Netflix Inc. (NASDAQ:NFLX)

The cash flow statement reveals a dynamic period for the company, marked by significant fluctuations in operating, investing, and financing activities over the five-year span. Net income demonstrates a generally positive trend, increasing substantially from 2021 to 2025, although with a dip in 2022. However, the relationship between net income and net cash provided by operating activities is complex, heavily influenced by non-cash adjustments, particularly additions to content assets and changes in content liabilities.

Operating Activities

Net cash provided by operating activities exhibits considerable volatility. While starting at US$392.610 thousand in 2021 and peaking at US$7,274.301 thousand in 2023, it experienced a decline in 2024 and 2025. This fluctuation is largely attributable to substantial adjustments to reconcile net income, specifically the significant and consistently negative additions to content assets. The change in content liabilities also plays a role, shifting from positive contributions in 2021 and 2022 to negative impacts in subsequent years. Deferred income taxes show a consistent negative impact, increasing in magnitude over time.

Investing Activities

Investing activities consistently represent a net cash outflow, although the magnitude varies. Purchases of property and equipment remain relatively stable. A significant outflow from purchases of investments is observed in 2022 and 2023, followed by substantial inflows from the maturities and sales of investments in 2023 and 2025. Acquisitions contributed to cash outflows in 2021, 2022, and 2025. Overall, net cash used in investing activities decreased in 2023 before increasing again in 2024, and then decreasing in 2025.

Financing Activities

Financing activities consistently resulted in net cash outflows throughout the period. Repurchases of common stock represent the largest drain on cash, increasing substantially from 2021 to 2025. Repayments of debt also contribute to cash outflows. Proceeds from the issuance of common stock and debt provide some offsetting inflows, but are insufficient to counteract the outflows from stock repurchases and debt repayments. The impact of taxes paid related to net share settlement of equity awards is also a consistent, though smaller, outflow.

Cash Position

Despite the fluctuations in operating, investing, and financing activities, the company’s cash, cash equivalents, and restricted cash demonstrate a general upward trend, increasing from US$8,238.870 thousand in 2021 to US$9,039.194 thousand in 2025. However, there was a decrease in 2022 and 2023. The net increase (decrease) in cash mirrors the volatility of the underlying cash flow components, with a significant increase in 2023 and a more moderate increase in 2025.

In summary, the company’s cash flow statement reflects a business model requiring substantial investment in content, as evidenced by the large additions to content assets. While net income has grown, the conversion of that income into operating cash flow is significantly impacted by these content-related investments. Financing activities are heavily geared towards returning capital to shareholders through stock repurchases, contributing to consistent net cash outflows. The overall cash position has improved, but remains sensitive to the dynamics of content investment and capital allocation strategies.