2021 Cash Flow Analysis for Netflix Inc NFLX

Netflix, Inc. is a leading entertainment services company that provides streaming media and video-on-demand online. The company is headquartered in Los Gatos, California, and was founded in 1997. Netflix is renowned for its vast library of films and television series, including those produced in-house, and its global subscriber base.

The cash flow statement illustrates the cash or cash equivalents a company has generated and utilized over a specific period. It is divided into three sections: operating activities, investing activities, and financing activities. This statement is crucial for investors and analysts to comprehend how a company manages its cash resources.

How to read the chart

The chart above shows the cash flow of Netflix, Inc. in 2021. The width of the bars represents the amount of cash flow, with wider bars indicating larger amounts.

We start on the left with the company's cash position at the beginning of the year. Because the cash decreased during the year, a part of that cash was used for financing and investing activities. The cash flow from operating activities is relatively modest, while the cash flow from investing activities is negative, indicating that the company spent more on new investments than it received from selling assets or investments.

The cash flow from financing activities is also negative, reflecting that the company paid out more cash for purposes such as debt repayments or other financial obligations. After accounting for the change in cash, including the effect of exchange rates, we end on the right with the company's cash position at the end of the year.

Real-Time Cash Flow Counter

To get a sense of the scale of Netflix, Inc.'s cash flow, we have created a real-time counter that simulates the company's cash flow for 2021. The counter starts when you scroll to this section and runs at the same speed as the company's reported cash flow.

This is not a live counter of real cash flows as they happen, but a simulation based on the company's reported cash flow for 2021. The counter is meant to give you a sense of the scale of the company's cash flow and how quickly it moves.

Cash Flow Statement

In 2021, Netflix, Inc. generated $392.61 million in cash from operating activities, spent $1,339.85 million on investing activities, and used $1,149.78 million in financing activities. Consequently, the company's cash balance decreased by approximately $2,183.76 million during the year, including the effect of exchange rates.

The company's beginning cash balance was $8,238.87 million. Typically, this amount includes cash and cash equivalents, such as short-term investments that can be easily converted into cash. The company's ending cash balance was $6,055.11 million.

The company's capital expenditures for the year were $524.59 million. This amount represents the cash the company spent on investments in property, plant, and equipment. Subtracting capital expenditures from cash flow from operations gives the company's free cash flow, which was negative $131.98 million in 2021. This amount represents the cash the company has available to pay dividends, repurchase stock, or make other investments.

Summary

Netflix, Inc.'s cash flow in 2021 highlights several interesting aspects. The company experienced a significant decrease in cash balance, driven by substantial outflows in both investing and financing activities. Despite positive cash flow from operations, the negative free cash flow indicates that Netflix invested heavily in its content and infrastructure, which is typical for a company focused on growth and expansion. The impact of exchange rates further contributed to the reduction in cash reserves, underscoring the challenges of operating in a global market.