Netflix, Inc. stock research
FY2023 Q2
Netflix (NFLX) Gross Margin — Quarter Ended Jun 30, 2023
Revenue held steady while cost of revenue declined, causing gross profit to increase and gross margin to strengthen. Compared to both the prior quarter and the same quarter a year earlier, gross margin improved as cost of revenue decreased relative to revenue.
Gross margin takeaway
Quarter ended Jun 30, 2023 · FY2023 Q2
Revenue held steady while cost of revenue declined, causing gross profit to increase and gross margin to strengthen. Compared to both the prior quarter and the same quarter a year earlier, gross margin improved as cost of revenue decreased relative to revenue.
- The reduction in cost of revenue was the principal observable factor behind the gross margin improvement, as revenue remained unchanged from the previous quarter and was higher than a year ago.
- Compared to the immediately preceding quarter, gross margin strengthened as cost of revenue fell while revenue was stable; versus the same quarter one year earlier, gross margin improved with revenue higher and cost of revenue lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
42.9%
Gross profit
$3.5B
Revenue
$8.2B
Cost of revenue
$4.7B
Quarter-over-quarter change
+1.8 pts
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% |
| Jun 30, 2023 | $8.2B | $3.5B | $4.7B | 42.9% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2023
+1.8 pts
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 reduction in cost of revenue was the principal observable factor behind the gross margin improvement, as revenue remained unchanged from the previous quarter and was higher than a year ago.
Compared to the immediately preceding quarter, gross margin strengthened as cost of revenue fell while revenue was stable; versus the same quarter one year earlier, gross margin improved with revenue higher and cost of revenue lower.
Monitor whether cost of revenue continues to decline or stabilizes in future quarters, as recent improvements drove margin expansion.