A comprehensive report evaluating Netflix, Inc. viability, stability, and profitability for future investment. The analysis provides an assessment of the firm's strategy, accounting, financial, prospective, and comes up with a buy/sell recommendation.
A comprehensive report evaluating Netflix, Inc. viability, stability, and profitability for future investment. The analysis provides an assessment of the firm's strategy, accounting, financial, prospective, and comes up with a buy/sell recommendation.
An IIT - BHU , competition slides for finding business expansion solution for Netflix(a video content provider) in competitive business environment in Indian entertainment industry.
Case study over current position of Netflix and where it is heading. AFI framework was used to provide insight into new viable strategies with recommendations on how Netflix can maintain a competitive advantage in the future.
Over the course of the semester I worked on a group project on Netflix. Taking a look into Netflix's history and how they compete against their competitors.
An IIT - BHU , competition slides for finding business expansion solution for Netflix(a video content provider) in competitive business environment in Indian entertainment industry.
Case study over current position of Netflix and where it is heading. AFI framework was used to provide insight into new viable strategies with recommendations on how Netflix can maintain a competitive advantage in the future.
Over the course of the semester I worked on a group project on Netflix. Taking a look into Netflix's history and how they compete against their competitors.
SFW - FOFA implications, Sum of parts valuation, possible acquirers George Gabriel
This research note analyses potential acquirer of the SFW business, and looks at Future of Financial Advice (FOFA) reforms and values SFW on a sum of the parts basis (a relevant valuation methodology for any business with multiple business segments).
Financial services sector - implications of FOFA, possible acquires of SFW, S...George Gabriel
SFG Australia was an ASX listed financial stock. In this note, we analysed (i) the Future of Financial Advice (FOFA) laws; (ii) sum of the parts (SOTP) valuation of SFW; and (iii) possible acquirers of the business
Sheet1NPV and IRR TemplateAssumptions & inputsrequired rate of re.docxmaoanderton
Sheet1NPV and IRR TemplateAssumptions & inputs:required rate of return20.0%InvestmentYear 1year 2year 3$ (110,000.0)$ 51,781.00$ 51,780.00$ 71,780.00discount factor1.201.441.73Present values$ 43,150.8$ 35,958.3$ 41,539.4Total present value$ 120,648.5NPV$ 10,648.5IRR25.8%
Sheet2
Sheet3
Captain Walter J. Harris, JR.
Captain Harris provided us with a very inspirational and full of enthusiasm speech. He shared his personal experiences from his early life. Being able to see first-hand how a person talks about his ambitions and success in life is very inspiring. Captain Harris share how he started out as a pilot on a transport plane, to finally flying passenger planes and even flying intercontinental flights. One suggestion that Captain Harris offered to us younger people is to not be complacent and careless. Having a goal to work towards, we should not get distracted by other things. Focusing on the set goal will get us to the end and will help achieve the goal. Four other suggestions were made. Choosing the right friends can help determine if we will be successful in our career or if we will fail and get pulled down and away from our career. If we have set goals, we will be able to stay on the right track while staying away from distractions. This also goes hand in hand with Captain Harris’s other suggestion. We need to stay out of trouble. A criminal record can keep us away from the dream job that we might be trying to reach and get. Once we are on our way to achieve our goal, stopping and checking the direction is important. If we are still on our way to get to it, then we should continue. Now if we have strayed from the straight path then stop, evaluate and get back on the right track. The most important suggestion that Captain Harris had was to have a plan for our life. Time does not wait and will not stop for us to make a pit stop. It keeps going and we could lose a chance of a lifetime by stopping midway.
Sheet1NPV and IRR Template_ five yearsAssumptions & inputs:required rate of return9.0%InvestmentYear 1year 2year 3year 4year 5$ (100,000.0)$ 25,000.00$ 25,000.00$ 25,000.00$ 25,000.00$ 25,000.00discount factor1.091.191.301.411.54Present values$ 22,935.8$ 21,042.0$ 19,304.6$ 17,710.6$ 16,248.3Total present value$ 97,241.3NPV$ (2,758.7)IRR7.9%
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Sheet1Free Cash Flow Forecast TemplateAppl Inc.(billions of dollars)2015201620172018Sales$233.7$252.4$272.6$294.4% increase8.0%EBIT71.2Depreciation11.2EBITDA82.489.897.9106.7% increase9.0%Tax Expenses19.120.822.724.7% increase9.0%Operating Cash flow63.369.075.282.0Capex11.212.012.813.7% increase7.0%YoY increse in w/capital44.34.75.0% increase8.0%Levered Free cash flow$48.10$52.69$57.72$63.22growth rate9.55%9.54%9.53%
Sheet1Discount free cash flow modelApple Inc.Date:2/24/16assumptions:3-year growth rate9.55%discount rate (wacc)10.0%discount factor1.101.211.332015201620172018terminal valuefree cash flow$ 48.1$ 52.70$ 57.70$ 63.20$ .
This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/excel-model-of-trading-firm-1067
DESCRIPTION
Valuation of trading firm which is outsource major percentage of manufacturing to third party vendors.
In this valuation methodology we would primarily look into brand equity and relative valuation compared to its peers
State of ICS and IoT Cyber Threat Landscape Report 2024 previewPrayukth K V
The IoT and OT threat landscape report has been prepared by the Threat Research Team at Sectrio using data from Sectrio, cyber threat intelligence farming facilities spread across over 85 cities around the world. In addition, Sectrio also runs AI-based advanced threat and payload engagement facilities that serve as sinks to attract and engage sophisticated threat actors, and newer malware including new variants and latent threats that are at an earlier stage of development.
The latest edition of the OT/ICS and IoT security Threat Landscape Report 2024 also covers:
State of global ICS asset and network exposure
Sectoral targets and attacks as well as the cost of ransom
Global APT activity, AI usage, actor and tactic profiles, and implications
Rise in volumes of AI-powered cyberattacks
Major cyber events in 2024
Malware and malicious payload trends
Cyberattack types and targets
Vulnerability exploit attempts on CVEs
Attacks on counties – USA
Expansion of bot farms – how, where, and why
In-depth analysis of the cyber threat landscape across North America, South America, Europe, APAC, and the Middle East
Why are attacks on smart factories rising?
Cyber risk predictions
Axis of attacks – Europe
Systemic attacks in the Middle East
Download the full report from here:
https://sectrio.com/resources/ot-threat-landscape-reports/sectrio-releases-ot-ics-and-iot-security-threat-landscape-report-2024/
PHP Frameworks: I want to break free (IPC Berlin 2024)Ralf Eggert
In this presentation, we examine the challenges and limitations of relying too heavily on PHP frameworks in web development. We discuss the history of PHP and its frameworks to understand how this dependence has evolved. The focus will be on providing concrete tips and strategies to reduce reliance on these frameworks, based on real-world examples and practical considerations. The goal is to equip developers with the skills and knowledge to create more flexible and future-proof web applications. We'll explore the importance of maintaining autonomy in a rapidly changing tech landscape and how to make informed decisions in PHP development.
This talk is aimed at encouraging a more independent approach to using PHP frameworks, moving towards a more flexible and future-proof approach to PHP development.
Search and Society: Reimagining Information Access for Radical FuturesBhaskar Mitra
The field of Information retrieval (IR) is currently undergoing a transformative shift, at least partly due to the emerging applications of generative AI to information access. In this talk, we will deliberate on the sociotechnical implications of generative AI for information access. We will argue that there is both a critical necessity and an exciting opportunity for the IR community to re-center our research agendas on societal needs while dismantling the artificial separation between the work on fairness, accountability, transparency, and ethics in IR and the rest of IR research. Instead of adopting a reactionary strategy of trying to mitigate potential social harms from emerging technologies, the community should aim to proactively set the research agenda for the kinds of systems we should build inspired by diverse explicitly stated sociotechnical imaginaries. The sociotechnical imaginaries that underpin the design and development of information access technologies needs to be explicitly articulated, and we need to develop theories of change in context of these diverse perspectives. Our guiding future imaginaries must be informed by other academic fields, such as democratic theory and critical theory, and should be co-developed with social science scholars, legal scholars, civil rights and social justice activists, and artists, among others.
Key Trends Shaping the Future of Infrastructure.pdfCheryl Hung
Keynote at DIGIT West Expo, Glasgow on 29 May 2024.
Cheryl Hung, ochery.com
Sr Director, Infrastructure Ecosystem, Arm.
The key trends across hardware, cloud and open-source; exploring how these areas are likely to mature and develop over the short and long-term, and then considering how organisations can position themselves to adapt and thrive.
Software Delivery At the Speed of AI: Inflectra Invests In AI-Powered QualityInflectra
In this insightful webinar, Inflectra explores how artificial intelligence (AI) is transforming software development and testing. Discover how AI-powered tools are revolutionizing every stage of the software development lifecycle (SDLC), from design and prototyping to testing, deployment, and monitoring.
Learn about:
• The Future of Testing: How AI is shifting testing towards verification, analysis, and higher-level skills, while reducing repetitive tasks.
• Test Automation: How AI-powered test case generation, optimization, and self-healing tests are making testing more efficient and effective.
• Visual Testing: Explore the emerging capabilities of AI in visual testing and how it's set to revolutionize UI verification.
• Inflectra's AI Solutions: See demonstrations of Inflectra's cutting-edge AI tools like the ChatGPT plugin and Azure Open AI platform, designed to streamline your testing process.
Whether you're a developer, tester, or QA professional, this webinar will give you valuable insights into how AI is shaping the future of software delivery.
Slack (or Teams) Automation for Bonterra Impact Management (fka Social Soluti...Jeffrey Haguewood
Sidekick Solutions uses Bonterra Impact Management (fka Social Solutions Apricot) and automation solutions to integrate data for business workflows.
We believe integration and automation are essential to user experience and the promise of efficient work through technology. Automation is the critical ingredient to realizing that full vision. We develop integration products and services for Bonterra Case Management software to support the deployment of automations for a variety of use cases.
This video focuses on the notifications, alerts, and approval requests using Slack for Bonterra Impact Management. The solutions covered in this webinar can also be deployed for Microsoft Teams.
Interested in deploying notification automations for Bonterra Impact Management? Contact us at sales@sidekicksolutionsllc.com to discuss next steps.
Builder.ai Founder Sachin Dev Duggal's Strategic Approach to Create an Innova...Ramesh Iyer
In today's fast-changing business world, Companies that adapt and embrace new ideas often need help to keep up with the competition. However, fostering a culture of innovation takes much work. It takes vision, leadership and willingness to take risks in the right proportion. Sachin Dev Duggal, co-founder of Builder.ai, has perfected the art of this balance, creating a company culture where creativity and growth are nurtured at each stage.
LF Energy Webinar: Electrical Grid Modelling and Simulation Through PowSyBl -...DanBrown980551
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Then welcome to this PowSyBl workshop, hosted by Rte, the French Transmission System Operator (TSO)!
During the webinar, you will discover the PowSyBl ecosystem as well as handle and study an electrical network through an interactive Python notebook.
PowSyBl is an open source project hosted by LF Energy, which offers a comprehensive set of features for electrical grid modelling and simulation. Among other advanced features, PowSyBl provides:
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- Grid simulation tools, such as power flows, security analyses (with or without remedial actions) and sensitivity analyses;
The framework is mostly written in Java, with a Python binding so that Python developers can access PowSyBl functionalities as well.
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GraphRAG is All You need? LLM & Knowledge GraphGuy Korland
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https://arxiv.org/abs/2306.08302
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https://www.microsoft.com/en-us/research/blog/graphrag-unlocking-llm-discovery-on-narrative-private-data/
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See how to accelerate model training and optimize model performance with active learning
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Get an exclusive demo of the new family of UiPath LLMs – GenAI models specialized for processing different types of documents and messages
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DevOps and Testing slides at DASA ConnectKari Kakkonen
My and Rik Marselis slides at 30.5.2024 DASA Connect conference. We discuss about what is testing, then what is agile testing and finally what is Testing in DevOps. Finally we had lovely workshop with the participants trying to find out different ways to think about quality and testing in different parts of the DevOps infinity loop.
Unsubscribed: Combat Subscription Fatigue With a Membership Mentality by Head...
NETFLIX Business Analysis & Valuation
1. Analysis & Valuation
For MGMT E-2620, Prof. Dalko
TEAM - 10
Brian Schoenherr, Anirudh Udayashankar, Junyao Zhao, Alegra N Horne & Larry Montello
2. Netflix Company Profile
• Pioneer and leader of the on-line TV market.
• 75M subscribers in over 190 countries.
• 125 million hours of viewing per day.
• Affordable no-commitment monthly fee.
• Personalized recommendations based on
sophisticated user monitoring.
• DVD rental is very profitable but an ever smaller
contributor to their business.
3. First Mover Advantage
Very Competitive Landscape
(Source: “Premium Prospects for OTT in the USA” study from MTM, Ooyala and Vindicia)
4. Threat of New Entrants
Hybrid Services
Niche offerings
MEDIUM
Threat of Substitutes
Cable Live streaming
Opting outside
Free alternatives
HIGH
Bargaining Power of Buyers
Low cost alternatives
Low switching cost
HIGH
Bargaining Power of
Suppliers
Supplier-Competitors
Strategic Alliances
HIGH
Degree of Rivalry among
Competitors
Amazon & Hulu
HBO, CBS, Fox
Apple, Google, Roku
HIGH
Industry Analysis -
Porter’s Five Forces
5. Netflix Competitive Strategy
• 48% share, more than twice as big as the next
competitor (Amazon 20% and Hulu 10%).
• Differentiation Strategy: offering superior
content to the global video streaming market.
• Sophisticated monitoring capability to
understand their customers preferences and
select winning content.
7. Netflix Corporate Strategy Analysis
• Three reportable segments: domestic streaming,
International streaming and Domestic DVD.
• Started with DVD rentals and built its knowledge of
(and tools to measure) winning content.
• Planned growth of customer base from 75M today to
150M by 2020.
• Primary investments:
– Global Expansion: Serving 190 countries world-wide
– $5B investment is developing their own content.
8. Strategy Analysis Conclusions
• Netflix is number 1 in video streaming and are
making investments to maintain their market
leadership.
• NFLX stock is trading at a very high premium over
what might be predicted with fundamental analysis.
This is typical of a market leader in a new emerging
high tech market.
• We predict Netflix will regress to the market growth
rate of 20% and face higher content and delivery
costs as they expand internationally.
9. Netflix – Accounting Analysis
• Revenue stream: Subscription fees only
– No advertising revenue
• Asset Recognition
– Library of DVD and streaming content
– Global network
– Mostly straight line amortization - discretionary
10. Netflix – Accounting Analysis
• Liabilities recognition: Subscription fees only
– Fixed costs for content licensing v/s variable subscription
fees; gross margin liabilities
– Future contracts of $6.1 billion – currently discussed, but
unaccounted for
– Growing international business – exchange rate volatility
• -$331 million impact in 2015
17. Other Ratios
Year Ended Dec-10, (MM USD) 2010 2011 2012 2013 2014 2015
EBITDA Margin 28.7% 38.0% 48.6% 55.8% 57.8% 56.4%
Sustainable Growth Rate 53.3% 35.2% 2.3% 8.4% 14.4% 5.5%
Dividend policy: Netflix has not declared or paid any cash dividends, and has no
intention of paying cash dividends in the foreseeable future.
On July 14, 2015, Netflix exercised a 7:1 stock split in the form of a stock dividend
to all shareholders.
Financial Analysis – Other Ratios
19. Statement of Cash Flows
Year Ended Dec-10, (MM USD) 2010 2011 2012 2013 2014 2015
Net Income 160.85 226.13 17.15 112.40 266.80 122.64
After-tax net interest expense (income) 11.61 12.60 11.24 19.15 38.35 114.72
Non-operating losses (gains) -10.50 0.00 0.00 0.00 0.00 0.00
Long-term operating accruals -101.32 -1,487.96 -782.48 -808.22 -980.54 -2,207.38
Depreciation and amortization 340.07 839.62 1,702.08 2,241.68 2,781.80 3,547.05
Content expenses -441.39 -2,327.58 -2,484.56 -3,049.90 -3,762.34 -5,754.43
Operating cash flow before working capital investments $60.64 -$1,249.23 -$754.09 -$676.67 -$675.39 -$1,970.02
Net (investments in) or liquidation of operating working capital 227.37 1,579.55 788.09 793.65 730.22 1,335.30
Operating cash flow before investment in long-term assets $288.01 $330.32 $34.00 $116.98 $54.83 -$634.72
Net (investment in) or liquidation of operating long-term assets -116.09 -265.82 -245.91 -255.97 -42.87 -179.19
Free cash flow available to debt and equity $171.92 $64.50 -$211.91 -$138.99 $11.96 -$813.91
After-tax net interest expense (income) 11.61 12.60 11.24 19.15 38.35 114.72
Net debt (repayment) or issuance -1.78 195.98 -2.62 270.05 398.91 1,499.45
Free cash flow available to equity $158.53 $247.88 -$225.77 $111.91 $372.52 $570.82
Dividend (payments) 0.00 0.00 0.00 0.00 0.00 0.00
Net stock (repurchase), issuance, or other equity changes 49.78 219.56 3.66 124.56 67.62 95.61
Net increase (decrease) in cash balance $208.31 $467.44 -$222.11 $236.47 $440.14 $666.43
20. Baseline forecast –
Assumptions for current stock price $95.50
• Maintain sales growth > 25% per annum
• NOPAT Margin > 7.4% per annum
• Increase from 5.5 million subscribers (2015) to 15 million new
subscribers each year for 5 years.
•--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Assumptions suggests Netflix can maintain its competitive
advantage in a very competitive industry.
We think the current set of assumptions are unrealistic..
Netflix – Prospective Analysis
21. Netflix – Scenario Analysis
Best case scenario $95
Most likely scenario $ 65
Worst case scenario $30
22. Valuation using Price Multiples
Time Warner Cable
Price/Earnings: 28.7
Price/Book ratio: 5.85
Comcast
Price/Earnings: 17.4
Price/Book ratio: 2.64
Netflix, Inc.
Price /Earnings ratio: 398
Price /Book ratio: 18.3
23. Overall Recommendation
We assign a Sell rating to Netflix stock.
Netflix current stock price: $95 a share
Macro factors: Increased competition
Company factors: low margins, increasing
debt, negative cash flows
Fair value at $65 a share
Netflix offers content on a subscription basis only, and does not derive any advertising revenue (as does most of the industry).
One key measure of Netflix’s success is its vast library of streaming and DVD content, which can currently be accessed globally.
This is represented as current and non-current content assets on the balance sheet – and we agree with this practice – as the content earns future cash flows for the company.
While the individual contracts for titles is impossible to determine, Netflix amortizes the content assets (licensed and produced) in “Cost of Revenues” on the Consolidated Statements of Operations.
The amortization period typically ranges from six months to five years.
The rate of amortization is discretionary to management, and a potential red flag with future growth in content assets.
While Netflix’s revenues are variable per the number of user subscriptions, the contracts for streaming licenses are fixed – which gives rise to gross margin liabilities which we should be watchful for.
Currently about $6.1 billion of future streaming assets and corresponding liabilities are not included on the balance sheet, as viewers cannot access them as yet. We believe this is correct, as it would have otherwise artifitially inflated the size of the balance sheet, with no gain to net operating assets.
With a growing international business segment, we should also account for Forex volatility, as all revenues net are translated into USD for accounting purposes.
In analyzing the financial statements we found that Management discussions are extremely detailed regarding all inherent risks to the future growth of the company - both in terms of customer acquisition and technological advancements - and has proven to be reliable in representing the business in the correct light, allowing investors to make calculated assumptions about opportunities on hand.
We concur with Netflix’s claims to manage balance sheet to lower blended cost of capital over time, while maintaining financial flexibility.
Netflix’s sales growth has been more than 20% each year except 2012. The high growth is due to the rapid growth of new subscribers globally, but the company’s ROE is significantly decreased.
The declined in ROE is due to the decline of operating ROA.
Netflix significantly increased their assets in the form of building and content library, and the growth rate of asset outpaced the growth rate of sales, result in the low asset turnover. IN the meantime, The NOPAT margin is also decreased because of the increased operating and content expenses.
The dupont also shows that Netflix has negative gains from its financial activities, but the trend is increasing shows that they become more efficient with the use of debt.
Using the top-down analysis to evaluate Netflix’s operating management, we see that Netflix increased their efficiency in procurement of contents and production process represented by decreasing rate of COGS, but the profits are offset by the high operating costs mainly from SG&A, amortization and depreciation expenses.
The high SG&A expenses on the other hand shows that Netflix is competing on a differentiation strategy.
For the investment analysis, the working capital management has improved in the form of longer Days Payable.
But the net Long-term Asset turnover is decreased because of increase in contents assets as well as infrastructures.
Netflix has increased the use of debt to support their business expansion. By the end of 2015, the company has the debt over equity ratio of 1.1,but shows good liquidity and interest coverage ratio.
by adding back depreciation and amortization, the EBITA Margin indicates the high profitability of Netflix’s business, and a sustainable growth rate of 5.5% at the end of 2015.