Netflix reported strong earnings with an EPS of $1.19 with global paid subscriber additions at 8.51mn vs 6.03mn expected. Netflix said that it added 37mn paid memberships in 2020 and achieved $25bn in annual revenue, a 24% rise YoY. 83% of paid net additions in 2020 came from outside the US/Canada region with EMEA accounting for 41% of full year paid net additions, while APAC was the second largest contributor to paid net additions after US/Canada at 9.3mn (up 65% YoY). They noted that they are very close to being sustainably free cash flow (FCF) positive – for the full year 2021, they expect FCF to be around break even after 2020’s FCF at $1.9bn vs -$3.3bn in 2019.

With the above results, Netflix said, “We believe we no longer have a need to raise external financing for our day-to-day operations. Our 5.375% February 1, 2021 bonds mature in Q1. We plan on repaying the bond at maturity out of cash on hand, as we are currently well above our minimum cash needs.” They also noted that they intend on maintaining $10-15bn in gross debt and will explore returning cash to shareholder via buybacks.

Netflix’s 5.375% 2029s trade significantly above par, up 0.17 to 118.13, yielding 3.02%

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