Netflix CFO David Wells told a room full of attendees at the Goldman Sachs ‘Communacopia’ Conference in NY that the company has no regrets spending $6 billion on content this year, despite the company’s $4.8 billion debt.
While Netflix has been criticized by analysts for their “free spending ways,” especially on original content, Wells says the cash outlay has been worth it, considering the streaming giant’s 104 million users worldwide. made massive financial bets on Emmy nominated content which appear to be paying off.
“You could decide to invest everything and more into content, so we have some discipline reserve for growing operating margin at this point,” Wells said.
Subscriber growth has been booming too, with over 100 million customers:
“Just a headline: If we’re able to grow the top line, we’re going to be guided by steady growth of operating margin and reinvest what’s left into content,” he said.
“For a while, we were not budget-constrained, we were project-constrained,” Wells continued. “We might be to the point where we might start seeing more budget constraint. That has some benefits in terms of helping drive discipline on the content line.”
Of note, Netflix original content is getting better ratings, on average, than licensed shows from legacy networks
Yes, they have a ton of debt. Yes, their P/E of 223 is at Amazonian levels – their closest competitor. But they’ve been crushing user growth estimates and guidance while falling in line on revenues / eps.
Variety reports that Netflix’s spending budget could increase to $7 billion next year.
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