 |
% |
30.3 |
% |
32.6 |
% |
40.4 |
% |
40.3 |
% |
33.6 |
% |
||||||
Operating Income |
$ |
128 |
$ |
209 |
$ |
245 |
$ |
447 |
$ |
462 |
$ |
420 |
||||||
Operating Margin |
4.6 |
% |
7.0 |
% |
7.5 |
% |
12.1 |
% |
11.8 |
% |
10.5 |
% |
||||||
Net Income |
$ |
66 |
$ |
130 |
$ |
186 |
$ |
290 |
$ |
384 |
$ |
307 |
||||||
Diluted EPS |
$ |
0.15 |
$ |
0.29 |
$ |
0.41 |
$ |
0.64 |
$ |
0.85 |
$ |
0.68 |
||||||
Total Streaming: |
||||||||||||||||||
Revenue |
$ |
2,671 |
$ |
2,875 |
$ |
3,181 |
$ |
3,602 |
$ |
3,814 |
$ |
3,900 |
||||||
Y/Y % Growth |
35.8 |
% |
33.2 |
% |
35.3 |
% |
43.2 |
% |
42.8 |
% |
35.7 |
% |
||||||
Paid Memberships |
99.04 |
104.02 |
110.64 |
118.90 |
124.35 |
129.50 |
||||||||||||
Paid Net Additions |
4.67 |
4.99 |
6.62 |
8.26 |
5.45 |
5.15 |
||||||||||||
Total Memberships |
103.95 |
109.25 |
117.58 |
125.00 |
130.14 |
135.14 |
||||||||||||
Net Additions |
5.20 |
5.30 |
8.33 |
7.41 |
5.15 |
5.00 |
||||||||||||
US Streaming: |
||||||||||||||||||
Revenue |
$ |
1,505 |
$ |
1,547 |
$ |
1,630 |
$ |
1,820 |
$ |
1,893 |
$ |
1,930 |
||||||
Contribution Profit |
$ |
560 |
$ |
554 |
$ |
561 |
$ |
697 |
$ |
740 |
$ |
730 |
||||||
Contribution Margin |
37.2 |
% |
35.8 |
% |
34.4 |
% |
38.3 |
% |
39.1 |
% |
37.8 |
% |
||||||
Paid Memberships |
50.32 |
51.35 |
52.81 |
55.09 |
55.96 |
56.66 |
||||||||||||
Paid Net Additions |
0.95 |
1.02 |
1.47 |
2.28 |
0.87 |
0.70 |
||||||||||||
Total Memberships |
51.92 |
52.77 |
54.75 |
56.71 |
57.38 |
58.03 |
||||||||||||
Net Additions |
1.07 |
0.85 |
1.98 |
1.96 |
0.67 |
0.65 |
||||||||||||
International Streaming: |
||||||||||||||||||
Revenue |
$ |
1,165 |
$ |
1,327 |
$ |
1,550 |
$ |
1,782 |
$ |
1,921 |
$ |
1,970 |
||||||
Contribution Profit (Loss) |
$ |
(13 |
) |
$ |
62 |
$ |
135 |
$ |
272 |
$ |
298 |
$ |
290 |
|||||
Contribution Margin |
(1.1 |
)% |
4.7 |
% |
8.7 |
% |
15.3 |
% |
15.5 |
% |
14.7 |
% |
||||||
Paid Memberships |
48.71 |
52.68 |
57.83 |
63.82 |
68.39 |
72.85 |
||||||||||||
Paid Net Additions |
3.73 |
3.97 |
5.16 |
5.98 |
4.58 |
4.45 |
||||||||||||
Total Memberships |
52.03 |
56.48 |
62.83 |
68.29 |
72.76 |
77.11 |
||||||||||||
Net Additions |
4.14 |
4.45 |
6.36 |
5.46 |
4.47 |
4.35 |
||||||||||||
Consolidated: |
||||||||||||||||||
Net cash (used in) operating activities |
$ |
(535 |
) |
$ |
(420 |
) |
$ |
(488 |
) |
$ |
(237 |
) |
$ |
(518 |
) |
|||
Free Cash Flow |
$ |
(608 |
) |
$ |
(465 |
) |
$ |
(524 |
) |
$ |
(287 |
) |
$ |
(559 |
) |
|||
EBITDA |
$ |
190 |
$ |
273 |
$ |
313 |
$ |
534 |
$ |
563 |
||||||||
Shares (FD) |
446.3 |
447.4 |
448.1 |
450.4 |
451.6 |
|||||||||||||
Streaming Content Obligations* ($B) |
15.7 |
17.0 |
17.7 |
17.9 |
18.4 |
|||||||||||||
*Corresponds to our total known streaming content obligations as defined in our financial statements and related notes in our most recently filed SEC Form 10-K |
1 |
2 |
3 |
4 |
IR Contact:
|
PR Contact:
|
Spencer Wang |
Richard Siklos |
Vice President, Finance/IR & Corporate Development |
VP, Corporate Communications |
408 809-5360 |
408 540-2629 |
5 |
6 |
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, 2018 |
March 31, 2018 |
June 30, 2017 |
June 30, 2018 |
June 30, 2017 |
|||||||||||||||
Revenues |
$ |
3,907,270 |
$ |
3,700,856 |
$ |
2,785,464 |
$ |
7,608,126 |
$ |
5,422,099 |
|||||||||
Cost of revenues |
2,289,867 |
2,196,075 |
1,902,308 |
4,485,942 |
3,559,332 |
||||||||||||||
Marketing |
526,780 |
479,222 |
274,323 |
1,006,002 |
545,593 |
||||||||||||||
Technology and development |
317,213 |
300,730 |
267,083 |
617,943 |
524,191 |
||||||||||||||
General and administrative |
311,197 |
278,251 |
213,943 |
589,448 |
408,234 |
||||||||||||||
Operating income |
462,213 |
446,578 |
127,807 |
908,791 |
384,749 |
||||||||||||||
Other income (expense): |
|||||||||||||||||||
Interest expense |
(101,605 |
) |
(81,219 |
) |
(55,482 |
) |
(182,824 |
) |
(102,224 |
) |
|||||||||
Interest and other income (expense) |
68,028 |
(65,743 |
) |
(58,363 |
) |
2,285 |
(44,771 |
) |
|||||||||||
Income before income taxes |
428,636 |
299,616 |
13,962 |
728,252 |
237,754 |
||||||||||||||
Provision for (benefit from) income taxes |
44,287 |
9,492 |
(51,638 |
) |
53,779 |
(6,068 |
) |
||||||||||||
Net income |
$ |
384,349 |
$ |
290,124 |
$ |
65,600 |
$ |
674,473 |
$ |
243,822 |
|||||||||
Earnings per share: |
|||||||||||||||||||
Basic |
$ |
0.88 |
$ |
0.67 |
$ |
0.15 |
$ |
1.55 |
$ |
0.57 |
|||||||||
Diluted |
$ |
0.85 |
$ |
0.64 |
$ |
0.15 |
$ |
1.50 |
$ |
0.55 |
|||||||||
Weighted-average common shares outstanding: |
|||||||||||||||||||
Basic |
435,097 |
434,174 |
431,396 |
434,638 |
431,000 |
||||||||||||||
Diluted |
451,552 |
450,359 |
446,262 |
450,958 |
445,862 |
7 |
As of |
|||||||
June 30, 2018 |
December 31, 2017 |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
3,906,357 |
$ |
2,822,795 |
|||
Current content assets, net |
4,803,663 |
4,310,934 |
|||||
Other current assets |
636,869 |
536,245 |
|||||
Total current assets |
9,346,889 |
7,669,974 |
|||||
Non-current content assets, net |
12,292,070 |
10,371,055 |
|||||
Property and equipment, net |
349,646 |
319,404 |
|||||
Other non-current assets |
674,932 |
652,309 |
|||||
Total assets |
$ |
22,663,537 |
$ |
19,012,742 |
|||
Liabilities and Stockholders' Equity |
|||||||
Current liabilities: |
|||||||
Current content liabilities |
$ |
4,541,087 |
$ |
4,173,041 |
|||
Accounts payable |
448,219 |
359,555 |
|||||
Accrued expenses |
392,595 |
315,094 |
|||||
Deferred revenue |
697,740 |
618,622 |
|||||
Total current liabilities |
6,079,641 |
5,466,312 |
|||||
Non-current content liabilities |
3,604,158 |
3,329,796 |
|||||
Long-term debt |
8,342,067 |
6,499,432 |
|||||
Other non-current liabilities |
141,071 |
135,246 |
|||||
Total liabilities |
18,166,937 |
15,430,786 |
|||||
Stockholders' equity: |
|||||||
Common stock |
2,103,437 |
1,871,396 |
|||||
Accumulated other comprehensive loss |
(12,427 |
) |
(20,557 |
) |
|||
Retained earnings |
2,405,590 |
1,731,117 |
|||||
Total stockholders' equity |
4,496,600 |
3,581,956 |
|||||
Total liabilities and stockholders' equity |
$ |
22,663,537 |
$ |
19,012,742 |
8 |
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, 2018 |
March 31, 2018 |
June 30, 2017 |
June 30, 2018 |
June 30, 2017 |
|||||||||||||||
Cash flows from operating activities: |
|||||||||||||||||||
Net income |
$ |
384,349 |
$ |
290,124 |
$ |
65,600 |
$ |
674,473 |
$ |
243,822 |
|||||||||
Adjustments to reconcile net income to net cash used in operating activities: |
|||||||||||||||||||
Additions to streaming content assets |
(3,033,721 |
) |
(2,986,747 |
) |
(2,664,421 |
) |
(6,020,468 |
) |
(5,013,087 |
) |
|||||||||
Change in streaming content liabilities |
288,474 |
378,885 |
514,890 |
667,359 |
881,147 |
||||||||||||||
Amortization of streaming content assets |
1,817,817 |
1,748,844 |
1,550,794 |
3,566,661 |
2,856,477 |
||||||||||||||
Amortization of DVD content assets |
11,154 |
11,134 |
16,511 |
22,288 |
35,109 |
||||||||||||||
Depreciation and amortization of property, equipment and intangibles |
19,736 |
19,041 |
18,551 |
38,777 |
33,600 |
||||||||||||||
Stock-based compensation expense |
81,232 |
68,395 |
44,028 |
149,627 |
88,916 |
||||||||||||||
Other non-cash items |
13,921 |
8,209 |
11,519 |
22,130 |
33,185 |
||||||||||||||
Foreign currency remeasurement loss (gain) on long-term debt |
(85,410 |
) |
41,080 |
64,220 |
(44,330 |
) |
64,220 |
||||||||||||
Deferred taxes |
(9,539 |
) |
(22,049 |
) |
(20,702 |
) |
(31,588 |
) |
(47,466 |
) |
|||||||||
Changes in operating assets and liabilities: |
|||||||||||||||||||
Other current assets |
(25,564 |
) |
(55,905 |
) |
(80,199 |
) |
(81,469 |
) |
(105,601 |
) |
|||||||||
Accounts payable |
7,733 |
74,083 |
(12,439 |
) |
81,816 |
(23,439 |
) |
||||||||||||
Accrued expenses |
(52,851 |
) |
119,049 |
(48,042 |
) |
66,198 |
45,500 |
||||||||||||
Deferred revenue |
23,848 |
55,270 |
46,609 |
79,118 |
61,830 |
||||||||||||||
Other non-current assets and liabilities |
40,582 |
13,830 |
(41,447 |
) |
54,412 |
(32,597 |
) |
||||||||||||
Net cash used in operating activities |
(518,239 |
) |
(236,757 |
) |
(534,528 |
) |
(754,996 |
) |
(878,384 |
) |
|||||||||
Cash flows from investing activities: |
|||||||||||||||||||
Acquisition of DVD content assets |
(12,552 |
) |
(10,796 |
) |
(7,624 |
) |
(23,348 |
) |
(32,996 |
) |
|||||||||
Purchases of property and equipment |
(27,323 |
) |
(37,170 |
) |
(65,231 |
) |
(64,493 |
) |
(117,754 |
) |
|||||||||
Change in other assets |
(441 |
) |
(1,786 |
) |
(1,064 |
) |
(2,227 |
) |
(1,833 |
) |
|||||||||
Purchases of short-term investments |
— |
— |
(14,246 |
) |
— |
(72,020 |
) |
||||||||||||
Proceeds from sale of short-term investments |
— |
— |
14,128 |
— |
69,876 |
||||||||||||||
Proceeds from maturities of short-term investments |
— |
— |
17,605 |
— |
22,705 |
||||||||||||||
Net cash used in investing activities |
(40,316 |
) |
(49,752 |
) |
(56,432 |
) |
(90,068 |
) |
(132,022 |
) |
|||||||||
Cash flows from financing activities: |
|||||||||||||||||||
Proceeds from issuance of debt |
1,900,000 |
— |
1,420,510 |
1,900,000 |
1,420,510 |
||||||||||||||
Debt issuance costs |
(16,992 |
) |
— |
(15,013 |
) |
(16,992 |
) |
(15,013 |
) |
||||||||||
Proceeds from issuance of common stock |
26,936 |
56,335 |
14,826 |
83,271 |
39,004 |
||||||||||||||
Other financing activities |
(532 |
) |
(321 |
) |
63 |
(853 |
) |
124 |
|||||||||||
Net cash provided by financing activities |
1,909,412 |
56,014 |
1,420,386 |
1,965,426 |
1,444,625 |
||||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(36,340 |
) |
7,177 |
11,527 |
(29,163 |
) |
16,982 |
||||||||||||
Net increase in cash, cash equivalents, and restricted cash |
1,314,517 |
(223,318 |
) |
840,953 |
1,091,199 |
451,201 |
|||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period |
2,599,477 |
2,822,795 |
1,077,824 |
2,822,795 |
1,467,576 |
||||||||||||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
3,913,994 |
$ |
2,599,477 |
$ |
1,918,777 |
$ |
3,913,994 |
$ |
1,918,777 |
|||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, 2018 |
March 31, 2018 |
June 30, 2017 |
June 30, 2018 |
June 30, 2017 |
|||||||||||||||
Non-GAAP free cash flow reconciliation: |
|||||||||||||||||||
Net cash used in operating activities |
$ |
(518,239 |
) |
$ |
(236,757 |
) |
$ |
(534,528 |
) |
$ |
(754,996 |
) |
$ |
(878,384 |
) |
||||
Acquisition of DVD content assets |
(12,552 |
) |
(10,796 |
) |
(7,624 |
) |
(23,348 |
) |
(32,996 |
) |
|||||||||
Purchases of property and equipment |
(27,323 |
) |
(37,170 |
) |
(65,231 |
) |
(64,493 |
) |
(117,754 |
) |
|||||||||
Change in other assets |
(441 |
) |
(1,786 |
) |
(1,064 |
) |
(2,227 |
) |
(1,833 |
) |
|||||||||
Non-GAAP free cash flow |
$ |
(558,555 |
) |
$ |
(286,509 |
) |
$ |
(608,447 |
) |
$ |
(845,064 |
) |
$ |
(1,030,967 |
) |
9 |
As of / Three Months Ended |
As of/ Six Months Ended |
||||||||||||||||||
June 30, 2018 |
March 31, 2018 |
June 30, 2017 |
June 30, 2018 |
June 30, 2017 |
|||||||||||||||
Domestic Streaming |
|||||||||||||||||||
Total memberships at end of period |
57,379 |
56,705 |
51,921 |
57,379 |
51,921 |
||||||||||||||
Paid memberships at end of period |
55,959 |
55,087 |
50,323 |
55,959 |
50,323 |
||||||||||||||
Revenues |
$ |
1,893,222 |
$ |
1,820,019 |
$ |
1,505,499 |
$ |
3,713,241 |
$ |
2,975,541 |
|||||||||
Cost of revenues |
925,703 |
894,873 |
831,962 |
1,820,576 |
1,581,450 |
||||||||||||||
Marketing |
227,961 |
228,022 |
113,608 |
455,983 |
228,646 |
||||||||||||||
Contribution profit |
739,558 |
697,124 |
559,929 |
1,436,682 |
1,165,445 |
||||||||||||||
International Streaming |
|||||||||||||||||||
Total memberships at end of period |
72,762 |
68,290 |
52,031 |
72,762 |
52,031 |
||||||||||||||
Paid memberships at end of period |
68,395 |
63,815 |
48,713 |
68,395 |
48,713 |
||||||||||||||
Revenues |
$ |
1,921,144 |
$ |
1,782,086 |
$ |
1,165,228 |
$ |
3,703,230 |
$ |
2,211,427 |
|||||||||
Cost of revenues |
1,324,240 |
1,258,809 |
1,017,612 |
2,583,049 |
1,864,929 |
||||||||||||||
Marketing |
298,819 |
251,200 |
160,715 |
550,019 |
316,947 |
||||||||||||||
Contribution profit (loss) |
298,085 |
272,077 |
(13,099 |
) |
570,162 |
29,551 |
|||||||||||||
Domestic DVD |
|||||||||||||||||||
Total memberships at end of period |
2,999 |
3,167 |
3,758 |
2,999 |
3,758 |
||||||||||||||
Paid memberships at end of period |
2,971 |
3,138 |
3,692 |
2,971 |
3,692 |
||||||||||||||
Revenues |
$ |
92,904 |
$ |
98,751 |
$ |
114,737 |
$ |
191,655 |
$ |
235,131 |
|||||||||
Cost of revenues |
39,924 |
42,393 |
52,734 |
82,317 |
112,953 |
||||||||||||||
Contribution profit |
52,980 |
56,358 |
62,003 |
109,338 |
122,178 |
||||||||||||||
Consolidated |
|||||||||||||||||||
Revenues |
$ |
3,907,270 |
$ |
3,700,856 |
$ |
2,785,464 |
$ |
7,608,126 |
$ |
5,422,099 |
|||||||||
Cost of revenues |
2,289,867 |
2,196,075 |
1,902,308 |
4,485,942 |
3,559,332 |
||||||||||||||
Marketing |
526,780 |
479,222 |
274,323 |
1,006,002 |
545,593 |
||||||||||||||
Contribution profit |
1,090,623 |
1,025,559 |
608,833 |
2,116,182 |
1,317,174 |
||||||||||||||
Other operating expenses |
628,410 |
578,981 |
481,026 |
1,207,391 |
932,425 |
||||||||||||||
Operating income |
462,213 |
446,578 |
127,807 |
908,791 |
384,749 |
||||||||||||||
Other expense |
(33,577 |
) |
(146,962 |
) |
(113,845 |
) |
(180,539 |
) |
(146,995 |
) |
|||||||||
Provision for (benefit from) income taxes |
44,287 |
9,492 |
(51,638 |
) |
53,779 |
(6,068 |
) |
||||||||||||
Net income |
$ |
384,349 |
$ |
290,124 |
$ |
65,600 |
$ |
674,473 |
$ |
243,822 |
10 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
March 31, 2018 |
June 30, 2018 |
|||||||||||||||
Non-GAAP Adjusted EBITDA reconciliation: |
|||||||||||||||||||
GAAP net income |
$ |
65,600 |
$ |
129,590 |
$ |
185,517 |
$ |
290,124 |
$ |
384,349 |
|||||||||
Add: |
|||||||||||||||||||
Other expense |
113,845 |
92,390 |
113,973 |
146,962 |
33,577 |
||||||||||||||
Provision for (benefit from) income taxes |
(51,638 |
) |
(13,353 |
) |
(54,187 |
) |
9,492 |
44,287 |
|||||||||||
Depreciation and amortization of property, equipment and intangibles |
18,551 |
19,238 |
19,073 |
19,041 |
19,736 |
||||||||||||||
Stock-based compensation expense |
44,028 |
44,763 |
48,530 |
68,395 |
81,232 |
||||||||||||||
Adjusted EBITDA |
$ |
190,386 |
$ |
272,628 |
$ |
312,906 |
$ |
534,014 |
$ |
563,181 |
11 |