Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Netflix Inc., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
The analysis of the annual financial data over the period from 2020 to 2024 reveals notable trends regarding profitability and efficiency metrics.
- Gross Profit Margin
- The gross profit margin exhibited a generally positive trend, starting at 38.89% in 2020 and increasing to 46.06% by 2024. There was a slight dip to 39.37% in 2022, followed by recovery and improvement indicating enhanced cost management or pricing strategies over the years.
- Operating Profit Margin
- The operating profit margin similarly showed improvement from 18.34% in 2020 to a peak of 26.71% in 2024. Despite a decline in 2022 to 17.82%, the margin rebounded, reflecting better operational efficiency and effective control over operating expenses after that year.
- Net Profit Margin
- The net profit margin increased from 11.05% in 2020 to 22.34% in 2024. The trend mirrors the fluctuations in operating margin, with a dip in 2022 followed by a steady rise. The improvements suggest progress in managing all expenses and taxes, resulting in stronger bottom-line profitability.
- Return on Equity (ROE)
- ROE showed considerable variability, beginning at 24.96% in 2020, peaking at 32.28% in 2021, then declining sharply to 21.62% in 2022. The subsequent upward movement towards 35.21% in 2024 indicates a recovery and increased efficiency in generating returns on shareholders’ equity.
- Return on Assets (ROA)
- ROA followed a similar pattern, rising from 7.03% in 2020 to 16.24% in 2024. The dip to 9.24% in 2022 was followed by consistent improvement, highlighting better asset utilization and profitability over time.
Overall, the data illustrate resilience with a dip in financial performance in 2022, followed by marked improvements in profitability and efficiency metrics through 2024. This suggests effective management responses to challenges, enhancing margins and returns to drive stronger financial health.
Return on Sales
Return on Investment
Gross Profit Margin
Netflix Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data demonstrates several notable trends in the company's performance over the five-year period ending December 31, 2024.
- Revenues
- Revenues have exhibited consistent growth each year, rising from approximately 24.99 billion US dollars in 2020 to 39.00 billion US dollars in 2024. This represents a compound upward trend with notable year-over-year increases, reflecting expanding business scale or market demand.
- Gross Profit
- Gross profit has also increased steadily, moving from about 9.72 billion US dollars in 2020 to 17.96 billion US dollars in 2024. While the growth trajectory somewhat mirrors that of revenue, the absolute increase in gross profit is substantial, indicating effective management of direct costs associated with revenue generation.
- Gross Profit Margin
- The gross profit margin percentage shows a fluctuating pattern but with an overall upward trajectory. Starting at 38.89% in 2020, the margin improved to 41.64% in 2021, dipped slightly to 39.37% in 2022, then rose again to 41.54% in 2023, and finally reached 46.06% in 2024. The increase in gross profit margin suggests enhanced operational efficiencies or a more favorable product mix contributing to higher profitability relative to revenue.
In summary, the data reflect positive growth dynamics with an expanding revenue base, increasing gross profit, and an improving gross profit margin. These trends collectively point to strengthening financial performance over the reviewed periods.
Operating Profit Margin
Netflix Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Operating Profit Margin, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2024.
- Revenues
- Revenues display a consistent upward trajectory, increasing annually from approximately 24.99 billion US dollars in 2020 to an estimated 39.00 billion US dollars in 2024. This steady growth indicates expanding sales or service volume over the period.
- Operating Income
- Operating income also shows an overall upward trend but with some fluctuations. It increased from around 4.59 billion US dollars in 2020 to a peak just over 6.19 billion US dollars in 2021, followed by a decline in 2022 to about 5.63 billion US dollars. After that, it resumed growth to approximately 6.95 billion US dollars in 2023 and then surged significantly to over 10.42 billion US dollars in 2024. This jump in the final year suggests strong operational performance or improved cost efficiency.
- Operating Profit Margin
- The operating profit margin percentages parallel the trends observed in operating income relative to revenues. Starting at 18.34% in 2020, the margin improved to 20.86% in 2021, then declined to 17.82% in 2022. It recovered to 20.62% in 2023 and rose substantially to 26.71% in 2024. The rising margin in 2024 indicates enhanced profitability and operational leverage.
Overall, the data suggests strong revenue growth accompanied by improving operating efficiency, particularly in the most recent year, which significantly boosted profitability ratios.
Net Profit Margin
Netflix Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Net Profit Margin, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period.
- Net Income
- Net income has generally increased, starting at approximately 2.76 billion USD in 2020 and reaching around 8.71 billion USD in 2024. There was a significant jump from 2020 to 2021, followed by a slight decrease in 2022. Afterward, net income rose again in 2023 and saw a substantial increase in 2024, indicating improved profitability.
- Revenues
- Revenues demonstrated consistent growth throughout the period. From roughly 25.0 billion USD in 2020, revenues increased steadily each year, culminating in approximately 39.0 billion USD in 2024. This steady rise suggests successful expansion or increased market demand over time.
- Net Profit Margin
- The net profit margin showed some volatility but also a general upward trend. It started at 11.05% in 2020, peaked at 17.23% in 2021, dipped to 14.21% in 2022, and then rose again to 16.04% in 2023. The margin reached its highest level of 22.34% in 2024, indicating improving efficiency or cost controls relative to revenue generation.
Overall, the data indicates that the company is experiencing robust revenue growth accompanied by considerable increases in net income and improving profitability margins, particularly noteworthy in the final year presented. The fluctuations in net income and profit margin during the middle years merit further review to understand underlying causes, but the upward trend in the latest year suggests positive financial momentum.
Return on Equity (ROE)
Netflix Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| ROE, Sector | ||||||
| Media & Entertainment | ||||||
| ROE, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period analyzed.
- Net Income
- The net income has shown an overall upward trend, increasing from approximately 2,761 million US dollars in 2020 to about 8,712 million US dollars in 2024. Despite a dip in 2022, where net income decreased to around 4,492 million US dollars from 5,116 million US dollars in 2021, the subsequent years demonstrated recovery and growth, with a significant increase in 2024.
- Stockholders’ Equity
- Stockholders' equity consistently increased throughout the period reviewed, starting at roughly 11,065 million US dollars in 2020 and rising steadily to approximately 24,744 million US dollars by the end of 2024. The only slight deviation occurred between 2022 and 2023, where equity slightly declined from 20,777 million US dollars to 20,588 million US dollars, before resuming its upward trajectory.
- Return on Equity (ROE)
- Return on equity exhibited notable fluctuations over the years. Initially, ROE rose from about 24.96% in 2020 to a peak of 32.28% in 2021, then declined to 21.62% in 2022. From 2022 onward, ROE increased again, reaching 35.21% in 2024, the highest value in this timeframe. The variation in ROE suggests changes in profitability efficiency relative to stockholders' equity.
Overall, the data indicates strong financial performance with growth in net income and equity position. Although there was some volatility in ROE and net income especially around 2022, the subsequent recovery points to improved profitability and effective equity utilization in recent years.
Return on Assets (ROA)
Netflix Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| ROA, Sector | ||||||
| Media & Entertainment | ||||||
| ROA, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveal a series of notable trends over the analyzed periods. Net income has exhibited an overall upward trajectory, starting at approximately 2.76 billion US dollars in 2020 and reaching a peak of over 8.71 billion US dollars by 2024. This suggests substantial growth in profitability, with a temporary dip observed in 2022 that did not hinder the subsequent increase.
Total assets have also shown consistent growth throughout the years, increasing from nearly 39.3 billion US dollars in 2020 to approximately 53.6 billion US dollars in 2024. This steady expansion reflects ongoing investment or accumulation of assets intact with the growth strategy and operational scale of the company.
Return on Assets (ROA), representing efficiency in generating profit from assets, reveals an improvement pattern overall. It rose from 7.03% in 2020 to 16.24% in 2024, with some fluctuations including a dip in 2022 to 9.24% before recovering in subsequent periods. This trend implies enhanced management effectiveness and asset utilization.
- Net Income
- Significant growth with a decline in 2022 before rebounding strongly in 2023 and 2024.
- Total Assets
- Consistent year-over-year increase, indicating asset base expansion.
- Return on Assets (ROA)
- Upward trend with temporary volatility, achieving the highest rate in the last period observed.