Netflix, Inc. stock research
FY2023 Q1
Netflix (NFLX) Gross Margin — Quarter Ended Mar 31, 2023
Gross margin improved sequentially but declined from the prior year. Revenue and gross profit increased compared to the previous quarter, while cost of revenue decreased; relative to the year-ago quarter, cost of revenue rose more than revenue, lowering gross profit.
Gross margin takeaway
Quarter ended Mar 31, 2023 · FY2023 Q1
Gross margin improved sequentially but declined from the prior year. Revenue and gross profit increased compared to the previous quarter, while cost of revenue decreased; relative to the year-ago quarter, cost of revenue rose more than revenue, lowering gross profit.
- The most significant observable driver is the change in cost of revenue relative to revenue. Sequentially, cost of revenue decreased as revenue increased, widening gross margin. On a year-over-year basis, cost of revenue grew faster than revenue, compressing margin.
- Gross margin improved from the immediately preceding quarter but weakened when compared to the same quarter one year earlier. This reflects a mixed performance relative to both periods.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
41.1%
Gross profit
$3.4B
Revenue
$8.2B
Cost of revenue
$4.8B
Quarter-over-quarter change
n/a
Year-over-year change
n/a
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $8.2B | $3.4B | $4.8B | 41.1% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Previous quarter unavailable
n/a
Year-over-year change
Year-ago quarter unavailable
n/a
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most significant observable driver is the change in cost of revenue relative to revenue. Sequentially, cost of revenue decreased as revenue increased, widening gross margin. On a year-over-year basis, cost of revenue grew faster than revenue, compressing margin.
Gross margin improved from the immediately preceding quarter but weakened when compared to the same quarter one year earlier. This reflects a mixed performance relative to both periods.
Track the direction of cost of revenue as it is a key determinant of gross margin trends.