Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Netflix Inc. pages available for free this week:
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Netflix Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Netflix Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial trajectory between 2021 and 2025 reflects a transition from economic value destruction to value creation. Despite a period of negative economic profit, a significant recovery is observed, culminating in a positive economic profit by the end of the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A fluctuating but ultimately upward trend is evident in NOPAT. After a decline from 6,078,640 thousand US$ in 2021 to 4,988,408 thousand US$ in 2022, the figure grew consistently, reaching 11,242,756 thousand US$ by 2025. The most substantial acceleration occurred between 2023 and 2025, indicating a marked improvement in operational efficiency and profitability.
- Cost of Capital
- The cost of capital exhibited a steady increase for the majority of the period, rising from 23.70% in 2021 to a peak of 25.18% in 2024, before stabilizing slightly at 25.10% in 2025. This upward trend suggests an increasing hurdle rate that the company had to overcome to generate economic value.
- Invested Capital
- Invested capital shows a consistent expansion over the five-year span. Starting at 34,785,312 thousand US$ in 2021, the capital base grew annually to reach 43,678,946 thousand US$ by 2025. This indicates ongoing investment in the business infrastructure and assets to support long-term growth.
- Economic Profit
- Economic profit remained negative from 2021 through 2024, signifying that the NOPAT was insufficient to cover the imputed cost of the invested capital. The deficit peaked in 2022 at -4,090,759 thousand US$. However, a strong recovery trend followed, with the deficit narrowing significantly in 2024 and finally shifting to a positive value of 280,038 thousand US$ in 2025. This shift indicates that the business began generating returns in excess of its cost of capital in the final year of the period.
Net Operating Profit after Taxes (NOPAT)
Netflix Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
Net income and net operating profit after taxes (NOPAT) exhibited fluctuating performance over the five-year period. While both metrics moved in similar directions, NOPAT consistently reported higher values than net income throughout the observed timeframe.
- Overall Trend
- Both net income and NOPAT demonstrate a general upward trend when considering the beginning and end of the period. However, this progression was not linear, with a notable dip in 2022 before recovering and accelerating in subsequent years.
- 2021 to 2022
- A decrease is observed in both net income and NOPAT from 2021 to 2022. Net income declined from US$5,116,228 thousand to US$4,491,924 thousand, representing a decrease of approximately 12.1%. NOPAT experienced a more substantial decrease, falling from US$6,078,640 thousand to US$4,988,408 thousand, a reduction of roughly 18.2%. This suggests a potential weakening of core operational profitability relative to overall net earnings during this period.
- 2022 to 2023
- Both metrics showed recovery from 2022 to 2023. Net income increased to US$5,407,990 thousand, while NOPAT rose to US$5,437,546 thousand. The increase in NOPAT was more pronounced than the increase in net income, indicating improved operational efficiency or a shift in the composition of earnings.
- 2023 to 2025
- A period of strong growth is evident from 2023 to 2025. Net income increased significantly, reaching US$10,981,201 thousand in 2025. NOPAT mirrored this growth, reaching US$11,242,756 thousand in 2025. The rate of increase accelerated in these years, suggesting successful strategic initiatives or favorable market conditions. The difference between NOPAT and net income widened during this period, potentially due to changes in non-operating items or tax implications.
- NOPAT vs. Net Income
- Throughout the entire period, NOPAT values consistently exceeded net income values. This difference likely reflects the impact of items such as interest expense and taxes, which are subtracted from NOPAT to arrive at net income. The widening gap between NOPAT and net income in later years warrants further investigation to understand the underlying drivers.
Cash Operating Taxes
Netflix Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The provision for income taxes and cash operating taxes both demonstrate a consistent upward trend over the five-year period. However, the magnitude of increase differs between the two metrics, and the relationship between them evolves over time.
- Provision for Income Taxes
- The provision for income taxes increased from US$723.875 million in 2021 to US$1.741 billion in 2025. The growth was relatively steady from 2021 to 2023, increasing by approximately 7% and 3% respectively. A significant acceleration in growth is observed between 2023 and 2024, with an increase of 57%, and continues at a substantial rate into 2025, growing by 39%.
- Cash Operating Taxes
- Cash operating taxes exhibited a similar upward trajectory, rising from US$702.867 million in 2021 to US$2.311 billion in 2025. The increase from 2021 to 2022 was substantial, at 51%. Growth continued at a strong pace from 2022 to 2023 (36%) and 2023 to 2024 (35%). The rate of increase slows slightly from 2024 to 2025, at 18%.
- Relationship between Provision and Cash Taxes
- In 2021, the difference between the provision for income taxes and cash operating taxes was relatively small, at approximately US$21 million. This difference widened considerably in 2022, reaching US$356.559 million. The gap continued to expand in 2023, reaching US$647.772 million, and further increased to US$701.707 million in 2024. However, the difference narrowed somewhat in 2025 to US$570.000 million. This suggests a changing dynamic in the timing of tax payments relative to reported income tax expense.
The accelerating growth in both the provision for income taxes and cash operating taxes, particularly from 2023 onwards, warrants further investigation. The widening, then slight narrowing, gap between these two figures suggests potential shifts in deferred tax assets or liabilities, or changes in the utilization of tax credits or loss carryforwards. The substantial increases in both metrics indicate a growing tax burden, which could impact future profitability and cash flow.
Invested Capital
Netflix Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of capital work-in-progress.
7 Subtraction of short-term investments.
The reported invested capital demonstrates a consistent upward trend over the five-year period. Total reported debt & leases and stockholders’ equity both contribute to this increase, though with differing patterns. An examination of these components reveals insights into the company’s capital structure evolution.
- Invested Capital
- Invested capital increased from US$34,785,312 thousand in 2021 to US$43,678,946 thousand in 2025. This represents a cumulative growth of approximately 25.6% over the period. The growth rate appears to be accelerating, with larger absolute increases observed in later years.
- Total Reported Debt & Leases
- Total reported debt & leases initially decreased from US$18,116,570 thousand in 2021 to US$16,931,564 thousand in 2022. However, it subsequently increased to US$17,994,974 thousand in 2024 before decreasing slightly to US$16,975,837 thousand in 2025. While fluctuations are present, the level remains relatively stable, fluctuating within a range of approximately US$1.1 million thousand over the five years.
- Stockholders’ Equity
- Stockholders’ equity exhibited a consistent upward trajectory, increasing from US$15,849,248 thousand in 2021 to US$26,615,488 thousand in 2025. This represents a cumulative growth of approximately 68.1%. The rate of increase appears to be accelerating, particularly between 2023 and 2025.
The increasing invested capital, coupled with the growth in stockholders’ equity and relatively stable debt levels, suggests a reliance on equity financing to fund growth. The acceleration in both invested capital and stockholders’ equity in the later years of the period indicates potentially increased investment activity or profitability contributing to retained earnings. The slight decrease in debt in the final year could indicate a strategic decision to reduce leverage or optimize the capital structure.
Cost of Capital
Netflix Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Netflix Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory over the observed five-year period indicates a significant transition from economic value destruction to value creation. A period of deepening losses in economic profit was followed by a consistent recovery, ultimately resulting in a positive economic outcome by the end of 2025.
- Economic Profit Trends
- Economic profit exhibited a downward movement between 2021 and 2022, falling from -2,164,377 thousand USD to a nadir of -4,090,759 thousand USD. Following this low point, a sustained recovery trend is evident, with the deficit narrowing to -3,907,507 thousand USD in 2023 and -1,649,761 thousand USD in 2024. This recovery culminated in a shift to positive territory in 2025, reaching 280,038 thousand USD.
- Invested Capital Expansion
- Invested capital demonstrates a steady and uninterrupted increase throughout the period. Starting at 34,785,312 thousand USD in 2021, the capital base grew to 43,678,946 thousand USD by 2025. This continuous expansion suggests a consistent commitment to capital investment regardless of the short-term fluctuations in economic profit.
- Economic Spread Ratio Performance
- The economic spread ratio closely tracks the performance of economic profit, reflecting the gap between the return on invested capital and the cost of capital. The ratio deteriorated from -6.22% in 2021 to -10.83% in 2022. A subsequent upward trend is observed, with the ratio improving to -10.30% in 2023 and -4.05% in 2024. By 2025, the ratio turned positive at 0.64%, signaling that the entity's returns have surpassed its cost of capital.
The correlation between the rising economic spread ratio and the eventual positive economic profit suggests an improvement in operational efficiency and capital utilization. The ability to move from a spread of -10.83% to 0.64% while simultaneously increasing the total invested capital indicates a successful optimization of the capital structure and revenue generation capabilities.
Economic Profit Margin
Netflix Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial trajectory from 2021 through 2025 indicates a significant recovery in economic value creation, transitioning from substantial value destruction to a positive economic profit position. This turnaround occurred alongside a period of consistent and accelerating revenue growth.
- Adjusted Revenue Growth
- A sustained upward trend is observed in adjusted revenues, which increased from 29,789,194 thousand USD in 2021 to 45,437,953 thousand USD by 2025. The growth remained steady throughout the period, reflecting a consistent expansion of the top line.
- Economic Profit Volatility and Recovery
- Economic profit experienced a sharp decline between 2021 and 2022, reaching a trough of -4,090,759 thousand USD. Following this low point, a recovery phase began in 2023, with losses narrowing significantly to -1,649,761 thousand USD in 2024. The trend culminated in 2025 with the achievement of a positive economic profit of 280,038 thousand USD, signaling that the company began generating returns in excess of its cost of capital.
- Economic Profit Margin Evolution
- The economic profit margin mirrors the volatility of the absolute economic profit. The margin deteriorated from -7.27% in 2021 to a peak deficit of -12.92% in 2022. Subsequently, a corrective trend emerged, with the margin improving to -11.53% in 2023 and -4.22% in 2024. By December 31, 2025, the margin turned positive at 0.62%, indicating a successful alignment of operational returns with the required capital charge.
The correlation between rising adjusted revenues and the improving economic profit margin suggests that the transition to positive economic value was driven by both scale effects and improved operational efficiency. The shift from a -12.92% margin in 2022 to a positive 0.62% in 2025 represents a comprehensive reversal of the value-destruction trend observed in the first half of the analyzed period.