Netflix, Inc. (NASDAQ: NFLX) stock rose over 13.8% in the pre-market session of Jan 20th, 2021 (Source: Google finance) after the company said that its global subscriber rolls crossed 200 million at the end of 2020 and projected it will no longer need to borrow billions of dollars to finance its broad slate of TV shows and movies. The company plans to return excess cash to shareholders through share buybacks. It plans to maintain $10 billion to $15 billion in gross debt. From October to December, the company had signed up 8.5 million new paying streaming customers as it debuted widely praised series “The Queen’s Gambit” and “Bridgerton,” a new season of “The Crown” and the George Clooney film “The Midnight Sky.” The additions beaten Wall Street estimates of 6.1 million, according to Refinitiv data, despite increase in competition and a US price increase. Now, NFLX is working to add customers around the globe as big media companies’ amp up competition.
Meanwhile, Netflix said most of its growth in 2020, in which 83% of new customers came from outside the United States and Canada. Forty-one percent joined from Europe, the Middle East and Africa. For January through March, Netflix expects that it would sign up 6 million more global subscribers, behind analyst expectations of roughly 8 million.
NFLX in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.19, missing the analysts’ estimates for the adjusted earnings per share of $1.38, according to Zacks Investment Research. The company had reported the adjusted revenue of $6.64 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $6.63 billion. Net cash generated by operating activities in Q4 was -$138 million compared to -$1.5 billion in the prior year period. Free cash flow (FCF) for the quarter was -$284 million vs. -$1.7 billion in Q4‘19, bringing full year 2020 free cash flow to +$1.9 billion vs. -$3.3 billion in 2019. Combined with the $8.2 billion cash balance and the $750m undrawn credit facility, the company anticipates that it no longer have a need to raise external financing for the day-to-day operations.
For the first quarter ending in April 2021, Netflix expects revenue to be in the range of $7.13 billion, while the analysts surveyed by Zacks had expected revenue of $6.91 billion.
For the full year 2021, the company currently expects free cash flow to be around break even (vs. the prior expectation for -$1 billion to break even).