Netflix, Inc. stock research
FY2023 Q3
Netflix (NFLX) Gross Margin — Quarter Ended Sep 30, 2023
Revenue increased compared to both the prior quarter and the same quarter last year, while cost of revenue grew at a slower pace year-over-year, resulting in higher gross profit and an improved gross margin relative to the prior year. Sequentially, gross margin weakened as cost of revenue rose faster than revenue.
Gross margin takeaway
Quarter ended Sep 30, 2023 · FY2023 Q3
Revenue increased compared to both the prior quarter and the same quarter last year, while cost of revenue grew at a slower pace year-over-year, resulting in higher gross profit and an improved gross margin relative to the prior year. Sequentially, gross margin weakened as cost of revenue rose faster than revenue.
- The year-over-year expansion in gross margin was the strongest driver, as revenue growth outpaced the increase in cost of revenue.
- Compared to the immediately preceding quarter, gross margin weakened; compared to the same quarter one year earlier, gross margin improved.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
42.3%
Gross profit
$3.6B
Revenue
$8.5B
Cost of revenue
$4.9B
Quarter-over-quarter change
-0.6 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% |
| Sep 30, 2023 | $8.5B | $3.6B | $4.9B | 42.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2023
-0.6 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 year-over-year expansion in gross margin was the strongest driver, as revenue growth outpaced the increase in cost of revenue.
Compared to the immediately preceding quarter, gross margin weakened; compared to the same quarter one year earlier, gross margin improved.
Monitor the relative growth of cost of revenue, as sequential margin compression indicates a need to watch cost trends.