Netflix reported earnings for the fourth quarter of 2020 after the bell on Tuesday, announcing it is “very close” to being free cash flow positive and is considering stock buybacks. This year, it expects to be around break even on cash flow.
The stock was up about 10% after hours.
Here are the key numbers:
- Earnings per share (EPS): $1.19 vs $1.39 expected, according to Refinitiv survey of analysts
- Revenue: $6.64 billion vs $6.626 billion expected, according to Refinitiv
- Global paid net subscriber additions: 8.5 million vs 6.47 million expected, according to StreetAccount
Netflix handily beat estimates for global paid net subscriber additions, reporting 8.5 million versus the 6.47 million analysts anticipated, according to StreetAccount. Netflix also beat estimates for revenue but fell short on earnings per share.
Netflix’s expectation of soon becoming free cash flow positive would bring to life the bull case for the stock. Netflix said it would no longer need external financing and would even explore returning cash to shareholders.
Netflix hasn’t made such a move since 2011, a pivotal year in the company’s shift from DVDs to streaming.
The company said it intends to pay down more of its debt as well. It’s raised $15 billion in debt since 2011 and currently has $8.2 billion cash on hand.
Netflix has been free cash flow positive for the past three quarters, though executives mostly credited that as an effect of postponed production during the pandemic. The company anticipated free cash flow would be slightly negative in the last quarter of 2020 as production restarts in some regions.
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