can someone explain NFLX's accounting methad. I would like to calculate EBITDA for 2nd qtr; which has operating income of only 6 MM$ but has huge depreciation in cash flow statement but has not be deducted in the income statement. Is adding depreciation to operating income is valid here. Thanks for help
Yes, it is still valid. 2nd Q EBIT = $15.6M + DA = $403.3M. So, EBITDA = $418.9M (47% of revenue). Becuase they have high "capx" (content contracts), leading to high depreciation, FCF is what really matters. In Q2 they added $397.6M in content plus another $3.6M in capex, so FCF was $6.2M + $403.3M - $397.6M - $3.6M = $8.3M (about 1% of revenue).