10q10k10q10k.net

What changed in Netflix's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Netflix's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+192 added−185 removedSource: 10-K (2024-01-26) vs 10-K (2023-01-26)

Top changes in Netflix's 2023 10-K

192 paragraphs added · 185 removed · 152 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

12 edited+0 added−0 removed22 unchanged
Biggest changeThe goal of these programs is to create great human beings, who become great 2 Table of Contents leaders, who shape a great company. We also offer programs and workshops to provide skills and coaching to employees on a variety of topics, such as leading and inspiring teams.
Biggest changeWe have built a portfolio of programs under three foundational pillars - great company, great leaders, and great human beings - which we believe support our current and future success. We also offer programs and workshops to provide skills and coaching to employees on a variety of topics, such as leading and inspiring 2 Table of Contents teams.
Investors and others should note that we announce material financial information to our investors using our investor relations website ( ir.netflix.net ), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media and blogs to communicate with our members and the public about our company, our services and other issues.
Investors and others should note that we announce material financial and other information to our investors using our investor relations website ( ir.netflix.net ), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media and blogs to communicate with our members and the public about our company, our services and other issues.
SEASONALITY 1 Table of Contents Our membership growth exhibits a seasonal pattern that reflects variations when consumers buy internet-connected screens and when they tend to increase their viewing. Historically, the fourth quarter represents our greatest streaming membership growth. In addition, our membership growth can be impacted by our content release schedule and changes to pricing.
SEASONALITY 1 Table of Contents Our membership growth exhibits a seasonal pattern that reflects variations when consumers buy internet-connected screens and when they tend to increase their viewing. Historically, the fourth quarter represents our greatest streaming membership growth. In addition, our membership growth can be impacted by our content release schedule and changes to pricing and plans.
Members can play, pause and resume to watch as much as they want, anytime, anywhere, and can change their plans at any time. Our core strategy is to grow our business globally within the parameters of our operating margin target. We strive to continuously improve our members' experience by offering compelling content that delights them and attracts new members.
Members can play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time. Our core strategy is to grow our business globally within the parameters of our operating margin target. We strive to continuously improve our members' experience by offering compelling content that delights them and attracts new members.
With this approach, we believe we are a more flexible, fun, stimulating, creative, collaborative and successful organization. As we have expanded our offices globally, our company culture remains an important aspect of our operations. We have also become mindful of cultural differences across and within regions.
With this approach, we believe we are a more flexible, fun, stimulating, creative, collaborative and successful organization. As we have expanded our offices globally, our company culture remains an important aspect of our operations. We are mindful of cultural differences across and within regions.
We empower all of our employees so that they can have significant impact and input into decision-making; each employee has the freedom and power to make the decisions and take actions in the best interest of the company in carrying out their role. In return, our employees are responsible and accountable for those decisions and actions.
We empower all of our employees so that they can have significant impact and input into decision-making; each employee has a high degree of freedom and power to make the decisions and take actions in the best interest of the company in carrying out their role. In return, our employees are responsible and accountable for those decisions and actions.
Item 1. Business ABOUT US Netflix, Inc. (“Netflix”, “the Company”, “registrant”, “we”, or “us”) is one of the world’s leading entertainment services with approximately 231 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages.
Item 1. Business ABOUT US Netflix, Inc. (“Netflix”, “the Company”, “registrant”, “we”, or “us”) is one of the world’s leading entertainment services with over 260 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages.
We also support numerous employee resource groups (ERGs), representing employees and allies from a broad array of historically underrepresented and/or marginalized communities. We publish an Inclusion report annually which further highlights our approach to diversity and inclusion, and publish our EEO-1 reports on our website. We believe in fostering great leaders.
We also support numerous employee resource groups (ERGs), representing employees and allies from a broad array of historically underrepresented and/or marginalized communities. We publish annually an update on our inclusion initiatives and progress, which further highlights our approach to diversity and inclusion, and publish our EEO-1 reports on our website. We believe in fostering great leaders.
Of these, approximately 9,000 (70%) were located in the United States and Canada, 2,000 (16%) in Europe, Middle East, and Africa, 400 (3%) in Latin America and 1,400 (11%) in Asia-Pacific. We also have a number of employees engaged in content production, some of whom are part-time or temporary, and whose numbers fluctuate throughout the year.
Of these, approximately 9,000 (69%) were located in the United States and Canada, 2,000 (15%) in Europe, Middle East, and Africa, 500 (4%) in Latin America and 1,500 (12%) in Asia-Pacific. We also have a number of employees engaged in content production, some of whom are part-time or temporary, and whose numbers fluctuate throughout the year.
In general these regulations impact all services and may make operating in certain jurisdictions more expensive or restrictive as to the content offerings we may provide. HUMAN CAPITAL We view our employees and our culture as key to our success. As of December 31, 2022, we had approximately 12,800 full-time employees located globally in 65 countries.
In general these regulations impact all services and may make operating in certain jurisdictions more expensive or restrictive as to the content offerings we may provide. HUMAN CAPITAL We view our employees and our culture as key to our success. As of December 31, 2023, we had approximately 13,000 full-time employees.
We believe a critical component of our success is our company culture. This culture, which is detailed in a "Culture Memo" located on our website, is often described as a high-performance culture of freedom and responsibility.
We believe a critical component of our success is our company culture. This culture, which is detailed in a "Culture Memo" located on our website, is often described as providing a unique environment for our associates to perform the best work of their lives in pursuit of excellence.
We offer programs, such as seminars and lectures, that help our leaders (officers, VPs and director-level employees) examine values that guide them personally, and as leaders, especially when those values come into tension with the world around us.
We offer programs, such as seminars and lectures, that are designed to equip our leaders (officers, VPs, people managers and director and senior manager-level employees) to lead the business and our teams in alignment with our expectations and strategic goals.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

67 edited+13 added−16 removed129 unchanged
Biggest changeIn addition to the risks that we face in the U.S., our international operations involve risks that could adversely affect our business, including: • the need to adapt our content and user interfaces for specific cultural and language differences; • difficulties and costs associated with staffing and managing foreign operations; • political or social unrest, global hostilities, and economic instability; • compliance with laws such as the Foreign Corrupt Practices Act, UK Bribery Act and other anti-corruption laws, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials; • difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions, including local ownership requirements for streaming content providers; • regulatory requirements or government action against our service, whether in response to enforcement of actual or purported legal and regulatory requirements or otherwise, that results in disruption or non-availability of our service or particular content in the applicable jurisdiction; • foreign intellectual property laws, such as the EU copyright directive, or changes to such laws, which may be less favorable than U.S. law and, among other issues, may impact the economics of creating or distributing content, anti-piracy efforts, or our ability to protect or exploit intellectual property rights; • adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, and the related application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate tax determination is uncertain; • fluctuations in currency exchange rates, which have and may continue to impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk, which we do not currently hedge against but may do so in the future; • profit repatriation and other restrictions on the transfer of funds; 13 Table of Contents • differing payment processing systems as well as consumer use and acceptance of electronic payment methods, such as payment cards; • new and different sources of competition; • censorship requirements that cause us to remove or edit popular content, leading to consumer disappointment, brand tarnishment or dissatisfaction with our service; • low usage and/or penetration of internet-connected consumer electronic devices; • different and more stringent user protection, data protection, privacy and other laws, including data localization and/or restrictions on data export, and local ownership requirements; • availability of reliable broadband connectivity and wide area networks in targeted areas for expansion; • differing, and often more lenient, laws and consumer understanding/attitudes regarding the illegality of piracy; • negative impacts from trade disputes; and • implementation of regulations designed to stimulate the local production of film and TV series in order to promote and preserve local culture and economic activity, including local content quotas, investment obligations, and levies to support local film funds.
Biggest changeIn addition to the risks that we face in the U.S., our international operations involve risks that could adversely affect our business, including: • the need to adapt our content and user interfaces for specific cultural and language differences; • difficulties and costs associated with staffing and managing foreign operations; • political or social unrest, global hostilities, and economic instability; • compliance with laws such as the Foreign Corrupt Practices Act, UK Bribery Act and other anti-corruption laws, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials; • difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions, including local ownership requirements for streaming content providers; • regulatory requirements or government action against our service, whether in response to enforcement of actual or purported legal and regulatory requirements or otherwise, that results in disruption or non-availability of our service or particular content or increased operating costs in the applicable jurisdiction; • foreign intellectual property laws, such as the EU copyright directive, or changes to such laws, among other issues, may impact the economics of creating or distributing content, anti-piracy efforts, or our ability to protect or exploit intellectual property rights; • adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, and the related application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate tax determination is uncertain; • fluctuations in currency exchange rates, which have and may continue to impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk, and while we use derivative instruments to hedge certain exposures to fluctuations in exchange rates, the use of such hedging activities may not be effective in offsetting an adverse financial impact and may introduce or heighten counterparty risk; • rates of inflation; • profit repatriation, currency control regulations and other restrictions on the transfer of funds; • differing payment processing systems as well as consumer use and acceptance of electronic payment methods, such as payment cards; • new and different sources of competition; 13 Table of Contents • censorship requirements that cause us to remove or edit popular content, leading to consumer disappointment, brand tarnishment or dissatisfaction with our service; • low usage and/or penetration of internet-connected consumer electronic devices; • different and more stringent user protection, data protection, privacy and other laws, including data localization and/or restrictions on data export, and local ownership requirements; • availability of reliable broadband connectivity and wide area networks in targeted areas for expansion; • differing laws and consumer understanding/attitudes regarding the illegality of piracy; • negative impacts from trade disputes; and • implementation of regulations designed to stimulate the local production of film and TV series in order to promote and preserve local culture and economic activity, including local content quotas, investment obligations, and levies to support local film funds.
Such commitments, to the extent estimable under accounting standards, are included in the Contractual Obligations section of Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7, Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Such commitments, to the extent estimable under accounting standards, are included in the Contractual Obligations section of Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 8, Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Moreover, we may incur additional indebtedness in the future and incur other obligations, including additional streaming content obligations. Our ability to make payments on our debt will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
Moreover, we may incur additional indebtedness in the future and incur other obligations, including additional streaming content obligations. Our ability to make payments on our debt and other obligations will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
We also maintain personal information and other data concerning our employees, as well as personal information of others working on our productions. Should an unauthorized intrusion into our members’ or employees’ personal information and other data and/or production personal information occur, our business could be adversely affected and our larger reputation with respect to data protection could be negatively impacted.
We also maintain personal information concerning our employees, as well as personal information of others working on our productions. Should an unauthorized intrusion into our members’ or employees’ personal information and/or production personal information occur, our business could be adversely affected and our larger reputation with respect to data protection could be negatively impacted.
For more information on our streaming content obligations, including those not on our consolidated balance sheet, see Note 7, Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
For more information on our streaming content obligations, including those not on our consolidated balance sheet, see Note 8, Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
We devote significant resources toward the development, production, marketing and distribution of original programming, including TV series, documentaries, feature films and mobile games. We believe that original and exclusive programming can help differentiate our service from other offerings, enhance our brand and otherwise attract and retain members.
We devote significant resources toward the development, production, marketing and distribution of original programming, including TV series, documentaries, feature films and games. We believe that original and exclusive programming can help differentiate our service from other offerings, enhance our brand and otherwise attract and retain members.
If U.S. or other foreign tax authorities change applicable tax laws or successfully challenge how or where our profits are currently recognized, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.
If U.S. or other tax authorities change applicable tax laws or successfully challenge how or where our profits are currently recognized, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.
We also utilize our own and third-party content delivery networks to help us stream TV series, documentaries and feature films and offer mobile games in high volume to Netflix members over the internet.
We also utilize our own and third-party content delivery networks to help us stream TV series, documentaries and feature films and offer games in high volume to Netflix members over the internet.
We take measures to protect against unauthorized intrusion into our members’ information and other data. Despite these measures and technologies we, our payment processing services or other third-party services we use such as AWS, could experience an unauthorized intrusion into our members’ information and other data.
We take measures to protect against unauthorized intrusion into our members’ information. Despite these measures and technologies we, our payment processing services or other third-party services we use such as AWS, could experience an unauthorized intrusion into our members’ information.
We also, from time to time, receive inquiries and subpoenas and other types of information requests from government authorities, and we may become subject to related claims and other actions related to our business activities.
We also receive inquiries and subpoenas and other types of information requests from government authorities, and we may become subject to related claims and other actions related to our business activities.
Because of our prominence, we (and/or third parties we use) may be a particularly attractive target for such attacks, and from time to time, we have experienced an unauthorized release of certain digital content assets. However, to date these unauthorized releases have not had a material impact on our service, systems or business.
Because of our prominence, we (and/or third parties we use) have been and may continue to be a particularly attractive target for such attacks, and from time to time, we have experienced an unauthorized release of certain digital content assets. However, to date these unauthorized releases have not had a material impact on our service, systems or business.
To the extent there are increases in payment processing fees, 6 Table of Contents material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules, regulations or industry standards concerning payments, loss of payment partners and/or disruptions or failures in our payment processing systems, partner systems or payment products, including products we use to update payment information, our revenue, operating expenses and results of operations could be adversely impacted.
To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules, regulations or industry standards concerning payments, loss of payment partners and/or disruptions or failures in our payment processing systems, partner systems or payment products, including products we use to update payment information, our revenue, operating expenses and results of operations could be adversely impacted.
Increased regulation of data utilization practices, including self-regulation or findings under existing laws that limit our ability to collect, transfer and use information and other data, could have an adverse effect on our business.
Increased regulation of data utilization practices, including self-regulation or findings under existing laws that limit our ability to collect, transfer and use personal information, could have an adverse effect on our business.
Payment terms for certain content commitments, such as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby we do not cashflow the production of such content.
Payment terms for certain content commitments, such as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby we do not fund the production of such content.
We rely on the continued service of our senior management, including our Co-Chief Executive Officers, Ted Sarandos and Greg Peters, our Executive Chairman, Reed Hastings, members of our executive team and other key employees and the hiring of new qualified employees. In our industry, there is substantial and continuous competition for highly-skilled business, product development, technical, creative and other personnel.
We rely on the continued service of our senior management, including our Co-Chief Executive Officers, Ted Sarandos and Greg Peters, our Executive Chairman, Reed Hastings, members of our executive team and other key employees. In our industry, there is substantial and continuous competition for highly-skilled business, product development, technical, creative and other personnel.
The market for entertainment is intensely competitive and subject to rapid change. Through new and existing distribution channels, consumers have increasing options to access entertainment video. The various economic models underlying these channels include subscription, transactional, ad-supported and piracy-based models. All of these have the potential to capture meaningful segments of the entertainment video market.
The market for entertainment is intensely competitive and subject to rapid change. Through new and existing distribution channels, consumers have increasing options to access entertainment video. The various economic models underlying these channels include subscription, transactional, ad-supported and piracy-based models. All of these have the potential to capture 4 Table of Contents meaningful segments of the entertainment video market.
We have filed and we expect to file from time to time for trademark and patent applications.
We have filed and we expect to file from time to time for trademark, copyright, and patent applications.
If our technology or that of third-parties we utilize in our operations fails or otherwise operates improperly, including as a result of “bugs” or other errors in our development and deployment of software, our ability to operate our service, retain existing members and add new members may be impaired.
If our technology or that of third-parties we utilize in our operations fails or otherwise operates improperly, 10 Table of Contents including as a result of “bugs” or other errors in our development and deployment of software, our ability to operate our service, retain existing members and add new members may be impaired.
In addition, the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United 15 Table of Contents States of America also requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.
In addition, the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America also requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.
Risks Related to Information Technology 9 Table of Contents Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including member and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.
Risks Related to Information Technology Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized access, disclosure or destruction of data, including member and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.
Any actual or perceived failure to comply with the GDPR, the CCPA/CPRA, other data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
Any actual or perceived failure to comply with the GDPR, the California Consumer Privacy Act/CPRA, other data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
Such actions, as well as higher costs or operating complexities in connection with these collective bargaining agreements or a significant labor dispute, could have an adverse effect on our business by causing delays in 14 Table of Contents production, added costs or by reducing profit margins, and our ability to provide new content to our members could likewise be delayed or dropped.
Such actions, as well as higher costs or operating complexities in connection with these collective bargaining agreements or a significant labor dispute, could have an adverse effect on our business by causing delays in production, added costs or by reducing profit margins, and our ability to provide new content to our members could likewise be delayed or dropped.
If we are not able to manage the growing complexity of our business, including improving, refining or revising our corporate culture, as well as our systems and operational practices related to our streaming operations and original content, our business may be adversely affected.
If we are not able to 5 Table of Contents manage the growing complexity of our business, including improving, refining or revising our corporate culture, as well as our systems and operational practices related to our streaming operations and original content, our business may be adversely affected.
This includes the technology that we have developed to recommend and merchandise content to our consumers as well as enable fast and efficient delivery of 10 Table of Contents content to our members and their various consumer electronic devices. For example, we have built and deployed our own content-delivery network (“CDN”).
This includes the technology that we have developed to recommend and merchandise content to our consumers as well as enable fast and efficient delivery of content to our members and their various consumer electronic devices. For example, we have built and deployed our own content-delivery network (“CDN”).
We may decide to remove content from our service, not to place licensed or produced content on our service or discontinue or alter production of original content if we believe such content might not be well received by our members, or could be damaging to our brand or business.
We may decide to remove content from our service, not to place licensed or produced content on our service or discontinue or alter production of original content if we believe such content might not be well received by our members, is prohibited by law, or could be damaging to our brand or business.
Risks Related to Privacy Privacy concerns could limit our ability to collect and leverage member personal information and other data and disclosure of member personal information and other data could adversely impact our business and reputation.
Risks Related to Privacy Privacy concerns could limit our ability to collect and leverage member personal information and disclosure of member personal information could adversely impact our business and reputation.
As of December 31, 2022, we had the equivalent of $14.4 billion aggregate principal amount of senior notes outstanding (“Notes”), some of which is denominated in currencies other than the U.S. dollar. In addition, we have entered into a revolving credit agreement that provides for a $1 billion unsecured revolving credit facility.
As of December 31, 2023, we had the equivalent of $14.6 billion aggregate principal amount of senior notes outstanding (“Notes”), some of which is denominated in currencies other than the U.S. dollar. In addition, we have entered into a revolving credit agreement that provides for a $1 billion unsecured revolving credit facility.
In addition, if we were to disclose information and other data about our members in a manner that was objectionable to them, our business reputation could be adversely affected, and we could face potential legal claims that could impact our operating results.
In addition, if we were to disclose personal information about our members in a manner that was objectionable to them, our business reputation could be adversely affected, and we could face potential legal claims that could impact our operating results.
Additionally, we could face legal claims or regulatory fines or penalties for such a breach. The costs relating to any data breach could be material, and we currently do not carry insurance against the risk of a data breach.
Additionally, we could face legal claims or regulatory fines or penalties for such a breach. The costs relating to any data breach could be material, and we currently do not carry insurance against the risk of a data 11 Table of Contents breach.
There is no assurance that hackers may not have a material impact on our service or systems in the future. Our insurance does not cover expenses related to such disruptions or unauthorized access. Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to develop, implement and maintain.
There is no assurance that hackers may not have a material impact on our service or systems in the future. We do not carry insurance to cover expenses related to such disruptions or unauthorized access. Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to develop, implement and maintain.
Our ad-supported plan offering and our ability to generate advertising revenue are subject to various risks and will depend on a number of factors, including: 7 Table of Contents • our ability to attract and retain advertisers; • fluctuations in memberships, including those selecting the ad-supported subscription plan, and member engagement; • the quantity or quality of ads shown to our members; • our ability to compete effectively for advertising spend; • the impact of seasonal, cyclical or other shifts in advertising spend, including the impact of macroeconomic conditions; • the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools; • changes in the way advertising on devices, connected TVs or on personal computers is measured or priced; • adverse legal developments relating to advertising or measurement tools; • changes in third-party policies, which may negatively impact the ability to measure, deliver and select ads to be served; • regulatory, legislative and industry developments relating to the collection and use of information and other privacy considerations, including regulations related to ad targeting and measurement tools; • any liability or reputational harm from advertisements shown on our service; • our relationship with third-party service providers for the management, sale and technology to support advertisements on our service; • the impact of our content and reputation on advertisers’ willingness to spend with us; and • any member dissatisfaction due to advertisements.
Our ability to generate advertising revenue is subject to various risks and will depend on a number of factors, including: • our ability to attract and retain advertisers; • fluctuations in memberships, including those selecting the ad-supported subscription plan, and member engagement; • the quantity or quality of ads shown to our members; • our ability to compete effectively for advertising spend; • the impact of seasonal, cyclical or other shifts in advertising spend, including the impact of macroeconomic conditions; • the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools; • changes in the way advertising on devices, connected TVs or on personal computers is measured or priced; • adverse legal developments relating to advertising or measurement tools; • changes in third-party policies, which may negatively impact the ability to measure, deliver and select ads to be served; • regulatory, legislative and industry developments relating to the collection and use of information and other privacy considerations, including regulations related to ad targeting and measurement tools; • any liability or reputational harm from advertisements shown on our service; • our relationship with third-party service providers for the management, operation, sale and technology to support advertisements on our service; • our ability to develop and expand an advertising sales organization team; • our ability to develop the technology and related infrastructure to support advertising; • the impact of our content and reputation on advertisers’ willingness to spend with us; and • any member dissatisfaction due to advertisements.
If we fail to maintain a positive reputation concerning our service and the content we offer, we may not be able to attract or retain members, we may face regulatory scrutiny and our operating results may be adversely affected. 5 Table of Contents We believe that a positive reputation concerning our service is important in attracting and retaining members.
If we fail to maintain a positive reputation concerning our service and the content we offer, we may not be able to attract or retain members, we may face regulatory scrutiny and our operating results may be adversely affected. We believe that a positive reputation concerning our service is important in attracting and retaining members.
If we 12 Table of Contents are unable to service our debt and other obligations from cash flows, we may need to refinance or restructure all or a portion of such obligations prior to maturity.
If we are unable to service our debt and other obligations from cash flows, we may need to refinance or restructure all or a portion of such obligations prior to maturity.
If partners do not update or otherwise modify their devices, or if we discontinue support for certain devices, our service and our members' use and enjoyment could be negatively impacted. We are subject to payment processing risk.
If partners do not update or otherwise modify their devices, or if we discontinue support for certain devices, our service and our members' use and enjoyment could be negatively impacted. 6 Table of Contents We are subject to payment processing risk.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred taxes and other tax liabilities and receivables, and in evaluating our tax positions and other tax attributes on a worldwide basis.
If we revise such estimates it could result in greater in-period expenses, which could cause us to miss our earnings guidance or negatively impact the results we report which could negatively impact our stock price. Further, events outside of our control may cause actual results to differ from our forecast.
If we revise such estimates it could result in greater in-period expenses, which could cause us to miss our earnings guidance or negatively impact the results we report which could negatively impact our stock price. Further, events outside of our control may cause actual results to differ from our forecast. Item 1B. Unresolved Staff Comments None.
There is an increasing focus from regulators, investors, members and other stakeholders on environmental, social, and governance (“ESG”) matters, both in the United States and internationally. To the extent the content we distribute and the manner in which we produce content creates ESG related concerns, our reputation may be harmed.
There is an increasing focus from regulators, investors, members and other stakeholders on environmental, social, and governance (“ESG”) matters, both in the United States and internationally, including the adoption of new disclosure and regulatory frameworks. To the extent the content we distribute and the manner in which we produce content creates ESG related concerns, our reputation may be harmed.
Piracy also threatens to damage our business, as its fundamental proposition to consumers is so compelling and difficult to compete against: virtually all content for free, and in light of the compelling consumer proposition, piracy services are subject to rapid global growth.
Piracy also threatens to damage our business, as its fundamental proposition to consumers is so compelling and difficult to compete against: virtually all content for free. In light of the compelling consumer proposition, piracy services are subject to rapid global growth, and our efforts to prevent that growth may be insufficient.
New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies and we have tax audits pending in several jurisdictions.
Tax laws are regularly being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies and we have tax audits pending in several jurisdictions.
As of December 31, 2022, we have not borrowed any amount under this revolving credit facility. As of December 31, 2022, we had approximately $7.6 billion of total content liabilities as reflected on our consolidated balance sheet, some of which is denominated in currencies other than the U.S. dollar.
As of December 31, 2023, we 12 Table of Contents have not borrowed any amount under this revolving credit facility. As of December 31, 2023, we had approximately $7.0 billion of total content liabilities as reflected on our consolidated balance sheet, some of which is denominated in currencies other than the U.S. dollar.
Within this context, we are selective about the titles we add and renew to our service. If we do not maintain a compelling mix of content, our member acquisition and retention may be adversely affected. Music and certain authors’ performances contained within content we distribute may require us to obtain licenses for such distribution.
If we do not maintain a compelling mix of content, our member acquisition and retention may be adversely affected. Music and certain authors’ performances contained within content we distribute may require us to obtain licenses for such distribution.
Labor disputes may have an adverse effect on the Company’s business. Our partners, suppliers, vendors and we employ the services of writers, directors, actors and other talent as well as trade employees and others who are subject to collective bargaining agreements in the motion picture industry, both in the U.S. and internationally.
Labor disputes may have an adverse effect on the Company’s business. We and our partners, suppliers, and vendors engage writers, directors, actors, other talent, trade employees and others who are subject to collective bargaining agreements in the motion picture industry, both in the U.S. and internationally. Expiring collective bargaining agreements may be renewed on terms that are unfavorable to us.
This information and data is maintained on our own systems as well as that of third parties we use in our operations. With respect to billing information, such as credit card numbers, we rely on encryption and authentication 11 Table of Contents technology to secure such information.
We maintain personal information regarding our members, including names, age, gender and billing information. This personal information is maintained on our own systems as well as that of third parties we use in our operations. With respect to billing information, such as credit card numbers, we rely on encryption and authentication technology to secure such information.
As we seek to differentiate our service, we are often focused on securing certain exclusive rights when obtaining content, including original content. We are also focused on programming an overall mix of content that 8 Table of Contents delights our members in a cost efficient manner.
As we seek to differentiate our service, we are often focused on securing certain exclusive rights when obtaining content, including original content. We are also focused on programming an overall mix of content that delights our members in a cost efficient manner. Within this context, we are selective about the titles we add and renew to our service.
We may face potential liability or may suffer significant losses in connection with these arrangements, including but not limited to if such third parties violate applicable law, become insolvent or engage in fraudulent behavior.
We contract with third parties related to the development, production, marketing and distribution of our original programming. We may face potential liability or may suffer significant losses in connection with these arrangements, including but not limited to if such third parties violate applicable law, become insolvent or engage in fraudulent behavior.
Given the dynamic nature of our business, and the inherent limitations in predicting the future, forecasts of our revenues, operating margins, net income and other financial and operating data may differ materially from actual results.
Preparing and forecasting our financial results requires us to make judgments and estimates which may differ materially from actual results. 15 Table of Contents Given the dynamic nature of our business, and the inherent limitations in predicting the future, forecasts of our revenues, operating margins, net income and other financial and operating data may differ materially from actual results.
As we scale our content production, including games, and introduce new features, we are building out expertise in a number of disciplines, including creative, marketing, legal, finance, licensing, merchandising and other resources, which requires significant resources and management attention. Further, we may expand our content and service offerings in a manner that is not well received by consumers.
As we scale our content production, including games, and introduce new features, such as live programming and expand our consumer products and experience offerings, we are building out expertise in a number of disciplines, including creative, marketing, legal, finance, licensing, merchandising and other resources, which requires significant resources and management attention.
As we grow our operations, we may face integration and operational challenges as well as potential unknown liabilities and reputational concerns in connection with partners we work with or companies we may acquire or control.
Further, we may expand our content and service offerings in a manner that is not well received by consumers. As we grow our operations, we may face integration and operational challenges as well as potential unknown liabilities and reputational concerns in connection with partners we work with or companies we may acquire or control.
Our ad-supported plan offering is new and subject to various risks and uncertainties, which may adversely affect our business. We began offering an ad-supported subscription plan that generates revenue partially from digital advertising on our service. We have limited experience and operating history offering advertising on our service, and our advertising revenue may not grow as we expect.
Our advertising offering is new and subject to various risks and uncertainties, which may adversely affect our business. 7 Table of Contents We have limited experience and operating history offering advertising on our service, and our advertising revenue may not grow as we expect.
If partners or other providers do a better job of connecting consumers with content they want to watch, for example through multi-service discovery interfaces, our service may be adversely impacted. We intend to continue to broaden our relationships with existing partners and to increase our capability to stream TV series and films to other platforms and partners over time.
If partners or other providers do a better job of connecting consumers with content they want to watch, for example through multi-service discovery interfaces, our service may be adversely impacted.
Our intellectual property rights extend to our technology, business processes and the content we produce and distribute through our service. We use the intellectual property of third parties in creating some of our content, merchandising our products and marketing our service. From time to time, third parties allege that we have infringed or otherwise violated their intellectual property rights.
Our intellectual property rights extend to our technology, business processes, the content we produce and distribute through our service, and consumer products, experiences, and marketing assets based thereon. We use the intellectual property of third parties in creating some of our content, merchandising our products and marketing our service.
We may also have to remove content from our service, or remove consumer products or marketing materials from the marketplace. As a result of a dispute, we may have to develop non-infringing technology, enter into royalty or licensing agreements, adjust our content, merchandising or marketing activities or take other actions to resolve the claims.
As a result of a dispute, we may have to develop non-infringing technology, enter into royalty or licensing agreements, adjust our content, merchandising or marketing activities or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us.
If we are not able to manage change and growth, our business could be adversely affected. We are expanding our operations internationally, scaling our streaming service to effectively and reliably handle anticipated growth in both members and features related to our services, such as introducing games and advertising on our service.
We are expanding our operations internationally, scaling our streaming service to effectively and reliably handle anticipated growth in both members and features related to our services, such as introducing games and advertising on our service, as well as offering live programming and expanding our consumer products and experiences.
We have recently expanded our entertainment video offering to include games. If our efforts to develop and offer games are not valued by our current and future members, our ability to attract and retain members may be negatively impacted. We may, from time to time, adjust our membership pricing, our membership plans, or our pricing model itself.
We have recently expanded our entertainment video offering to include games. If our efforts to develop and offer games are not valued by our current and future members, our ability to attract and retain members may be negatively impacted. We may also seek to extend our business into new products and services to help drive growth.
For example, we recently introduced a new, lower-priced ad-supported subscription plan. Similarly, we have increased and anticipate continuing to increase our efforts to limit multi-household usage and to otherwise enforce our terms of use relative to shared viewing outside a household.
We have and may, from time to time, adjust our membership pricing, our membership plans, or our pricing model itself. For example, we introduced a new, lower-priced ad-supported subscription plan. Similarly, we have increased enforcement of and will continue to enforce our terms of use to limit multi-household usage and shared viewing outside of a household.
Failure to comply with these obligations could subject us to liability, and to the extent that we need to alter our business model or practices to adapt to these obligations, we could incur additional expenses.
Failure to comply with these obligations could subject us to liability, and to the extent that we need to alter our business model or practices to adapt to these obligations, we could incur additional expenses. Our reputation and relationships with members would be harmed if member personal information, particularly billing data, were to be accessed by unauthorized persons.
Expiring collective bargaining agreements may be renewed on terms that are unfavorable to us. If expiring collective bargaining agreements cannot be renewed, then it is possible that the affected unions could take action in the form of strikes or work stoppages.
If expiring collective bargaining agreements cannot be renewed, affected unions have, and could in the future, take action in the form of strikes or work stoppages.
These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, terrorist attacks, rogue employees, power loss, telecommunications failures, and cybersecurity risks. Interruptions in these systems, or with the internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver our service.
These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, public health issues such as pandemics or epidemics, terrorist attacks, rogue employees, power loss, telecommunications failures, cybersecurity risks and incidents, and other interruptions beyond our control.
Our computer systems and those of third parties we use in our operations are subject to cybersecurity threats, including cyber-attacks such as computer viruses, denial of service attacks, physical or electronic break-ins and similar disruptions.
Service interruptions, errors in our software or the unavailability of computer systems or data used in our operations could diminish the overall attractiveness of our service to existing and potential members. 9 Table of Contents Our computer systems and those of third parties we use in our operations are subject to constantly evolving cybersecurity threats, including cyber-attacks such as computer viruses, malware, ransomware, denial of service attacks, physical or electronic break-ins, or insider threats, as well as misconfigurations in information systems, networks, software or hardware, and similar disruptions or errors.
As a content producer, we are responsible for production costs and other expenses, such as ongoing guild payments, and take on risks associated with production, such as completion and key talent risk, which have been heightened during the COVID-19 pandemic.
As a content producer, we are responsible for production costs and other expenses, such as ongoing guild payments, and take on risks associated with production, such as completion and key talent risk. Further, negotiations or renewals related to entertainment industry collective bargaining agreements have, and in the future, could negatively impact timing and costs associated with our productions.
If our trademarks and other proprietary rights are not adequately protected to prevent use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.
Additionally, as the market for the digital distribution of content grows, a broader role for CMOs in the remuneration of authors, performers and other beneficiaries of neighboring rights is likely to expose us to greater distribution expenses in certain markets. 8 Table of Contents If our trademarks and other proprietary rights are not adequately protected to prevent use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.
Traditional providers of entertainment video, including broadcasters and cable network operators, as well as internet based e-commerce or entertainment video providers are increasing their streaming video offerings.
Traditional providers of entertainment video, including broadcasters and cable network operators, as well as internet based e-commerce or entertainment video providers are increasing their streaming video offerings. Several of these competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content, large content libraries, and significant financial, marketing and other resources.
This type of litigation may result in substantial costs and a diversion of management’s attention and resources. Preparing and forecasting our financial results requires us to make judgments and estimates which may differ materially from actual results.
This type of litigation may result in substantial costs and a diversion of management’s attention and resources.
Defending ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, results in costly litigation and diversion of technical and management personnel. It also may result in our inability to use our current website, streaming technology, our recommendation and merchandising technology or inability to market our service or merchandise our products.
There are numerous patents that broadly claim means and methods of conducting business on the internet. We have not searched patents relative to our technology. Defending ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, results in costly litigation and diversion of technical and management personnel.
Failure to reach such licensing agreements could expose us to potential liability for copyright infringement or otherwise increase our costs. Additionally, as the market for the digital distribution of content grows, a broader role for CMOs in the remuneration of authors, performers and other beneficiaries of neighboring rights could expose us to greater distribution expenses.
Failure to reach such licensing agreements could expose us to potential liability for copyright infringement or otherwise increase our costs.
Additionally, outside parties may attempt to induce employees, vendors, partners, or users to disclose sensitive or confidential information in order to gain access to data.
We and many of the third parties we work with rely on open source software and libraries that are integrated into a variety of applications, tools and systems, which may increase our exposure to vulnerabilities. Additionally, outside parties may attempt to induce employees, vendors, partners, or users to disclose sensitive or confidential information in order to gain access to data.
New entrants may enter the market or existing providers may adjust their services with unique offerings or approaches to providing entertainment video. Companies also may enter into business combinations or alliances that strengthen their competitive positions.
They may offer more compelling content or secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product development, technology, infrastructure, content acquisitions and marketing. New entrants may enter the market or existing providers may adjust their services with unique offerings or approaches to providing entertainment video.
Removed
Several of these competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content, large content libraries, and significant financial, marketing and other resources. 4 Table of Contents They may offer more compelling content or secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product development, technology, infrastructure, content acquisitions and marketing.
Added
For example, we are expanding our offering of consumer products and live experiences. To the extent we cannot successfully find and develop new products and services to help drive growth, our future results of operations and growth may be adversely impacted.
Removed
Further, negotiations or renewals related to entertainment industry collective bargaining agreements could negatively impact timing and costs associated with our productions. We contract with third parties related to the development, production, marketing and distribution of our original programming.
Added
In addition, new technological developments, including the development and use of generative artificial intelligence, are rapidly evolving. If our competitors gain an advantage by using such technologies, our ability to compete effectively and our results of operations could be adversely impacted. Companies also may enter into business combinations or alliances that strengthen their competitive positions.
Removed
The ongoing coronavirus (COVID-19) pandemic disrupted our business, increased our costs, led to delays in content releases and may again impact our business and results of operations. The COVID-19 pandemic and the various responses to it created significant volatility, uncertainty and economic disruption.
Added
If we are not able to manage change and growth, our business could be adversely affected.
Removed
Recently, there has been a return to more normal societal interactions, including the way we operate our business.
Added
We intend to continue to broaden our relationships with existing partners and to increase our capability to stream TV series and films and offer games to other platforms and partners over time.
Removed
We cannot predict the future impacts of this ongoing and any new pandemic(s), including: the duration and scope of such pandemic; governmental, business and individuals’ actions that may be taken in response; the effect on our members and consumer demand for and ability to pay for our services; disruptions or restrictions on our employees’ ability to work and travel; and any stoppages, disruptions or increased costs associated with our development, production, post-production, marketing and distribution of original programming.
Added
From time to time, third parties allege that we have infringed or otherwise violated their intellectual property rights.
Removed
Future disruptions arising from the ongoing and any new pandemics could have a significant negative impact on our costs of doing business and otherwise negatively impact our results of operations.
Added
In addition, the use or adoption of new and emerging technologies may increase our exposure to intellectual property claims, and the availability of copyright and other intellectual property protection for AI-generated material is uncertain. Many companies are devoting significant resources to developing patents that could potentially affect many aspects of our business.
Removed
We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations, including content production, as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, members, partners and stockholders.

… 16 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

7 edited+2 added−1 removed1 unchanged
Biggest changeAs of December 31, 2022, $4.4 billion remains available for repurchases. 18 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the Securities and Exchange Commission, the following information relating to the price performance of our common stock shall not be deemed “filed” with the Commission or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
Biggest change(2) Average price paid per share includes costs associated with the repurchases. 19 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the Securities and Exchange Commission, the following information relating to the price performance of our common stock shall not be deemed “filed” with the Commission or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
Item 3. Legal Proceedings Information with respect to this item may be found in Note 7 Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, under the caption "Legal Proceedings" which information is incorporated herein by reference. Item 4.
Item 3. Legal Proceedings Information with respect to this item may be found in Note 8 Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, under the caption "Legal Proceedings" which information is incorporated herein by reference. Item 4.
Mine Safety Disclosures Not applicable. 17 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol “NFLX”.
Mine Safety Disclosures Not applicable. 18 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol “NFLX”.
The following graph compares, for the five year period ended December 31, 2022, the total cumulative stockholder return on the Company’s common stock with the total cumulative return of the NASDAQ Composite Index, the S&P 500 Index and the RDG Internet Composite Index.
The following graph compares, for the five year period ended December 31, 2023, the total cumulative stockholder return on the Company’s common stock with the total cumulative return of the NASDAQ Composite Index, the S&P 500 Index and the RDG Internet Composite Index.
Holders As of December 31, 2022, there were approximately 2,788 stockholders of record of our common stock, although there is a significantly larger number of beneficial owners of our common stock. Dividend Policy We have never declared or paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash dividends in the foreseeable future.
Holders As of December 31, 2023, there were approximately 2,728 stockholders of record of our common stock, although there is a significantly larger number of beneficial owners of our common stock. Dividend Policy We have never declared or paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash dividends in the foreseeable future.
Measurement points are the last trading day of each of the Company’s fiscal years ended December 31, 2017, December 31, 2018, December 31, 2019, December 31, 2020, December 31, 2021 and December 31, 2022.
Measurement points are the last trading day of each of the Company’s fiscal years ended December 31, 2018, December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023.
Historical stock price performance should not be relied upon as an indication of future stock price performance. Item 6. [Reserved] 19 Table of Contents
Historical stock price performance should not be relied upon as an indication of future stock price performance. Item 6. [Reserved] 20 Table of Contents
Removed
Company Purchases of Equity Securities In March 2021, the Company’s Board of Directors authorized the repurchase of up to $5 billion of its common stock, with no expiration date. There were no repurchases during the quarter ended December 31, 2022.
Added
Company Purchases of Equity Securities Stock repurchases during the three months ended December 31, 2023 were as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) (in thousands) October 1 - 31, 2023 287,360 $ 404.62 287,360 $ 10,738,584 November 1 - 30, 2023 2,708,477 $ 447.03 2,708,477 $ 9,527,821 December 1 - 31, 2023 2,481,771 $ 472.63 2,481,771 $ 8,354,857 Total 5,477,608 5,477,608 (1) In March 2021, the Company’s Board of Directors authorized the repurchase of up to $5 billion of its common stock, with no expiration date, and in September 2023, the Board of Directors increased the share repurchase authorization by an additional $10 billion, also with no expiration date.
Added
For further information regarding stock repurchase activity, see Note 9 Stockholders’ Equity to the consolidated financial statements in this Annual Report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−0 removed1 unchanged
Biggest changeItem 5.02 January 24, 2018 10. 5 † Amended and Restated Performance Bonus Plan 8-K 001-35727 10.1 December 9, 2022 10. 6 † Amended and Restated Executive Severance and Retention Incentive Plan 8-K 001-35727 10.1 September 10, 2021 10.7 Revolving Credit Agreement among the Company, Deutsche bank AG New York Branch, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, N.A. and the administrative agent, dated as of July 27, 2017 10-Q 001-35727 10.15 October 18, 2017 10.8 First Amendment Agreement, dated as of March 29, 2019, among Netflix, Inc., the Lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. 8-K 001-35727 10.1 April 1, 2019 10.9 Second Amendment Agreement, dated as of June 17, 2021, among Netflix, Inc., the Lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. 8-K 001-35727 10.1 June 17, 2021 10.10† Form of Stock Option Agreement under the 2011 Stock Plan 10-K 001-35727 10.11 January 27, 2022 10.11† Form of Stock Option Agreement under the 2020 Stock Plan X 10.12† Form of Stock Option Agreement under the 2020 Stock Plan (Options Subject to Vesting) 8-K 001-35727 10.1 December 23, 2022 21.1 List of Significant Subsidiaries X 23.1 Consent of Ernst & Young LLP X 24 Power of Attorney (see signature page) 31.1 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.3 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certifications of Co-Chief Executive Officers and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 62 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form File No.
Biggest changeItem 5.02 January 24, 2018 10.5† Amended and Restated Performance Bonus Plan 8-K 001-35727 10.1 December 9, 2022 10.6† Amended and Restated Executive Severance and Retention Incentive Plan 8-K 001-35727 10.1 September 10, 2021 10.7 Revolving Credit Agreement among the Company, Deutsche bank AG New York Branch, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, N.A. and the administrative agent, dated as of July 27, 2017 10-Q 001-35727 10.15 October 18, 2017 10.8 First Amendment Agreement, dated as of March 29, 2019, among Netflix, Inc., the Lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. 8-K 001-35727 10.1 April 1, 2019 10.9 Second Amendment Agreement, dated as of June 17, 2021, among Netflix, Inc., the Lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. 8-K 001-35727 10.1 June 17, 2021 10.10 Third Amendment Agreement, dated as of March 6, 2023, among Netflix, Inc., the Lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. 10-Q 001-35727 10.2 April 21, 2023 10.11† Form of Stock Option Agreement under the 2011 Stock Plan 10-K 001-35727 10.11 January 27, 2022 10.12† Form of Stock Option Agreement under the 2020 Stock Plan 10-K 001-35727 10.11 January 26, 2023 10.13† Netflix, Inc. 2020 Stock Plan Form of Restricted Stock Unit Award Agreement 8-K 001-35727 10.1 December 8, 2023 10.14† Netflix, Inc. 2020 Stock Plan Form of Performance-Based Restricted Stock Unit Award Agreement 8-K 001-35727 10.2 December 8, 2023 10.15† Netflix, Inc.
Exhibit Filing Date 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags X 104 The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL X * These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings. † Indicates a management contract or compensatory plan 63 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Clawback Policy X 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags X 104 The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL X * These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings. † Indicates a management contract or compensatory plan 67 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: January 26, 2023 By: / S / T ED S ARANDOS Ted Sarandos Co-Chief Executive Officer (principal executive officer) Dated: January 26, 2023 By: / S / G REG P ETERS Greg Peters Co-Chief Executive Officer (principal executive officer) Dated: January 26, 2023 By: / S / S PENCER N EUMANN Spencer Neumann Chief Financial Officer (principal financial and accounting officer) 64 Table of Contents POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ted Sarandos and Spencer Neumann, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his substitute or substituted, may lawfully do or cause to be done by virtue thereof.
Dated: January 26, 2024 By: / S / T ED S ARANDOS Ted Sarandos Co-Chief Executive Officer (principal executive officer) Dated: January 26, 2024 By: / S / G REG P ETERS Greg Peters Co-Chief Executive Officer (principal executive officer) 68 Table of Contents POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ted Sarandos, Greg Peters, and Spencer Neumann, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his substitute or substituted, may lawfully do or cause to be done by virtue thereof.
H ALEY Director January 26, 2023 Timothy M. Haley / S / J AY C. H OAG Director January 26, 2023 Jay C. Hoag / S / L ESLIE J. K ILGORE Director January 26, 2023 Leslie J.
H ALEY Director January 26, 2024 Timothy M. Haley / S / J AY C. H OAG Director January 26, 2024 Jay C. Hoag / S / L ESLIE J. K ILGORE Director January 26, 2024 Leslie J.
Signature Title Date / S / T ED S ARANDOS Co-Chief Executive Officer and Director (principal executive officer) January 26, 2023 Ted Sarandos /S/ G REG P ETERS Co-Chief Executive Officer and Director (principal executive officer) January 26, 2023 Greg Peters / S / S PENCER N EUMANN Chief Financial Officer (principal financial and accounting officer) January 26, 2023 Spencer Neumann / S / R EED H ASTINGS Executive Chairman and Director January 26, 2023 Reed Hastings / S / R ICHARD B ARTON Director January 26, 2023 Richard Barton / S / M ATHIAS D ÖPFNER Director January 26, 2023 Mathias Döpfner / S / T IMOTHY M.
Signature Title Date / S / T ED S ARANDOS Co-Chief Executive Officer and Director (principal executive officer) January 26, 2024 Ted Sarandos /S/ G REG P ETERS Co-Chief Executive Officer and Director (principal executive officer) January 26, 2024 Greg Peters / S / S PENCER N EUMANN Chief Financial Officer (principal financial officer) January 26, 2024 Spencer Neumann / S / J EFFREY K ARBOWSKI Chief Accounting Officer (principal accounting officer) January 26, 2024 Jeffrey Karbowski / S / R EED H ASTINGS Executive Chairman and Director January 26, 2024 Reed Hastings / S / R ICHARD B ARTON Director January 26, 2024 Richard Barton / S / M ATHIAS D ÖPFNER Director January 26, 2024 Mathias Döpfner / S / T IMOTHY M.
Kilgore / S / S TRIVE M ASIYIWA Director January 26, 2023 Strive Masiyiwa / S / A NN M ATHER Director January 26, 2023 Ann Mather / S / B RAD S MITH Director January 26, 2023 Brad Smith 65 Table of Contents /S/ A NNE S WEENEY Director January 26, 2023 Anne Sweeney 66
Kilgore / S / S TRIVE M ASIYIWA Director January 26, 2024 Strive Masiyiwa / S / A NN M ATHER Director January 26, 2024 Ann Mather 69 Table of Contents / S / S USAN R ICE Director January 26, 2024 Susan Rice / S / B RAD S MITH Director January 26, 2024 Brad Smith /S/ A NNE S WEENEY Director January 26, 2024 Anne Sweeney 70
Added
Executive Officer Severance Plan 8-K 001-35727 10.3 December 8, 2023 10.16† Executive Severance and Retention Incentive Plan as Amended and Restated effective January 1, 2024 8-K 001-35727 10400 December 8, 2023 21.1 List of Significant Subsidiaries X 23.1 Consent of Ernst & Young LLP X 24 Power of Attorney (see signature page) 31.1 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 66 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form File No.
Added
Exhibit Filing Date 31.2 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.3 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certifications of Co-Chief Executive Officers and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 97.1 Netflix, Inc.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved] 19 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29 Item 8. Financial Statements and Supplementary Data 29 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 Item 9A. Controls and Procedures 30
Biggest changeItem 6. [Reserved] 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29 Item 8. Financial Statements and Supplementary Data 30 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 30 Item 9A. Controls and Procedures 31 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+14 added−14 removed31 unchanged
Biggest changeUnited States and Canada (UCAN) 20 Table of Contents As of/ Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except revenue per membership and percentages) Revenues $ 14,084,643 $ 12,972,100 $ 11,455,396 $ 1,112,543 9 % Paid net membership additions (losses) (919) 1,279 6,274 (2,198) (172) % Paid memberships at end of period (1) 74,296 75,215 73,936 (919) (1) % Average paying memberships 74,001 74,234 71,689 (233) — % Average monthly revenue per paying membership $ 15.86 $ 14.56 $ 13.32 $ 1.30 9 % Constant currency change (2) 9 % Europe, Middle East, and Africa (EMEA) As of/ Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except revenue per membership and percentages) Revenues $ 9,745,015 $ 9,699,819 $ 7,772,252 $ 45,196 — % Paid net membership additions 2,693 7,338 14,920 (4,645) (63) % Paid memberships at end of period (1) 76,729 74,036 66,698 2,693 4 % Average paying memberships 73,904 69,518 60,425 4,386 6 % Average monthly revenue per paying membership $ 10.99 $ 11.63 $ 10.72 $ (0.64) (6) % Constant currency change (2) 6 % Latin America (LATAM) As of/ Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except revenue per membership and percentages) Revenues $ 4,069,973 $ 3,576,976 $ 3,156,727 $ 492,997 14 % Paid net membership additions 1,738 2,424 6,120 (686) (28) % Paid memberships at end of period (1) 41,699 39,961 37,537 1,738 4 % Average paying memberships 40,000 38,573 35,297 1,427 4 % Average monthly revenue per paying membership $ 8.48 $ 7.73 $ 7.45 $ 0.75 10 % Constant currency change (2) 14 % Asia-Pacific (APAC) As of/ Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except revenue per membership and percentages) Revenues $ 3,570,221 $ 3,266,601 $ 2,372,300 $ 303,620 9 % Paid net membership additions 5,391 7,140 9,259 (1,749) (24) % Paid memberships at end of period (1) 38,023 32,632 25,492 5,391 17 % Average paying memberships 35,019 28,461 21,674 6,558 23 % Average monthly revenue per paying membership $ 8.50 $ 9.56 $ 9.12 $ (1.06) (11) % Constant currency change (2) (2) % 21 Table of Contents (1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members.
Biggest changeUnited States and Canada (UCAN) As of/Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except revenue per membership and percentages) Revenues $ 14,873,783 $ 14,084,643 $ 12,972,100 $ 789,140 6 % Paid net membership additions (losses) 5,832 (919) 1,279 6,751 735 % Paid memberships at end of period (1) 80,128 74,296 75,215 5,832 8 % Average paying memberships 76,126 74,001 74,234 2,125 3 % Average monthly revenue per paying membership $ 16.28 $ 15.86 $ 14.56 $ 0.42 3 % Constant currency change (2) 3 % Europe, Middle East, and Africa (EMEA) As of/Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except revenue per membership and percentages) Revenues $ 10,556,487 $ 9,745,015 $ 9,699,819 $ 811,472 8 % Paid net membership additions 12,084 2,693 7,338 9,391 349 % Paid memberships at end of period (1) 88,813 76,729 74,036 12,084 16 % Average paying memberships 80,928 73,904 69,518 7,024 10 % Average monthly revenue per paying membership $ 10.87 $ 10.99 $ 11.63 $ (0.12) (1) % Constant currency change (2) (1) % Latin America (LATAM) As of/Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except revenue per membership and percentages) Revenues $ 4,446,461 $ 4,069,973 $ 3,576,976 $ 376,488 9 % Paid net membership additions 4,298 1,738 2,424 2,560 147 % Paid memberships at end of period (1) 45,997 41,699 39,961 4,298 10 % Average paying memberships 42,802 40,000 38,573 2,802 7 % Average monthly revenue per paying membership $ 8.66 $ 8.48 $ 7.73 $ 0.18 2 % Constant currency change (2) 10 % Asia-Pacific (APAC) 22 Table of Contents As of/Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except revenue per membership and percentages) Revenues $ 3,763,727 $ 3,570,221 $ 3,266,601 $ 193,506 5 % Paid net membership additions 7,315 5,391 7,140 1,924 36 % Paid memberships at end of period (1) 45,338 38,023 32,632 7,315 19 % Average paying memberships 41,033 35,019 28,461 6,014 17 % Average monthly revenue per paying membership $ 7.64 $ 8.50 $ 9.56 $ (0.86) (10) % Constant currency change (2) (6) % (1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members.
For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. For produced content, we capitalize costs associated with the production, including development cost, direct costs and production overhead.
For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. For produced content, we capitalize costs associated with the production, including development costs, direct costs and production overhead.
Payments for content, including additions to content assets and the changes in related liabilities, are classified within "Net cash provided by (used in) operating activities" on the Consolidated Statements of Cash Flows. We recognize content assets (licensed and produced) as "Content assets, net" on the Consolidated Balance Sheets.
Payments for content, including additions to content assets and the changes in related liabilities, are classified within "Net cash provided by operating activities" on the Consolidated Statements of Cash Flows. We recognize content assets (licensed and produced) as "Content assets, net" on the Consolidated Balance Sheets.
Streaming Revenues We derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan.
Streaming Revenues We primarily derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. 27 Table of Contents Content We acquire, license and produce content, including original programming, in order to offer our members unlimited viewing of video entertainment.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. Content We acquire, license and produce content, including original programming, in order to offer our members unlimited viewing of video entertainment.
The amortization is on an accelerated basis, as we typically expect more upfront viewing, and film amortization is more accelerated than TV series amortization. On average, over 90% of a licensed or produced content asset is expected to be amortized within four years after its month of first availability.
The amortization is on an accelerated basis, as we typically expect more upfront viewing, and film amortization is more accelerated than TV series amortization. On average, over 90% of a licensed or produced content asset is expected to be amortized within four years 28 Table of Contents after its month of first availability.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Expenses directly associated with the acquisition, licensing and production of content (such as payroll and related personnel expenses, costs associated with obtaining rights to music included in our content, overall deals with talent, miscellaneous production related costs and participations and residuals), streaming delivery costs and other operations costs make up the remainder of cost of revenues.
Expenses directly associated with the acquisition, licensing and production of content (such as payroll, stock-based compensation, facilities, and other related personnel expenses, costs associated with obtaining rights to music included in our content, overall deals with talent, miscellaneous production related costs and participations and residuals), streaming delivery costs and other operations costs make up the remainder of cost of revenues.
The following tables summarize streaming revenue and other streaming membership information by region for the years ended December 31, 2022, 2021 and 2020.
The following tables summarize streaming revenue and other streaming membership information by region for the years ended December 31, 2023, 2022 and 2021.
We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing 28 Table of Contents authorities, based on the technical merits of the position.
We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
(3) See Note 5 Balance Sheet Components in the accompanying notes to our consolidated financial statements for further details regarding leases. As of December 31, 2022, the Company has additional operating leases for real estate that have not yet commenced of $419 million which has been included above.
As of December 31, 2023, the Company has additional operating leases for real estate that have not yet commenced of $343 million which has been included above. See Note 5 Balance Sheet Components in the accompanying notes to our consolidated financial statements for further details regarding leases.
Tax incentives are generally accounted for as a reduction to the cost basis of content assets (presented in “Content assets, net”) and reduces content amortization over the life of the title (as presented in “Cost of revenues”) on the Consolidated Statement of Operations.
Tax incentives are generally accounted for as a reduction to the cost basis of content assets (presented in “Content assets, net”) and reduce content amortization over the life of the title (as presented in “Cost of revenues”) on the Consolidated Statements of Operations.
Indemnifications The information set forth under Note 8 Guarantees - Indemnification Obligations in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K is incorporated herein by reference.
Indemnifications The information set forth under Note 8 Commitments and Contingencies in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K is incorporated herein by reference.
For the year ended December 31, 2022, our revenues would have been approximately $1,773 million higher had foreign currency exchange rates remained constant with those for the year ended December 31, 2021. Cost of Revenues Amortization of content assets makes up the majority of cost of revenues.
For the year ended December 31, 2023, our revenues would have been approximately $597 million higher had foreign currency exchange rates remained constant with those for the year ended December 31, 2022. Cost of Revenues Amortization of content assets makes up the majority of cost of revenues.
In assessing liquidity in relation to our results of operations, we compare free cash flow to net income, noting that the major recurring differences are excess content payments over amortization, non-cash stock-based compensation expense, non-cash remeasurement gain/loss on our euro-denominated debt, and other working capital differences.
In assessing liquidity in relation to our results of operations, we compare free cash flow to net income, noting that the major recurring differences are the timing impact between content payments and amortization, non-cash stock-based compensation expense, non-cash remeasurement gain/loss on our euro-denominated debt, excess property and equipment purchases over depreciation, and other working capital differences.
In addition, as of December 31, 2022, we had gross unrecognized tax benefits of $227 million, of which $155 million was classified in “Other non-current liabilities" in the Consolidated Balance Sheets. At this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.
In addition, as of December 31, 2023, we had gross unrecognized tax benefits of $327 million, of which $221 million was classified in “Other non-current liabilities" in the Consolidated Balance Sheets. At this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.
Our ability to obtain this or any additional financing that we may choose to, or need to, obtain will depend on, among other things, our development efforts, business plans, operating performance and the condition of the capital markets at the time we seek financing.
Our ability to obtain this or any additional financing that we may choose or need, including for potential strategic acquisitions and investments, will depend on, among other things, our development efforts, business plans, operating performance, and the condition of the capital markets at the time we seek financing.
Technology and Development 22 Table of Contents Technology and development expenses consist primarily of payroll and related expenses for technology personnel responsible for making improvements to our service offerings, including testing, maintaining and modifying our user interface, our recommendations, merchandising and infrastructure. Technology and development expenses also include costs associated with general use computer hardware and software.
Technology and Development Technology and development expenses consist primarily of payroll, stock-based compensation, facilities, and other related expenses for technology personnel responsible for making improvements to our service offerings, including testing, maintaining and modifying our user interface, our recommendations, merchandising and infrastructure. Technology and development expenses also include costs associated with general use computer hardware and software.
Marketing Marketing expenses consist primarily of advertising expenses and certain payments made to our marketing partners, including consumer electronics ("CE") manufacturers, multichannel video programming distributors ("MVPDs"), mobile operators and ISPs. Advertising expenses include promotional activities such as digital and television advertising. Marketing expenses also include payroll and related expenses for personnel that support marketing activities.
Marketing Marketing expenses consist primarily of advertising expenses and certain payments made to our marketing and advertising sales partners, including consumer electronics ("CE") manufacturers, multichannel video programming distributors ("MVPDs"), mobile operators and ISPs. Advertising expenses include promotional activities such as digital and television advertising.
General and Administrative General and administrative expenses consist of payroll and related expenses for corporate personnel. General and administrative expenses also include professional fees and other general corporate expenses.
General and Administrative General and administrative expenses consist of payroll, stock-based compensation, facilities, and other related expenses for corporate personnel. General and administrative expenses also include professional fees and other general corporate expenses.
The foreign exchange gain in the year ended December 31, 2021 was primarily driven by the non-cash $431 million gain from the remeasurement of our Senior Notes denominated in euros, partially offset by the remeasurement of cash and content liability positions in currencies other than the functional currencies.
The foreign exchange loss in the year ended December 31, 2023 was primarily driven by the non-cash loss of $176 million from the remeasurement of our Senior Notes denominated in euros, coupled with the remeasurement of cash and content liability positions in currencies other than the functional currencies.
The assumptions utilized in determining future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying business. Actual operating results in future years could differ from our current assumptions, judgments and estimates.
The assumptions utilized in determining future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying business. Actual operating results in future years could differ from our current assumptions, judgments and estimates. We do not recognize certain tax benefits from uncertain tax positions within the provision for income taxes.
Net cash used in financing activities decreased $486 million primarily due to there being no repurchases of common stock in the year ended December 31, 2022 as compared to repurchases of common stock for an aggregate amount of $600 million in the year ended December 31, 2021, partially offset by the repayment upon maturity of the $700 million aggregate principal amount of our 5.500% Senior Notes in February 2022 as compared to the repayment upon maturity of the $500 million aggregate principal amount of our 5.375% Senior Notes in February 2021.
The increase in net cash used in financing activities is primarily due to repurchases of common stock for an aggregate amount of $6,045 million in the year ended December 31, 2023, as compared to no repurchases of common stock in the year ended December 31, 2022, partially offset by the absence of debt maturities in the year ended December 31, 2023 as compared to the repayment upon maturity of the $700 million aggregate principal amount of our 5.500% Senior Notes in February 2022.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Interest and other income (expense) $ 337,310 $ 411,214 $ (618,441) $ (73,904) (18) % As a percentage of revenues 1 % 1 % (2) % Interest and other income (expense) decreased primarily due to a foreign exchange gain of $282 million for the year ended December 31, 2022 as compared to a gain of $403 million for the year ended December 31, 2021.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Interest and other income (expense) $ (48,772) $ 337,310 $ 411,214 $ (386,082) (114) % As a percentage of revenues — % 1 % 1 % Interest and other income (expense) decreased primarily due to foreign exchange losses of $293 million for the year ended December 31, 2023 as compared to a gain of $282 million for the year ended December 31, 2022.
Content obligations include amounts related to the acquisition, licensing and production of content. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements and other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time we enter into an agreement to obtain future titles.
An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements and other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time we enter into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Interest expense $ 706,212 $ 765,620 $ 767,499 $ (59,408) (8) % As a percentage of revenues 2 % 3 % 3 % Interest expense for the year ended December 31, 2022 consisted primarily of $698 million of interest on our Notes.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Interest expense $ 699,826 $ 706,212 $ 765,620 $ (6,386) (1) % As a percentage of revenues 2 % 2 % 3 % 24 Table of Contents Interest expense for the year ended December 31, 2023 consisted primarily of $698 million of interest on our Notes.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) General and administrative $ 1,572,891 $ 1,351,621 $ 1,076,486 $ 221,270 16 % As a percentage of revenues 5 % 5 % 4 % The increase in general and administrative expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to a $224 million increase in personnel-related costs.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) General and administrative $ 1,720,285 $ 1,572,891 $ 1,351,621 $ 147,394 9 % As a percentage of revenues 5 % 5 % 5 % The increase in general and administrative expenses for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily due to a $82 million increase in third-party expenses and a $78 million increase in personnel-related costs.
Interest Expense Interest expense consists primarily of the interest associated with our outstanding debt obligations, including the amortization of debt issuance costs. See Note 6 Debt in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further detail on our debt obligations.
Interest Expense Interest expense consists primarily of the interest associated with our outstanding debt obligations, including the amortization of debt issuance costs. See Note 6 Debt in the accompanying notes to our consolidated financial statements for further detail on our debt obligations.
In March 2021, our Board of Directors authorized the repurchase of up to $5 billion of our common stock, with no expiration date.
In March 2021, our Board of Directors authorized the repurchase of up to $5 billion of our common stock, with no expiration date, and in September 2023, the Board of Directors increased the share repurchase authorization by an additional $10 billion, also with no expiration date.
The decrease in interest expense for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was due to the lower average aggregate principal of interest bearing notes outstanding. 23 Table of Contents Interest and Other Income (Expense) Interest and other income (expense) consists primarily of foreign exchange gains and losses on foreign currency denominated balances and interest earned on cash, cash equivalents and short-term investments.
Interest expense for the year ended December 31, 2023 as compared to the year ended December 31, 2022 remained relatively flat. Interest and Other Income (Expense) Interest and other income (expense) consists primarily of foreign exchange gains and losses on foreign currency denominated balances and interest earned on cash, cash equivalents and short-term investments.
We currently anticipate that cash flows from operations, available funds and access to financing sources, including our revolving credit facility, will continue to be sufficient to meet our cash needs for the next twelve months and beyond. Our material cash requirements from known contractual and other obligations primarily relate to our content, debt and lease obligations.
We expect to continue to significantly invest in global content, particularly in original content, which will impact our liquidity. We currently anticipate that cash flows from operations, available funds and access to financing sources, including our revolving credit facility, will continue to be sufficient to meet our cash needs for the next twelve months and beyond.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance when it is more likely than not they will not be realized.
Free cash flow was $2,873 million lower than net income for the year ended December 31, 2022 primarily due to $2,634 million of cash payments for content assets over amortization expense, $353 million of non-cash remeasurement gain on our euro-denominated debt, and $461 million other non-favorable working capital differences, partially offset by $575 million of non-cash stock-based compensation expenses.
Free cash flow was $1,518 million higher than net income for the year ended December 31, 2023 primarily due to $1,057 million of amortization expense exceeding cash payments for content assets, $339 million of non-cash stock-based compensation expense, $176 million of non-cash remeasurement loss on our euro-denominated debt, and $47 million in other favorable working capital differences, partially offset by $101 million of property and equipment purchases exceeding depreciation expense.
The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. At December 31, 2022, our estimated gross unrecognized tax benefits were $227 million of which $155 million, if recognized, would favorably impact our future earnings.
The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Technology and development $ 2,711,041 $ 2,273,885 $ 1,829,600 $ 437,156 19 % As a percentage of revenues 9 % 8 % 7 % The increase in technology and development expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to a $386 million increase in personnel-related costs.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Technology and development $ 2,675,758 $ 2,711,041 $ 2,273,885 $ (35,283) (1) % As a percentage of revenues 8 % 9 % 8 % Technology and development expenses for the year ended December 31, 2023 as compared to the year ended December 31, 2022 remained relatively flat.
Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of these types of agreements. The contractual obligations table above does not include any estimated obligation for the unknown future titles, payment for which could range from less than one year to more than five years.
The contractual obligations table above does not include any estimated obligation for the unknown future titles, payment for which could range from less than one year to more than five years.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Cost of revenues $ 19,168,285 $ 17,332,683 $ 15,276,319 $ 1,835,602 11 % As a percentage of revenues 61 % 58 % 61 % The increase in cost of revenues for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to a $1,796 million increase in content amortization relating to our existing and new content, including more exclusive and original programming.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Cost of revenues $ 19,715,368 $ 19,168,285 $ 17,332,683 $ 547,083 3 % As a percentage of revenues 58 % 61 % 58 % The increase in cost of revenues for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was due to a $171 million increase in content amortization relating to our existing and new content, coupled with a $376 million increase in other cost of revenues primarily due to an increase in expenses directly associated with the acquisition, licensing and production of content.
Results of Operations The following represents our consolidated performance highlights: As of/ Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except revenue per membership and percentages) Financial Results: Streaming revenues $ 31,469,852 $ 29,515,496 $ 24,756,675 7 % DVD revenues 145,698 182,348 239,381 (20) % Total revenues $ 31,615,550 $ 29,697,844 $ 24,996,056 6 % Operating income $ 5,632,831 $ 6,194,509 $ 4,585,289 (9) % Operating margin 18 % 21 % 18 % Global Streaming Memberships: Paid net membership additions 8,903 18,181 36,573 (51) % Paid memberships at end of period 230,747 221,844 203,663 4 % Average paying memberships 222,924 210,784 189,083 6 % Average monthly revenue per paying membership $ 11.76 $ 11.67 $ 10.91 1 % Consolidated revenues for the year ended December 31, 2022 increased 6% as compared to the year ended December 31, 2021, due to the 6% growth in average paying memberships and a 1% increase in average monthly revenue per paying membership.
Results of Operations The following represents our consolidated performance highlights: As of/Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except revenue per membership and percentages) Financial Results: Streaming revenues $ 33,640,458 $ 31,469,852 $ 29,515,496 7 % DVD revenues (1) 82,839 145,698 182,348 (43) % Total revenues $ 33,723,297 $ 31,615,550 $ 29,697,844 7 % Operating income $ 6,954,003 $ 5,632,831 $ 6,194,509 23 % Operating margin 21 % 18 % 21 % Global Streaming Memberships: Paid net membership additions 29,529 8,903 18,181 232 % Paid memberships at end of period 260,276 230,747 221,844 13 % Average paying memberships 240,889 222,924 210,784 8 % Average monthly revenue per paying membership $ 11.64 $ 11.76 $ 11.67 (1) % (1) In April 2023, we announced our plans to discontinue our DVD-by-mail service, and we ceased providing our mailing services to customers on September 29, 2023.
Working capital differences include deferred revenue, excess property and equipment purchases over depreciation, taxes and semi-annual interest payments on our outstanding debt.
Working capital differences primarily include deferred revenue, taxes and semi-annual interest payments on our outstanding debt. Our receivables from members generally settle quickly.
Debt, net of debt issuance costs, decreased $1,040 million primarily due to the repayment upon maturity of the $700 million aggregate principal amount of our 5.500% Senior Notes in February 2022, coupled with the remeasurement of our euro-denominated notes. The amount of principal and interest due in the next twelve months is $682 million.
Debt, net of debt issuance costs, increased $190 million primarily due to the remeasurement of our euro-denominated notes. The amount of principal and interest due in the next twelve months is $1,077 million. The amount of principal and interest due beyond the next twelve months is $16,662 million.
For example, production costs are paid as the content is created, well in advance of when the content is available on the service and amortized. We expect to continue to significantly invest in global content, particularly in original content, which will impact our liquidity.
Investments in original content, and in particular content that we produce and own, require more cash upfront relative to licensed content. For example, production costs are paid as the content is created, well in advance of when the content is available on the service and amortized.
Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date.
Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of these types of agreements.
The amount of principal and interest due beyond the next twelve months is $17,529 million. As of December 31, 2022, no amounts had been borrowed under our $1 billion Revolving Credit Agreement. See Note 6 Debt in the accompanying notes to our consolidated financial statements.
As of December 31, 2023, no amounts had been borrowed under our $1 billion Revolving Credit Agreement. See Note 6 Debt in the accompanying notes to our consolidated financial statements. We anticipate that our future capital needs from the debt market will be more limited compared to prior years.
As of December 31, 2022, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $26 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.
We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations. We also earn revenue from advertisements presented on our streaming service, consumer products and various other sources.
As of December 31, 2022, the expected timing of those payments are as follows: Obligations (in thousands): Total Next 12 Months Beyond 12 Months Content obligations (1) $ 21,831,947 $ 10,038,483 $ 11,793,464 Debt (2) 18,210,739 681,993 17,528,746 Operating lease obligations (3) 3,363,091 477,451 2,885,640 Total $ 43,405,777 $ 11,197,927 $ 32,207,850 25 Table of Contents (1) As of December 31, 2022, content obligations were comprised of $4.5 billion included in "Current content liabilities" and $3.1 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
As of December 31, 2023, the expected timing of those payments are as follows: Contractual obligations (in thousands): Total Next 12 Months Beyond 12 Months Content obligations (1) $ 21,713,349 $ 10,328,923 $ 11,384,426 Debt (2) 17,739,159 1,077,261 16,661,898 Operating lease obligations (3) 3,088,899 513,506 2,575,393 Total $ 42,541,407 $ 11,919,690 $ 30,621,717 (1) As of December 31, 2023, content obligations were comprised of $4.5 billion included in "Current content liabilities" and $2.6 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.6 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition. 26 Table of Contents Content obligations include amounts related to the acquisition, licensing and production of content.
Our receivables from members generally settle quickly. 26 Table of Contents Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands) Net cash provided by operating activities $ 2,026,257 $ 392,610 $ 2,427,077 $ 1,633,647 416 % Net cash used in investing activities (2,076,392) (1,339,853) (505,354) 736,539 55 % Net cash provided by (used in) financing activities (664,254) (1,149,776) 1,237,311 (485,522) (42) % Non-GAAP reconciliation of free cash flow: Net cash provided by operating activities 2,026,257 392,610 2,427,077 1,633,647 416 % Purchases of property and equipment (407,729) (524,585) (497,923) (116,856) (22) % Change in other assets — (26,919) (7,431) 26,919 100 % Free cash flow $ 1,618,528 $ (158,894) $ 1,921,723 $ 1,777,422 1119 % Net cash provided by operating activities increased $1,634 million from the year ended December 31, 2021 to $2,026 million for the year ended December 31, 2022 primarily driven by a $1,918 million or 6% increase in revenues, coupled with a decrease in cash payments for content assets.
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands) Net cash provided by operating activities $ 7,274,301 $ 2,026,257 $ 392,610 $ 5,248,044 259 % Net cash provided by (used in) investing activities 541,751 (2,076,392) (1,339,853) 2,618,143 126 % Net cash used in financing activities (5,950,803) (664,254) (1,149,776) 5,286,549 796 % Non-GAAP reconciliation of free cash flow: Net cash provided by operating activities 7,274,301 2,026,257 392,610 5,248,044 259 % Purchases of property and equipment (348,552) (407,729) (524,585) (59,177) (15) % Change in other assets — — (26,919) — — % Free cash flow $ 6,925,749 $ 1,618,528 $ (158,894) $ 5,307,221 328 % 27 Table of Contents Net cash provided by operating activities increased $5,248 million from the year ended December 31, 2022 to $7,274 million for the year ended December 31, 2023.
Provision for Income Taxes Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Provision for income taxes $ 772,005 $ 723,875 $ 437,954 $ 48,130 7 % Effective tax rate 15 % 12 % 14 % The increase in our effective tax rate for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is primarily due to a reduction in excess tax benefits of stock-based compensation and an increase in foreign taxes, partially offset by the impact of international provisions of the Tax Cuts and Jobs Act and the Federal and California Research and Development ("R&D") credits.
Provision for Income Taxes Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Provision for income taxes $ 797,415 $ 772,005 $ 723,875 $ 25,410 3 % Effective tax rate 13 % 15 % 12 % The decrease in our effective tax rate for the year ended December 31, 2023 as compared to the year ended December 31, 2022 is primarily due to a decrease in foreign taxes.
While we do not anticipate these changes to be significant, they could impact our consolidated financial position and we will continue to monitor as new information and guidance becomes available. 24 Table of Contents Liquidity and Capital Resources Year Ended December 31, Change 2022 2021 2022 vs. 2021 (in thousands, except percentages) Cash, cash equivalents, restricted cash and short-term investments $ 6,081,858 $ 6,055,111 $ 26,747 — % Short-term and long-term debt 14,353,076 15,392,895 (1,039,819) (7) % Cash, cash equivalents, restricted cash and short-term investments increased $27 million in the year ended December 31, 2022 primarily due to cash provided by operations, partially offset by acquisitions, the repayment of debt and purchases of property and equipment.
See Note 10 Income Taxes to the consolidated financial statements for further information regarding income taxes. 25 Table of Contents Liquidity and Capital Resources As of December 31, Change 2023 2022 2023 vs. 2022 (in thousands, except percentages) Cash, cash equivalents, restricted cash and short-term investments $ 7,139,488 $ 6,081,858 $ 1,057,630 17 % Short-term and long-term debt 14,543,261 14,353,076 190,185 1 % Cash, cash equivalents, restricted cash and short-term investments increased $1,058 million in the year ended December 31, 2023 primarily due to cash provided by operations, partially offset by the repurchase of stock.
As of December 31, 2022, the Company has repurchased 1,182,410 shares of common stock for an aggregate amount of $600 million. As of December 31, 2022, $4.4 billion remains available for repurchases. Our primary uses of cash include the acquisition, licensing and production of content, marketing programs, streaming delivery and personnel-related costs, as well as for strategic acquisitions and investments.
Our primary uses of cash include the acquisition, licensing and production of content, marketing programs, streaming delivery and personnel-related costs, as well as strategic acquisitions and investments. Cash payment terms for non-original content have historically been in line with the amortization period.
(2) We believe constant currency information is useful in analyzing the underlying trends in average monthly revenue per paying membership.
(2) We believe the non-GAAP financial measure of constant currency revenue is useful in analyzing the underlying trends in average monthly revenue per paying membership absent foreign currency fluctuations. However, this non-GAAP financial measure should be considered in addition to, not as a substitute for, or superior to other financial measures prepared in accordance with GAAP.
Year Ended December 31, Change 2022 2021 2020 2022 vs. 2021 (in thousands, except percentages) Marketing $ 2,530,502 $ 2,545,146 $ 2,228,362 $ (14,644) (1) % As a percentage of revenues 8 % 9 % 9 % Marketing expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021 remained relatively flat.
Marketing expenses also include payroll, stock-based compensation, facilities, and other related expenses for personnel that support sales and marketing activities. 23 Table of Contents Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Marketing $ 2,657,883 $ 2,530,502 $ 2,545,146 $ 127,381 5 % As a percentage of revenues 8 % 8 % 9 % The increase in marketing expenses for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily due to a $146 million increase in advertising expenses and a $21 million increase in personnel-related costs, partially offset by a $39 million decrease in payments to our marketing partners.
Removed
The increase in average monthly revenue per paying membership resulted from our price changes, partially offset by the strengthening of the U.S. dollar relative to certain foreign currencies. The decrease in operating margin is primarily due to revenues growing at a slower rate as compared to the 15% increase in content amortization.
Added
The discontinuance of our DVD business had an immaterial impact on our operations and financial results. Consolidated revenues for the year ended December 31, 2023 increased 7% as compared to the year ended December 31, 2022.
Removed
Revenue growth during the year was impacted by fluctuations in foreign exchange rates, while content amortization increased as a result of delays in content releases due to the COVID-19 pandemic impacting the comparable prior year period. The COVID-19 pandemic and the various responses to it created significant volatility, uncertainty and economic disruption.
Added
Operating margin for the year ended December 31, 2023 increased three percentage points, primarily due to revenues growing at a faster rate as compared to the growth in cost of revenues and marketing and decreased technology and development expenses, partially offset by higher growth in general and administrative expenses as compared to the growth in revenues.
Removed
Recently, there has been a return to more normal societal interactions, including the way we operate our business. We cannot predict the future impacts of this ongoing and any new pandemic(s). See Part I, Item IA: "Risk Factors" in this Annual Report on Form 10-K for additional details.
Added
As of December 31, 2023, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $28 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $8 per month.
Removed
In 2022, the difference between our 15% effective tax rate and the Federal statutory rate of 21% was primarily due to the impact of international provisions of the Tax Cuts and Jobs Act, Federal and California R&D credits, and the recognition of excess tax benefits of stock-based compensation.
Added
Revenues earned from sources other than monthly membership fees were not material for the years ended December 31, 2023, 2022, and 2021.
Removed
Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. The mandatory capitalization requirement increases our deferred tax assets and cash tax liabilities. On August 16, 2022, Congress passed the Inflation Reduction Act of 2022.
Added
Year Ended December 31, Change 2023 2022 2021 2023 vs. 2022 (in thousands, except percentages) Streaming revenues $ 33,640,458 $ 31,469,852 $ 29,515,496 $ 2,170,606 7 % 21 Table of Contents Streaming revenues for the year ended December 31, 2023 increased 7% as compared to the year ended December 31, 2022, primarily due to the 8% growth in average paying memberships, partially offset by a 1% decrease in average monthly revenue per paying membership.
Removed
The tax provisions most applicable to us are the newly introduced 15% corporate alternative minimum tax on book income and 1% excise tax on stock repurchases, which are both effective January 1, 2023.
Added
The decrease in average monthly revenue per paying membership was primarily due to changes in plan mix, higher membership growth in regions with lower average monthly revenue per paying membership, partially offset by limited price increases. Additionally, streaming revenues for the year ended December 31, 2023 were further impacted by unfavorable fluctuations in foreign exchange rates.
Removed
We anticipate that our future capital needs from the debt market will be more limited compared to prior years.
Added
The change in foreign currency gains and losses was partially offset by a $221 million increase in interest income earned due to higher average interest rates and investment balances for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Removed
Cash payment terms for non-original content have historically been in line with the amortization period. Investments in original content, and in particular content that we produce and own, require more cash upfront relative to licensed content.
Added
In the fiscal year ended December 31, 2023, the Company repurchased 14,513,790 shares of common stock for an aggregate amount of $6,045 million. As of December 31, 2023, $8.4 billion remains available for repurchases.
Removed
Total lease obligations as of December 31, 2022 decreased $153 million from $3,516 million as of December 31, 2021 to $3,363 million as of December 31, 2022 due to payments made on lease liabilities.
Added
Our material cash requirements from known contractual and other obligations primarily relate to our content, debt and lease obligations.
Removed
The payments for content assets decreased $810 million, from $17,469 million to $16,660 million, or 5%, as compared to the increase in the amortization of content assets of $1,796 million, from $12,230 million to $14,026 million, or 15%.
Added
(3) Operating lease obligations are comprised of operating lease liabilities included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Consolidated Balance Sheets, inclusive of imputed interest. Operating lease obligations also include additional obligations that are not reflected on the Consolidated Balance Sheets as they did not meet the criteria for recognition.
Removed
In addition, we had increased payments associated with higher operating expenses, primarily related to increased personnel costs to support our continued improvements in our streaming service and our international expansion. Net cash used in investing activities increased $737 million, primarily due to purchases of short-term investments.
Added
The increase in net cash provided by operating activities was primarily driven by a decrease in payments for content assets, coupled with a $916 million or 20% increase in net income and favorable changes in working capital. The payments for content assets decreased $3,519 million, from $16,660 million to $13,140 million, or 21%.
Removed
Free cash flow was $5,275 million lower than net income for the year ended December 31, 2021 primarily due to $5,239 million of cash payments for content assets over amortization expense, $431 million of non-cash remeasurement gain on our euro-denominated debt and $8 million other non-favorable working capital differences, partially offset by $403 million of non-cash stock-based compensation expenses.
Added
Net cash provided by (used in) investing activities increased $2,618 million from the year ended December 31, 2022 to $542 million for the year ended December 31, 2023.
Removed
However, we believe that it is more likely than not that most of the deferred tax assets recorded on our Consolidated Balance Sheets will ultimately be realized. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.
Added
The increase in net cash provided by (used in) investing activities is primarily due to proceeds from the maturities of short-term investments, net of purchases, and there being no acquisitions in the year ended December 31, 2023, as compared to acquisitions for an aggregate amount of $757 million in the year ended December 31, 2022.
Removed
As of December 31, 2022 the valuation allowance of $343 million was related to the California research and development credits and certain foreign tax attributes that we do not expect to realize. We did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes.
Added
Net cash used in financing activities increased $5,287 million from the year ended December 31, 2022 to $5,951 million for the year ended December 31, 2023.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+9 added−2 removed1 unchanged
Biggest changeForeign Currency Risk Currencies denominated in other than the U.S. dollar account for 56% of revenue for the year ended December 31, 2022. We therefore have foreign currency risk related to these currencies, which are primarily the euro, the British pound, the Brazilian real, the Canadian dollar, the Mexican peso, the Australian dollar, and the Japanese yen.
Biggest changeWe therefore have foreign currency risk related to these currencies, with our largest exposures being the euro, the British pound, the Brazilian real, the Canadian dollar, and the Mexican peso.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks related to interest rate changes and the corresponding changes in the market values of our debt and foreign currency fluctuations. Interest Rate Risk At December 31, 2022, our cash equivalents and short-term investments were generally invested in money market funds and time deposits.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks related to interest rate changes and the corresponding changes in the market values of our debt and foreign currency fluctuations. Interest Rate Risk At December 31, 2023, our cash equivalents and short-term investments were generally invested in money market funds and time deposits.
Interest paid on such funds fluctuates with the prevailing interest rate. As of December 31, 2022, we had $14.4 billion of debt, consisting of fixed rate unsecured debt in fourteen tranches due between 2024 and 2030. Refer to Note 6 to the consolidated financial statements for details about all issuances.
Interest paid on such funds fluctuates with the prevailing interest rate. As of December 31, 2023, we had $14.6 billion of debt, consisting of fixed rate unsecured debt in fourteen tranches due between 2024 and 2030. Refer to Note 6 to the consolidated financial statements for details about all issuances.
Accordingly, changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our revenue and operating income as expressed in U.S. dollars.
Accordingly, volatility in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our revenue and operating income as expressed in U.S. dollars.
The fair value of our debt will fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. The fair value of our debt will also fluctuate based on changes in foreign currency rates, as discussed below.
The fair value 29 Table of Contents of our debt will fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. The fair value of our debt will also fluctuate based on changes in foreign currency rates, as discussed below.
In the year ended December 31, 2022, we recognized a $282 million foreign exchange gain primarily due to the non-cash remeasurement of our Senior Notes denominated in euros, partially offset by the remeasurement of cash and content liability positions denominated in currencies other than functional currencies.
In the year ended December 31, 2023, we recognized a $293 million foreign exchange loss primarily due to the non-cash remeasurement of our Senior Notes denominated in euros and the remeasurement of cash and content liabilities denominated in currencies other than the functional currencies.
For the year ended December 31, 2022, our revenues would have been approximately $1,773 million higher had foreign currency exchange rates remained constant with those for the year ended December 31, 2021.
For the year ended December 31, 2023, our revenues would have been approximately $597 million higher had foreign currency exchange rates remained constant with those in the same period of 2022. See Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for further information regarding our non-GAAP financial measure of constant currency.
Removed
In addition, the effect of exchange rate changes on cash, cash equivalents and restricted cash in the year ended December 31, 2022 was a decrease of $170 million. We do not use foreign exchange contracts or derivatives to hedge any foreign currency exposures. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
Added
Foreign Currency Risk We operate our business globally and transact in multiple currencies. Currencies denominated in other than the U.S. dollar accounted for 57% of revenue and 28% of operating expenses for the year ended December 31, 2023.
Removed
Our continued international expansion increases our exposure to exchange rate fluctuations and as a result, such fluctuations could have a significant impact on our future results of operations.
Added
In the year ended December 31, 2023, we entered into foreign exchange forward contracts to mitigate fluctuations in forecasted U.S. dollar-equivalent revenues occurring in January 2024 and beyond from changes in foreign currency exchange rates. These contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures.
Added
We designate these contracts as cash flow hedges of forecasted foreign currency revenue and initially record the gains or losses on these derivative instruments as a component of accumulated other comprehensive income (“AOCI") and reclassify the amounts into “Revenues” on the Consolidated Statements of Operations in the same period the forecasted transaction affects earnings.
Added
If the U.S dollar weakened by 10% as of December 31, 2023, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $958 million lower. This adverse change in AOCI would be expected to offset a corresponding favorable foreign currency change in the underlying forecasted revenues when recognized in earnings.
Added
In the year ended December 31, 2023, we also entered into foreign exchange forward contracts to mitigate fluctuations in forecasted and firmly committed U.S. dollar-equivalent transactions related to the licensing and production of content assets occurring in January 2024 and beyond from changes in foreign currency exchange rates.
Added
These contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures.
Added
We designate these contracts as cash flow hedges and initially record the gains or losses on these derivative instruments as a component of AOCI and reclassify the amounts into “Cost of Revenues” to offset the hedged exposures as they affect earnings, which occurs as the underlying hedged content assets are amortized.
Added
If the U.S dollar strengthened by 10% as of December 31, 2023, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $71 million lower. This adverse change in AOCI would be expected to offset a corresponding favorable foreign currency change in the underlying exposures when recognized in earnings.
Added
In addition, the effect of exchange rate changes on cash, cash equivalents and restricted cash as disclosed on the Consolidated Statements of Cash Flows in the year ended December 31, 2023 was an increase of $83 million.

Other NFLX 10-K year-over-year comparisons