Netflix filed its latest quarterly report last week, and we first were poking around its Commitments and Contingencies disclosures to see what leasing obligations the company might have.
Almost immediately, however, we stumbled upon a different commitment Netflix reports: streaming content obligations. That makes sense, given that Netflix has huge licensing and royalty expenses to stream all that content to its customers.
We just weren’t prepared for the staggering size of Netflix’ streaming content obligations — more than $18.6 billion dollars, as of Sept. 30.
How fast have those obligations been growing, we wondered? And were Netflix revenue and income keeping pace?
Answering those questions is actually quite easy in Calcbench. Here’s how we did it.
First, we saw that $18.6 billion amount in Netflix’ disclosures. Of course that figure is a number, so as always, we could use the Calcbench Trace feature to find where that number comes from. We simply moved our cursor over the $18.6 billion, and several boxes magically appeared. See Figure 1, below.
In the lower box, you get an option called “Show Tag History” (circled in red). Click on that option, and a display will appear that lists the values for that specific financial item as far back as Calcbench has the data. In our case here, we could see the history for “PurchaseObligation” that Netflix had reported, as far back as second quarter 2012.
We wanted more, however. So we went to the other box that magically appeared above the $18.6 billion (circled in blue) giving us the “Export History” option. We pressed that, and blammo! Calcbench downloaded all that data into an Excel spreadsheet for us.
Then we just worked in Excel to create the chart below for you to see. It shows that obligations rose by 293 percent — from $6.38 billion to $18.6 billion — over the last six years. Wow. (See Chart 1, below.)
That’s a lot of obligation, so we then wanted to see whether Netflix’s revenue and operating income were growing at comparable rates. Yes, we could use the Trace feature and Export History option two more times, but we were too lazy to do all that again twice.
Instead, we went to the Data Query Tool. There, we could set our search range for Q2-2012 through Q3-2018, and then select revenue and operating income from the choices on the Income Statement list. (See Figure 2, below.) Scroll to the bottom of the page, press the Export to Excel button, and blammo again! Now we had all the quarterly data for both items.
Then it was just a matter of putting that data on charts again. We found that revenue rose 373 percent, from $1.07 billion to $4 billion last quarter (see Chart 2, below); and operating income rose more than 800 percent — from $57.1 million to $480.7 million (see Chart 3, below).
Now, revenue and operating income do fluctuate more than streaming obligations, but that’s no surprise. Spending obligations are often dictated by contracts with orderly payment schedules, while revenue and operating income are subject to the whims of customers and changes in operations costs.
Any way you cut it, however, you have to give Netflix its due. The company might be racking up expenses at a brisk pace, but sales and income are moving even faster.
And you can confirm all that multiple ways through Calcbench.
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