NFLXNEUTRAL

Gross Margin

51.9%

Higher than 50% of Communication Services sector peers

Updated 22h ago

Sector Performance

50th percentile

NFLX

51.9%

Sector Median

51.9%

Sector Avg

55.6%

📊

Deep Analysis

Netflix's gross margin of 51.9% means the company retains roughly 52 cents of revenue as gross profit for every dollar earned after paying production and content licensing costs.

This lags the Communication Services sector median of 62.4%, placing Netflix at the 25th percentile among peers—indicating weaker profitability at the gross level compared to most competitors in its sector. The metric has remained flat at 51.9% over the last two quarters, suggesting stable but not improving cost structure. The below-median margin reflects Netflix's content-heavy business model and ongoing investments in original programming, which pressures gross profitability relative to peers with lighter asset bases. For investors, this margin weakness implies Netflix generates less gross profit per revenue dollar than sector competitors, potentially limiting financial flexibility for operating investments or shareholder returns.

Frequently Asked Questions

What does the Gross Margin tell investors about NFLX?

Gross margin reveals pricing power and cost structure. Software companies often sustain 70–80%; manufacturers typically 30–50%. Expansion is a bullish signal.

How is the Gross Margin calculated?

Gross Margin is calculated as: Gross Profit / Revenue.

How does NFLX's Gross Margin compare to its sector?

NFLX's Gross Margin of 51.9% compares to a Communication Services sector median of 51.9%, placing it in the 50th percentile.

Who are NFLX's closest peers by Gross Margin?

The closest Communication Services peers by Gross Margin include: DASH (50.6%), TWTR (54.0%), TWLO (48.1%), SNAP (56.5%), NYT (46.2%).

The Formula

Gross Profit / Revenue

Why It Matters

Gross margin reveals pricing power and cost structure. Software companies often sustain 70–80%; manufacturers typically 30–50%. Expansion is a bullish signal.