Netflix, Inc. (NFLX) Cash Flow Statement

The wide quarterly swings in OCF/NI, from 0.47 to 1.11, suggest that net income is not consistently translating into cash, likely due to timing of content payments and working capital changes. Investors should monitor whether the low conversion in 2026Q2 is a one-off or a trend, as it may signal aggressive revenue recognition or delayed collections.

The FCF margin trajectory shows significant improvement over the past year, with 2026Q1 reaching 41.6%, but the sharp drop to 10.9% in 2026Q2 highlights quarter-to-quarter volatility. This suggests that while the underlying business is generating strong cash, timing of content investments and working capital can cause large swings, warranting a longer-term view.

The low capex-to-revenue ratio (under 2%) reflects Netflix's asset-light model, but the substantial D&A of $4.4B in 2026Q2 underscores that content is the primary capital investment. This suggests that traditional capex metrics understate the company's capital intensity, and investors should focus on content spend as the key driver of future cash flows.

The large quarterly swings in working capital, ranging from -$684.9M to +$575.8M, suggest that Netflix's cash flow is heavily influenced by the timing of content payments and subscriber collections. This volatility may obscure the underlying cash generation, and analysts should adjust for these swings to assess the true operating cash flow trend.

The buyback pace accelerated to $4.7B in 2026Q2, well above the quarter's FCF of $1.4B, suggesting Netflix is using its cash reserves to fund repurchases. While this signals confidence, it also reduces financial flexibility, and investors should monitor whether buybacks remain sustainable if FCF growth slows.

The cumulative OCF of $24.3B versus net income of $28.3B shows a slight shortfall, but this is largely due to the one-time tax benefit in 2026Q1 that inflated net income. Excluding that, cash conversion appears healthy, but the recent dip in OCF/NI to 0.47 in 2026Q2 warrants attention as it may signal a shift in earnings quality.