- "After a challenging first half, we believe we’re on a path to reaccelerate growth. The key is pleasing members."
- "We think our bingeable release model helps drive substantial engagement, especially for newer titles."
- "Our existing plans remain ad free."
- To stop providing subs forecasts from 23Q1
- Strong USD impact 2022E $1b on rev, $0.8b on oper income; oper margin target (19-20%) on track but lower if USD remains above Jan 2022 level
- Targets FCF: 2022 $1b (+/- few 100m), 2023 substantial growth
- Growth rates excluding currency effects:
- 22Q3
- Total streamers (223m) +4.5% (lowest ever)
- ARM ($11.85) +8%
- Revenues ($7.93b) +13%
- 22Q4E
- Total streamers (228m) +2.6%
- ARM +6%
- Revenues ($7.78b) +9%
- Margins
- Gross margin (after content amortisation) 39.6% (down from a peak 21H1).
- Marketing expense 7.2% of revenues (roughly at a low)
- Technology & Development roughly flat at ~8.5% of revenues
- Operating margin 19.3%
- Cash flow
- Cash spent on streaming content $4.52b in Q3, $17.8b TTM (stable for 4 quarters)
- Cash spending-to-amortisation ratio 1.24x (peaked at 1,75x in 19Q4)
- Cash spent per net add $1,884 (peak)
- Cash spent per retained sub $20.4 (longer term roughly flat)
- Cash & equivalents $6.11b. Last debt issue 20Q2, then bottomed at $5.82b in 22Q2.
Games
- "We now have 35 games on service (all included in every Netflix subscription without in-game ads or in-app purchases) and we’re seeing some encouraging signs of gameplay leading to higher retention." + 55 games in development
- Animal Logic acquisition [see 220719] to impact 22Q4 cashflow
- Plans new game studio in S California
- Considers cloud gaming service
Password sharing
- To start charging sharers extra for borrowers from early 2023.
- Borrowers may create own subscription, perhaps the Basic With Ads tier.
- Borrowers can migrate their profiles using Profile Transfer.
Main points
- Back to subscriber growth.
- Heavy USD impact.
- Focus on customer: content (originals) & binge viewing.
- Games becoming more important.
- Password sharing attacked with charging plan, cheaper tier and Profile Transfer.
- Margins could be expanded, as scale builds, but games delay the process.
- Content spending stabilising in absolute terms.
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