NFLX Profit Margins
Gross, Operating & Net Margin Analysis for Netflix Inc
Margin Quality
Strong
Current Profit Margins
Gross Margin
46.1%
$17.96B gross profit
Operating Margin
26.7%
$10.42B operating income
Net Profit Margin
22.3%
$8.71B net income
5-Year Margin Trends
What Margins Indicate About NFLX
Business Quality
Moderate gross margins indicate Netflix Inc operates in a competitive market with balanced pricing dynamics.
Operational Efficiency
Expanding operating margins show Netflix Inc is improving operational leverage and cost management.
Profitability
Net margins above 15% demonstrate excellent profitability and suggest strong competitive positioning.
Investment Implications
Mixed margin trends require deeper analysis to understand underlying business dynamics and sustainability.
Understanding Profit Margins
Gross Margin
(Revenue - Cost of Goods Sold) / Revenue. Measures pricing power and production efficiency before operating expenses.
Operating Margin
Operating Income / Revenue. Shows profitability from core operations after all operating expenses but before interest and taxes.
Net Profit Margin
Net Income / Revenue. The bottom line - shows how much profit the company keeps from each dollar of revenue after all expenses.
Analyze NFLX Profitability
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Frequently Asked Questions
What is NFLX's profit margin?
NFLX (Netflix Inc) has a net profit margin of 22.3%, meaning the company keeps $0.22336962115246067 in profit for every dollar of revenue. This represents a change from the previous year's net margin of 22.3%.
What is NFLX's gross margin?
NFLX's gross margin is 46.1%. Gross margin measures the percentage of revenue remaining after subtracting the cost of goods sold. A moderate gross margin like this reflects the competitive dynamics of the Communication Services.
What is NFLX's operating margin?
NFLX has an operating margin of 26.7%. Operating margin shows profitability after operating expenses but before interest and taxes. The 26.7% year-over-year improvement suggests better operational efficiency.
Are NFLX's profit margins good?
NFLX's margins are considered strong. With a gross margin of 46.1% and net margin of 22.3%, Netflix Inc demonstrates strong pricing power and operational efficiency.
How do profit margins affect NFLX stock?
Profit margins are a key indicator of NFLX's business quality and competitive position. High margins suggest strong competitive advantages and pricing power, which typically support premium valuations. Expanding margins often lead to stock price appreciation, while contracting margins can signal competitive pressures.
What drives NFLX's profit margins?
NFLX's profit margins are influenced by several factors: pricing power vs competitors, operational efficiency, scale advantages, input costs (materials, labor), Entertainment-specific dynamics, and management execution. The significant expansion in gross margin suggests changes in these underlying drivers.
Disclaimer: Margin analysis is based on reported financial statements and should be compared to industry peers for context. Different sectors have structurally different margin profiles. This information is for educational purposes only and should not be considered financial advice.