April 22, 2020
Fresh off quarterly financials that saw subscriber growth go through the roof, Netflix is sticking its hand out to the market looking for $1 billion in funding for content creation in the United States and Europe.
Perhaps lost in the staggering 15.77 million Q1 subscriber additions is the reality Netflix has nearly $15 billion in debt — a line item management doesn’t mind increasing. With the lack of free cash flow an ongoing issue for Netflix critics, CEO Reed Hastings was quick to point out in the April 21 shareholder letter that due to shutdowns in production, cash flow had stabilized.
Net cash used in Q1 operating activities was +$260 million compared to -$380 million in the prior year period. Free cash flow totaled +$162 million compared, with -$460 million in the year ago quarter.
With Netflix productions currently paused, management is now expecting year-end free cash flow of -$1 billion compared with previous expectation from -$2.5 billion and -$3.3 billion actual in 2019).
“We have more than 12 months of liquidity and substantial financial flexibility,” Hastings and CFO Spenser Neumann wrote in the shareholder letter. “Our financing strategy remains unchanged — our current plan is to continue to use debt to finance our investment needs.”