Loomis Sayles Global Growth Fund on Netflix

Netflix has a global subscription video platform with more than 325 million paying subscribers and a large content library supported by substantial historical investment. Loomis Sayles believes its scale, brand, subscriber base and accumulated content expertise create high barriers to entry, while the secular shift from linear television to streaming remains a durable growth driver. The team expects low-double-digit revenue growth and has raised its long-term operating-margin expectation to the mid-to-high 30% range, which should allow operating profit and free cash flow to grow faster than revenue. Despite a negative share-price reaction to near-term guidance, Loomis Sayles says the long-term structural thesis is unchanged and believes the market materially underestimates Netflix's future free cash flow.