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What changed in Netflix's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Netflix's 2023 and 2024 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 2024 report.

+209 added−201 removedSource: 10-K (2025-01-27) vs 10-K (2024-01-26)

Top changes in Netflix's 2024 10-K

209 paragraphs added · 201 removed · 176 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

17 edited+2 added−3 removed14 unchanged
Biggest changeWe seek to drive conversation around our content to further enhance member joy, and we are continuously enhancing our user interface to help our members more easily choose content that they will find enjoyable. BUSINESS SEGMENTS We operate as one operating segment. Our revenues are primarily derived from monthly membership fees for services related to streaming content to our members.
Biggest changeWe aim to offer a range of pricing plans, including our ad-supported subscription plan, to meet a variety of consumer needs. We seek to drive conversation around our content to further enhance member joy, and we are continuously enhancing our user interface to help our members more easily choose content that they will find enjoyable.
We aim to generally pay our employees at the top of their personal market, and they generally are able to choose the form of their compensation between cash and stock options. This permits employee compensation to be highly personalized and reflective of each employee's individual needs and preferences.
We aim generally to pay our employees at their personal top of market, and they generally are able to choose the form of their compensation between cash and stock options. This permits employee compensation to be highly personalized and reflective of each employee's individual needs and preferences.
We conduct pay equity analyses at least annually, and have adopted practices to help ensure that employees from underrepresented groups are not being underpaid based on gender (globally) and race (U.S.) relative to others doing the same or similar work under comparable circumstances. We aim to rectify any pay gaps that we find through this analysis.
We conduct pay equity analyses at least annually, and have adopted practices to help ensure that employees from underrepresented groups are not being underpaid based on gender identity (globally) and race or ethnicity (U.S.) relative to others doing the same or similar work under comparable circumstances. We aim to rectify any pay gaps that we find through this analysis.
We want more people and cultures to see themselves reflected on screen - so it’s important that our employee base is diverse and represents the communities we serve. We look to help increase representation by training our recruiters on how to hire more inclusively, and to help the company and senior leaders diversify their networks.
We want more people and cultures to see themselves reflected on screen - so it’s important that our employee base is diverse and represents the communities we serve. We look to help increase representation by educating our people leaders and recruiters on how to hire more inclusively, and to help the company and senior leaders diversify their networks.
Employees have access to a host of other benefits, including mental health, childcare, family planning and a company match for charitable donations. We believe that our approach to human capital resources has been instrumental in our growth, and has made Netflix a desirable destination for employees. OTHER INFORMATION We maintain a website at www.netflix.com.
Employees have access to a host of other benefits, including mental health, childcare, family planning and a company match for charitable donations. We believe that our approach to human capital resources has been instrumental in our growth, and has made Netflix a desirable destination for employees. 2 Table of Contents OTHER INFORMATION We maintain a website at www.netflix.com.
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.
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 302 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages.
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.
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, 2024, we had approximately 14,000 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 providing a unique environment for our associates to perform the best work of their lives in pursuit of excellence.
This culture, which is detailed in a "Culture Memo" located on our website, is often described as providing a unique environment for our employees to perform the best work of their lives in pursuit of excellence.
We compete with a broad set of activities for consumers’ leisure time, including other entertainment video providers, such as linear TV, streaming entertainment providers (including those that provide pirated content), video gaming providers and more broadly against other sources of entertainment, like social media, that our members could choose in their moments of free time.
We compete with a broad set of activities for consumers’ leisure time, including other entertainment video providers, such as linear television, streaming entertainment providers (including those that provide pirated content), video gaming providers, as well as user-generated content, some of which are by professional content creators, and more broadly against other sources of entertainment, such as social media, that our members could choose in their moments of free time.
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.
We use the intellectual property of third parties in creating some of our content, merchandising our products and marketing our service.
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.
SEASONALITY 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.
We aim to attract and retain great people - representing a diverse array of perspectives and skills - to work together as a dream team.
We aim to attract and retain great people - representing a diverse array of perspectives and skills - to work together as a dream team. As our business grows and changes, we seek to improve our culture to meet the new needs of our business.
See Note 12, Segment and Geographic Information , in the accompanying notes to our consolidated financial statements for further detail. COMPETITION The market for entertainment video is intensely competitive and subject to rapid change.
BUSINESS SEGMENTS We operate as one operating segment. Our revenues are primarily derived from monthly membership fees for services related to streaming content to our members. See Note 12, Segment and Geographic Information , in the accompanying notes to our consolidated financial statements for further detail. COMPETITION The market for entertainment video is intensely competitive and subject to rapid change.
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 believe our dynamic culture helps us create a better experience for our members, employees, creators and partners. 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.
INTELLECTUAL PROPERTY We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as important to our success. We use a combination of patent, trademark, copyright and trade secret laws and confidentiality agreements to protect our proprietary intellectual property.
In addition, our membership growth can be impacted by our content release schedule and changes to pricing and plans. 1 Table of Contents INTELLECTUAL PROPERTY We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as important to our success.
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.
Of these, approximately 9,600 (69%) were located in the United States and Canada, 2,200 (16%) in Europe, Middle East, and Africa, 600 (4%) in Latin America and 1,600 (11%) in Asia-Pacific.
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.
We offer various experiences and training to inform our employees about our culture and other context that we believe is important for success at Netflix. We aim to equip our people leaders (officers, VPs, directors, and manager-level employees) to lead the business and our teams in alignment with our expectations and strategic objectives.
Removed
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.
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We use a combination of patent, trademark, copyright and trade secret laws and confidentiality agreements to protect our proprietary intellectual property. Our intellectual property rights extend to our technology, business processes, the content we produce and distribute through our service, and the consumer products and experiences based thereon.
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We 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.
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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 and may be covered by collective bargaining agreements. We believe an important component of our success is our company culture.
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We believe this focus helps our employees grow as leaders and well-rounded individuals, and better positions Netflix to operate our global business of providing compelling content to entertain the world.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

81 edited+6 added−6 removed122 unchanged
Biggest changeOur substantial indebtedness and other obligations, including streaming content obligations, may: • make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on our Notes and our other obligations; • limit our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions or other general business purposes; • increase our cost of borrowing; • limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes; • require us to use a substantial portion of our cash flow from operations to make debt service payments and pay our other obligations when due; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared to our less leveraged competitors; and • increase our vulnerability to the impact of adverse economic and industry conditions, including changes in interest rates and foreign exchange rates.
Biggest changeOur substantial indebtedness and other obligations, including streaming content obligations, may require us to use a substantial portion of our cash flow from operations to make debt service payments and pay our other obligations when due, limit our ability to borrow additional funds, limit our flexibility to plan for, or react to, changes in our business and industry and place us at a competitive disadvantage compared to our less leveraged competitors.
Our charter documents in their current form may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable because they: • authorize our board of directors, without stockholder approval, to issue up to 10,000,000 shares of undesignated preferred stock; • provide for a classified board of directors until our annual meeting of stockholders held in 2025; • prohibit our stockholders from acting by written consent; and • establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings.
Our charter documents in their current form may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable because they: • authorize our board of directors, without stockholder approval, to issue up to 10,000,000 shares of undesignated preferred stock; • provide for a classified board of directors until our annual meeting of stockholders to be held in 2025; • prohibit our stockholders from acting by written consent; and • establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings.
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.
There are numerous patents that broadly claim means and methods of conducting business on the internet. We have not searched for 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.
As we have grown, we have seen a rise in the number of litigation matters against us. These matters have included copyright and other claims related to our content, patent infringement claims, tax litigation, employment related litigation, as well as consumer and securities class actions, each of which are typically expensive to defend.
As we have grown, we have seen a rise in the number of litigation matters against us. These matters have included copyright and other claims related to our content, products, patent infringement claims, tax litigation, employment related litigation, as well as consumer and securities class actions, each of which are typically expensive to defend.
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.
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; 7 Table of Contents • 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 and advertising technology organization team; • our ability to develop the technology and related infrastructure to support advertising and drive value to advertisers; • the impact of our content and reputation on advertisers’ willingness to spend with us; and • any member dissatisfaction due to advertisements.
Internationally, we may become subject to additional and/or more stringent legal obligations concerning our treatment of member and other personal information, such as laws regarding data localization and/or restrictions on data export.
Internationally, we may become subject to additional and/or more stringent legal obligations concerning our treatment of member and other personal information, such as laws regarding data localization, data transfer and/or restrictions on data export.
While we believe that consumer demand, regulatory oversight and competition will help check these incentives, to the extent that network operators are able to provide preferential treatment to their data as opposed to ours or otherwise implement discriminatory network management practices, our business could be negatively impacted. The extent to which these incentives limit operator behavior differs across markets.
While we believe that consumer demand, regulatory oversight and competition will help counterbalance these incentives, to the extent that network operators are able to provide preferential treatment to their data as opposed to ours or otherwise implement discriminatory network management practices, our business could be negatively impacted. The extent to which these incentives limit operator behavior differs across markets.
In certain instances, we leverage third parties such as our cable and other partners to bill subscribers on our behalf. If these third parties become unwilling or unable to continue processing payments on our behalf, we would have to transition subscribers or otherwise find alternative methods of collecting payments, which could adversely impact member acquisition and retention.
In certain instances, we leverage third parties such as our cable and other partners to bill members on our behalf. If these third parties become unwilling or unable to continue processing payments on our behalf, we would have to transition members or otherwise find alternative methods of collecting payments, which could adversely impact member acquisition and retention.
Changes in laws or regulations that adversely affect the growth, popularity or use of the internet, including laws impacting net neutrality or requiring payment of network access fees, could decrease the demand for our service and increase our cost of doing business.
Changes in laws or regulations that adversely affect the growth, popularity or use of the internet, including laws impacting net neutrality, requiring payment of network access fees or payment of network support taxes, could decrease the demand for our service and increase our cost of doing business.
If consumers do not perceive our service offering to be of value, including if we introduce new or adjust existing features, adjust pricing or service offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain members, and accordingly, our revenue, including revenue per paying membership, and results of operations may be adversely affected.
If consumers do not perceive our service offering to be of value, including if we introduce new or adjust existing features, adjust pricing or service offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain members, and accordingly, our revenue and results of operations may be adversely affected.
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. We may also have to remove content from our service, or remove consumer products or marketing materials from the marketplace.
It also may result in our inability to use our current technology and products, our recommendation and merchandising technology or inability to market our service or merchandise our products. We may also have to remove content from our service, or remove consumer products or marketing materials from the marketplace.
If we experience high executive turnover, fail to adapt our business practices to industry expectations, fail to implement succession plans for key employees, encounter difficulties associated with the transition of members of our management team, are not successful in recruiting new personnel or in retaining and motivating existing personnel, in instilling our culture in new employees, or maintaining and improving our culture as we grow, our operations may be disrupted, which could adversely affect our results of operations.
If we experience high executive turnover, fail to adapt our business practices to industry expectations, fail to maintain a positive reputation, fail to implement succession plans for key employees, encounter difficulties associated with the transition of members of our management team, are not successful in recruiting new personnel or in retaining and motivating existing personnel, in instilling our culture in new employees, or maintaining and improving our culture as we grow, our operations may be disrupted, which could adversely affect our results of operations.
The U.S. federal and state governments, countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in jurisdictions where we do business.
The U.S. federal and state governments, countries in the EU, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in jurisdictions where we do business.
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.
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.
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.
We rely on the continued service of our senior management, including our Co-Chief Executive Officers, Ted Sarandos and Greg Peters, 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.
In 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.
In 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; • regulatory requirements or government action, 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, administrative enforcement actions, fines, and civil and criminal liability, or increased operating costs in the applicable jurisdiction; • application of foreign intellectual property laws, which requires the business to adapt to bespoke compliance rules, 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 and non-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 and we may choose not to hedge certain exposures; • 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; 12 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.
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 scale our content production, including games, and introduce new features 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.
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.
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.
As we scale our streaming service and introduce new features such as our new ad-supported subscription plan, we are developing technology and utilizing third-party “cloud” computing, technology and other services.
As we scale our streaming service and introduce new features such as our ad-supported subscription plan and live programming, we are developing technology and utilizing third-party “cloud” computing, technology and other services.
As our service and others like us gain traction in international markets, governments are increasingly looking to introduce new or extend legacy regulations to these services, in particular those related to broadcast media and tax. For example, European law enables individual member states to impose levies and other financial obligations on media operators located outside their jurisdiction.
As our service and others like us gain traction in international markets, governments are increasingly looking to introduce new or extend legacy regulations to these services, in particular those related to broadcast media and tax. For example, European law enables individual member states to impose levies and other financial obligations on media operators that provide services in their jurisdiction.
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”).
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 CDN.
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.
Our intellectual property rights extend to our technology, business processes, the content we produce and distribute through our service, and consumer products, 8 Table of Contents experiences, and marketing assets based thereon. We use the intellectual property of third parties in creating some of our content, merchandising our products and experiences, and marketing our service.
Given this, along with the fact that we cannot easily switch our AWS operations to another cloud provider, any disruption of or interference with our use of AWS would impact our operations and our business would be adversely impacted.
Given this, along with the fact that we cannot easily switch our AWS operations to another cloud provider, any commercial disputes related to, disruption of or interference with our use of AWS would impact our operations and our business would be adversely impacted.
To the extent our content is deemed controversial or offensive by government regulators, we may face direct or indirect retaliatory action or behavior, including being required to remove such content from our service, our entire service could be banned and/or become subject to heightened regulatory scrutiny across our business and operations.
To the extent our content is deemed controversial or offensive by government regulators, we may face direct or indirect 5 Table of Contents retaliatory action or behavior, including being required to remove such content from our service, our entire service could be banned and/or become subject to heightened regulatory scrutiny across our business and operations.
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.
We have and may, from time to time, adjust our membership pricing, our membership plans, or our pricing model itself, including for example, the 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.
We are subject to the periodic examination of our domestic and foreign tax returns by the IRS, state, local, and foreign tax authorities, some of whom are challenging our tax positions. We regularly assess the likelihood of adverse outcomes from these examinations in determining the adequacy of our provision for income taxes and other tax liabilities.
We are subject to the periodic examination of our domestic and foreign tax returns by the Internal Revenue Service, state, local, and foreign tax authorities, some of whom are challenging our tax positions. We regularly assess the likelihood of adverse outcomes from these examinations in determining the adequacy of our provision for income taxes and other tax liabilities.
These and other adjustments we make may not be well-received by consumers, and could negatively impact our ability to attract and retain members, revenues per paying membership, revenue and our results of operations. In addition, many of our members rejoin our service or originate from word-of-mouth advertising from existing members.
These and other adjustments we make may not be well-received by consumers, and could negatively impact our ability to attract and retain members, revenue and our results of operations. In addition, many of our members rejoin our service or originate from word-of-mouth advertising from existing members.
If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our stockholders may experience dilution. Any large equity or equity-linked offering could also negatively impact our stock price.
If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our co m mon stock, and our stockholders may experience dilution. Any large equity or equity-linked offering could also negatively impact our stock price.
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.
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 actual viewing patterns differ from these estimates, the pattern and/or period of amortization would be changed and could affect the timing or recognition of content amortization.
If actual viewing patterns differ from these estimates, the 14 Table of Contents pattern and/or period of amortization would be changed and could affect the timing or recognition of content amortization.
We are subject to laws, rules and regulations in the U.S. and in other countries relating to privacy and the collection, use and security of personal information, including but not limited to Regulation (EU) 2016/679 (also known as the General Data Protection Regulation or “GDPR”) and the California Privacy Rights Act ("CPRA").
We are subject to laws, rules and regulations relating to privacy and the collection, use and security of personal information, including but not limited to Regulation (EU) 2016/679 (also known as the General Data Protection Regulation or “GDPR”) and the California Privacy Rights Act ("CPRA").
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.
Our advertising offering is new and subject to various risks and uncertainties, which may adversely affect our business. We have limited experience and operating history offering advertising on our service, and our advertising revenue may not grow as we expect.
To the extent membership and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of content commitments and accelerated payment requirements of certain agreements.
To the extent revenue growth does not meet our expectations, our liquidity and results of operations could be adversely affected as a result of content commitments and accelerated payment requirements of certain agreements.
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.
If we are not able to manage the growing complexity of our business, including improving, refining or evolving 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.
To the extent our content, in particular, our original programming, is perceived as low quality, offensive or otherwise not compelling to consumers, our ability to establish and maintain a positive reputation may be adversely impacted.
To the extent our content is perceived as low quality, offensive or otherwise not compelling to consumers, our ability to establish and maintain a positive reputation may be adversely impacted.
In addition, technology changes to our streaming functionality may require that partners update their devices, or may lead to us to stop supporting the delivery of our service on certain legacy devices.
In addition, technology changes to our streaming functionality may require that partners update their devices, and from time to time, lead to us to stop supporting the delivery of our service on certain legacy devices.
We also may be required to notify regulators about any actual or perceived data breach (including various state Attorneys General, one or more EU data protection authorities, or other data protection authorities) as well as the individuals who are affected by the incident within strict time periods.
We have notified and may in the future be required to notify regulators about any actual or perceived data breach (including various state Attorneys General, one or more EU data protection authorities, or other data protection authorities) as well as the individuals who are affected by the incident within strict time periods.
Several jurisdictions have and others may, over time, impose financial and regulatory obligations on us. In addition, the continued growth and development of the market for online commerce may lead to more stringent consumer protection laws, which may impose additional burdens on us.
Several European Union (EU) Member States have and others may, over time, impose financial and regulatory obligations on us. In addition, the continued growth and development of the market for online commerce may lead to more stringent consumer protection laws, which may impose additional burdens on us.
Any significant disruption to our service or access to our systems could result in a loss of members and adversely affect our business and results of operation.
Any significant disruption to our service or access to our systems could result in a loss of members, damage our reputation, and adversely affect our business and results of operations.
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.
As of December 31, 2024, we had the equivalent of $15.7 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 $3 billion unsecured revolving credit facility.
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 are expanding our operations, 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 are also scaling our own studio operations to produce original content.
Competitors include other entertainment video providers, such as linear television, and streaming entertainment providers (including those that provide pirated content), video gaming providers, as well as user-generated content, and more broadly other sources of entertainment that our members could choose in their moments of free time.
Competitors include other entertainment video providers, such as linear television, and streaming entertainment providers (including those that provide pirated content), video gaming providers, as well as user-generated content, some of which are by professional content creators, and more broadly other sources of entertainment, such as social media, that our members could choose in their moments of free time.
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.
As of December 31, 2024, we have not borrowed any amount under this revolving credit facility. As of December 31, 2024, we had approximately $6.2 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.
In the ordinary course of business and in particular in connection with content acquisition, merchandising our service to our members and our ad-supported subscription plan, we collect and utilize information supplied by our members, which may include personal information and other data.
In the ordinary course of business and in particular in connection with content acquisition, merchandising our service to our members and our advertising offering, we collect and utilize information supplied by our members and third parties, which may include personal information and other data.
Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our website, streaming technology, our recommendation and merchandising technology, title selection processes, our content, and marketing activities. Trademark, copyright, patent and other intellectual property rights are important to us and other companies.
Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our technology, business processes, and content. Trademark, copyright, patent and other intellectual property rights are important to us and other companies.
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.
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, have and could in the future lead to investigations, claims, and proceedings by governmental entities and private parties, which to date have not been material but 10 Table of Contents may result in significant damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
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.
We face competition from traditional providers of entertainment video, including broadcasters and cable network operators, as well as internet based e-commerce or entertainment video providers and platforms. Several of these competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content, large content libraries, and significant 4 Table of Contents financial, marketing and other resources.
These systems periodically experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other data, confidential information or intellectual property.
These systems and those of third parties with which we do business have experienced and may continue to experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other data, confidential information or intellectual property.
These efforts require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated, and may limit the functionality of or otherwise negatively impact our service offering and systems.
Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to develop, implement and maintain. These efforts require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated, and may limit the functionality of or otherwise negatively impact our service offering and systems.
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.
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.
For example, the European Union revised its Audio Visual Media Services Directive in 2018 to require that European works comprise at least thirty percent (30%) of media service providers’ catalogs, and to require prominence of those works.
For example, the EU revised its Audio Visual Media Services Directive in 2018 to require that European works comprise at least thirty percent (30%) of media service providers’ catalogs, and to require prominence of those works, and certain EU Member States have imposed additional investment obligations and levies.
Risks Related to Our Business If our efforts to attract and retain members are not successful, our business will be adversely affected. We must continually add new members both to replace canceled memberships and to grow our business beyond our current membership base. Our penetration and growth rates have fluctuated and vary across the jurisdictions where we provide our service.
Risks Related to Our Business If our efforts to attract and retain members are not successful, our business will be adversely affected. We must continually add new members both to replace canceled memberships and to grow our business beyond our current membership base.
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 also utilize our own and third-party 9 Table of Contents content delivery networks ("CDN") to help us stream content and offer games in high volume to Netflix members over the internet.
As a producer and distributor of content, we face potential liability for negligence, copyright and trademark infringement, or other claims based on the nature and content of materials that we acquire, produce, license and/or distribute. We also may face potential liability for content used in promoting our service, including marketing materials.
We face risks, such as unforeseen costs and potential liability in connection with content we acquire, produce, license and/or distribute through our service. As a producer and distributor of content, we face potential liability for negligence, copyright and trademark infringement, or other claims based on the nature and content of materials that we acquire, produce, license and/or distribute.
We are also scaling our own studio operations to produce original content, including through acquisitions such as Scanline and Animal Logic. As our international offering evolves, we are managing and adjusting our business to address varied content offerings, consumer customs and practices, in particular those dealing with e-commerce and streaming video, as well as differing legal and regulatory environments.
As our international offering evolves, we are managing and adjusting our business to address varied content offerings, consumer customs and practices, in particular those dealing with e-commerce and streaming video, as well as differing legal and regulatory environments.
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.
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.
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.
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.
In countries where we have been operating for many years or where we are highly penetrated, our membership growth is slower than in newer or less penetrated countries.
Our penetration and growth rates have fluctuated and vary across the jurisdictions where we provide our service. In countries where we have been operating for many years or where we are highly penetrated, our membership growth is slower than in newer or less penetrated countries.
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.
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 content and offer games to other platforms and partners over time.
If government regulations relating to the internet or other areas of our business change, we may need to alter the manner in which we conduct our business, or incur greater operating expenses.
The termination of our ability to process payments on any major payment method would significantly impair our ability to operate our business. If government regulations relating to the internet or other areas of our business change, we may need to alter the manner in which we conduct our business, or incur greater operating expenses.
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.
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 more effectively to satisfy consumer demand, our ability to compete successfully and our results of operations could be adversely impacted.
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.
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. We also maintain personal information concerning our employees, as well as personal information of others working on our productions.
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.
We also may face potential liability for content used in promoting our service, including marketing materials. We devote significant resources toward the development, production, marketing and distribution of original programming. We believe that original and exclusive programming can help differentiate our service from other offerings, enhance our brand and otherwise attract and retain members.
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.
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.
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.
However, to date these unauthorized releases have not had a material impact on our service, systems or business. 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.
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.
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. Such work stoppages have resulted, and may in the future result, in halted productions and delays in our ability to provide new content to our members.
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.
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. 13 Table of Contents Risks Related to Our Stock Ownership Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable, although we have announced plans to modify some of these provisions over time.
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.
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 unauthorized releases of certain digital content assets and unintended disclosure of personal information due to incidents related to third parties.
Rising interest rates or any disruption in the capital markets could make it more difficult and expensive for us to raise additional capital or refinance our existing indebtedness.
The decision to obtain additional capital will depend on, among other things, our business plans, operating performance and condition of the capital markets. Rising interest rates or any disruption in the capital markets could make it more difficult and expensive for us to raise additional capital or refinance 11 Table of Contents our existing indebtedness.
If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements. The termination of our ability to process payments on any major payment method would significantly impair our ability to operate our business.
If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may 6 Table of Contents impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements.
Certain laws intended to prevent network operators from discriminating against the legal traffic that traverse their networks have been implemented in many countries, including across the European Union. In others, the laws may be nascent or non-existent. Furthermore, favorable laws may change, including for example, in the United States where net neutrality regulations were repealed.
Certain laws intended to prevent network operators from discriminating against the legal traffic that traverse their networks have been implemented in many countries, including across the EU and several U.S. states. In others, the laws may be nascent, evolving or non-existent. For example, a U.S. federal appeals court recently overturned the Federal Communications Commission's net neutrality rules.
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.
To the extent we cannot successfully find and develop new products, experiences and services to help drive growth, or we do not realize the expected benefits or generate additional revenue from such new products, experiences, and services, our future results of operations and growth may be adversely impacted.
If we are unable to successfully or profitably compete with current and new competitors, our business will be adversely affected, and we may not be able to increase or maintain market share, revenues or profitability. We face risks, such as unforeseen costs and potential liability in connection with content we acquire, produce, license and/or distribute through our service.
If we are unable to successfully or profitably compete with current and new competitors and win moments of truth, our business will be adversely affected, and we may not be able to increase or maintain market share, revenues or profitability.
Our business could be adversely impacted by costs and challenges associated with strategic acquisitions and investments. From time to time, we acquire or invest in businesses, content, and technologies that support our business.
From time to time, we acquire or invest in businesses, content, and technologies that support our business.
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.
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. 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.
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.
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.
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.
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.
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.
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. The addition of new features or upgrades also increases our exposure to vulnerabilities, and generative artificial intelligence could intensify these cybersecurity risks.
This type of litigation may result in substantial costs and a diversion of management’s attention and 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.
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.
If our efforts to sustain and improve our existing TV and film offering, as well as develop and expand our video entertainment options, are not done in a manner valued by our current and future members, our ability to attract and retain members may be negatively impacted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur systems periodically experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other data, confidential information or intellectual property, and we have experienced an unauthorized release of certain digital content assets.
Biggest changeOur systems and those of third parties with which we do business have experienced and may continue to experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other data, confidential information or intellectual property, and we have experienced unauthorized releases of certain digital content assets and unintended disclosure of personal information due to incidents related to third parties.
The Audit Committee of the Board oversees our cybersecurity risk and receives regular reports from our VP of Security and Privacy Engineering on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance. 17 Table of Contents
The Audit Committee of the Board oversees our cybersecurity risk and receives regular reports from our VP of Security and Privacy Engineering on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance. 15 Table of Contents
Our VP of Security and Privacy Engineering has over 30 years of industry experience, including serving in similar roles leading and overseeing cybersecurity programs at other public companies. Team members who support our information security program have relevant educational and industry experience, 16 Table of Contents including holding similar positions at large technology companies.
Our VP of Security and Privacy Engineering has over 30 years of industry experience, including serving in similar roles leading and overseeing cybersecurity programs at other public companies. Team members who support our information security program have relevant educational and industry experience, including holding similar positions at large technology companies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We have leased principal properties in both Los Gatos, California, which is the location of our corporate headquarters, and in Los Angeles, California. In addition, we lease various office and production space throughout the world.
Biggest changeItem 2. Properties We have leased principal properties in both Los Gatos, California, which is the location of our corporate headquarters, and in Los Angeles, California. In addition, we own and lease various office and production space throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCompany 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.
Biggest changeCompany Purchases of Equity Securities Stock repurchases during the three months ended December 31, 2024 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, 2024 519,883 $ 724.15 519,883 $ 2,678,384 November 1 - 30, 2024 457,732 $ 792.49 457,732 $ 2,315,637 December 1 - 31, 2024 188,212 $ 913.13 188,212 $ 17,143,775 Total 1,165,827 1,165,827 (1) In September 2023, the Board of Directors authorized the repurchase of up to $10 billion of its common stock, with no expiration date, and in December 2024, the Board of Directors increased the share repurchase authorization by an additional $15 billion, also with no expiration date.
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”.
Mine Safety Disclosures Not applicable. 16 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, 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.
The following graph compares, for the five year period ended December 31, 2024, 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, 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.
Holders As of December 31, 2024, there were approximately 2,752 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, 2018, December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023.
Measurement points are the last trading day of each of the Company’s fiscal years ended December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024.
Historical stock price performance should not be relied upon as an indication of future stock price performance. Item 6. [Reserved] 20 Table of Contents
Historical stock price performance should not be relied upon as an indication of future stock price performance. Item 6. [Reserved] 18 Table of Contents
(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.
(2) Average price paid per share includes costs associated with the repurchases but excludes the 1% excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022. 17 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeExhibit Filing Date 10.5† Amended and Restated Performance Bonus Plan 8-K 001-35727 10.1 December 9, 2022 10.6† Form of Stock Option Agreement under the 2011 Stock Plan 10-K 001-35727 10.11 January 27, 2022 10.7† Form of Stock Option Agreement under the 2020 Stock Plan 10-K 001-35727 10.11 January 26, 2023 10.8† Form of Stock Option Agreement under the 2020 Stock Plan (Options Subject to Vesting) 8-K 001-35727 10.1 December 23, 2022 10.9† Netflix, Inc. 2020 Stock Plan Form of Restricted Stock Unit Award Agreement 8-K 001-35727 10.1 December 8, 2023 10.10† Netflix, Inc. 2020 Stock Plan Form of Performance-Based Restricted Stock Unit Award Agreement 8-K 001-35727 10.2 December 8, 2023 10.11† Netflix, Inc.
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.
Dated: January 27, 2025 By: / S / T ED S ARANDOS Ted Sarandos Co-Chief Executive Officer (principal executive officer) Dated: January 27, 2025 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.
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.
Clawback Policy 10-K 001-35727 97.1 January 26, 2024 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2024, 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, 2024, 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.
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.
Signature Title Date / S / T ED S ARANDOS Co-Chief Executive Officer and Director (principal executive officer) January 27, 2025 Ted Sarandos /S/ G REG P ETERS Co-Chief Executive Officer and Director (principal executive officer) January 27, 2025 Greg Peters / S / S PENCER N EUMANN Chief Financial Officer (principal financial officer) January 27, 2025 Spencer Neumann / S / J EFFREY K ARBOWSKI Chief Accounting Officer (principal accounting officer) January 27, 2025 Jeffrey Karbowski / S / R EED H ASTINGS Executive Chairman and Director January 27, 2025 Reed Hastings / S / R ICHARD B ARTON Director January 27, 2025 Richard Barton / S / M ATHIAS D ÖPFNER Director January 27, 2025 Mathias Döpfner / S / T IMOTHY M.
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
Kilgore / S / S TRIVE M ASIYIWA Director January 27, 2025 Strive Masiyiwa / S / A NN M ATHER Director January 27, 2025 Ann Mather 69 Table of Contents / S / S USAN R ICE Director January 27, 2025 Susan Rice / S / B RAD S MITH Director January 27, 2025 Brad Smith /S/ A NNE S WEENEY Director January 27, 2025 Anne Sweeney 70
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.
H ALEY Director January 27, 2025 Timothy M. Haley / S / J AY C. H OAG Director January 27, 2025 Jay C. Hoag / S / L ESLIE J. K ILGORE Director January 27, 2025 Leslie J.
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.
Insider Trading Policy X 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 97.1 Netflix, Inc.
Removed
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
Item 5.02 January 24, 2018 66 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form File No.
Added
Executive Officer Severance Plan 8-K 001-35727 10.3 December 8, 2023 19.1 Netflix, Inc.

Item 6. [Reserved]

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

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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.
Biggest changeItem 6. [Reserved] 18 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 27 Item 8. Financial Statements and Supplementary Data 28 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 28 Item 9A. Controls and Procedures 29 Item 9B.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeUnited States and Canada (UCAN) As of/Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except revenue per membership and percentages) Streaming revenues $ 17,359,369 $ 14,873,783 $ 14,084,643 $ 2,485,586 17 % Paid net membership additions (losses) 9,497 5,832 (919) 3,665 63 % Paid memberships at end of period 89,625 80,128 74,296 9,497 12 % Average paying memberships 84,112 76,126 74,001 7,986 10 % Average monthly revenue per paying membership $ 17.20 $ 16.28 $ 15.86 $ 0.92 6 % Constant currency change 6 % Europe, Middle East, and Africa (EMEA) As of/Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except revenue per membership and percentages) Streaming revenues $ 12,387,035 $ 10,556,487 $ 9,745,015 $ 1,830,548 17 % Paid net membership additions 12,320 12,084 2,693 236 2 % Paid memberships at end of period 101,133 88,813 76,729 12,320 14 % Average paying memberships 94,200 80,928 73,904 13,272 16 % Average monthly revenue per paying membership $ 10.96 $ 10.87 $ 10.99 $ 0.09 1 % Constant currency change 1 % 20 Table of Contents Latin America (LATAM) As of/Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except revenue per membership and percentages) Streaming revenues $ 4,839,816 $ 4,446,461 $ 4,069,973 $ 393,355 9 % Paid net membership additions 7,330 4,298 1,738 3,032 71 % Paid memberships at end of period 53,327 45,997 41,699 7,330 16 % Average paying memberships 48,954 42,802 40,000 6,152 14 % Average monthly revenue per paying membership $ 8.24 $ 8.66 $ 8.48 $ (0.42) (5) % Constant currency change 21 % Asia-Pacific (APAC) As of/Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except revenue per membership and percentages) Streaming revenues $ 4,414,746 $ 3,763,727 $ 3,570,221 $ 651,019 17 % Paid net membership additions 12,203 7,315 5,391 4,888 67 % Paid memberships at end of period 57,541 45,338 38,023 12,203 27 % Average paying memberships 50,466 41,033 35,019 9,433 23 % Average monthly revenue per paying membership $ 7.29 $ 7.64 $ 8.50 $ (0.35) (5) % Constant currency change (3) % Cost of Revenues Cost of revenues primarily consists of the amortization of content assets.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, and our forecast of future earnings, future taxable income and prudent and feasible tax planning strategies.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, our forecast of future earnings and future taxable income, and prudent and feasible tax planning strategies.
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 foreign exchange loss in the year ended December 31, 2023 was primarily driven by a 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.
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.
Sales and Marketing Sales and marketing expenses consist primarily of advertising expenses and certain payments made to marketing and advertising sales partners, including consumer electronics ("CE") manufacturers, multichannel video programming distributors ("MVPDs"), mobile operators, and ISPs. Marketing expenses include promotional activities such as digital and television advertising.
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.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 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, 2023.
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.
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, live events and various other sources.
(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.
(3) 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 (“ARM”) 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.
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.
Our ability to obtain this or any additional financing that we may choose or need, including for the refinancing of upcoming maturities or 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.
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.
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.
Other operations costs include customer service and payment processing fees, including those we pay to our integrated payment partners, as well as other costs directly incurred in making our content available to members.
Other operating costs include customer service and payment processing fees, including those we pay to our integrated payment partners, as well as other costs directly incurred in making our content available to members.
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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
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.
As of December 31, 2024, the Company has additional operating leases for real estate that have not yet commenced of $38 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.
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.
As of December 31, 2024, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $32 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $8 per month.
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.
As of December 31, 2024, we had gross unrecognized tax benefits of $432 million, of which $302 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 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.
In September 2023, the Board of Directors authorized the repurchase of up to $10 billion of our common stock, with no expiration date, and in December 2024, the Board of Directors increased the share repurchase authorization by an additional $15 billion, also with no expiration date.
Revenues earned from sources other than monthly membership fees were not material for the years ended December 31, 2023, 2022, and 2021.
Revenues earned from sources other than monthly membership fees were not a material component of streaming revenues for the years ended December 31, 2024, 2023, and 2022.
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.
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.
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.
Expenses related to the acquisition, licensing and production of content not included in content amortization may include payroll, stock-based compensation, facilities, and other personnel-related expenses, costs associated with obtaining rights to music included in our content, overall deals with talent, miscellaneous production-related costs and participations and residuals.
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.
Sales and marketing expenses also include payroll, stock-based compensation, facilities, and other related expenses for personnel that support advertising sales and marketing activities. 21 Table of Contents Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Sales and marketing $ 2,917,554 $ 2,657,883 $ 2,530,502 $ 259,671 10 % As a percentage of revenues 7 % 8 % 8 % The increase in sales and marketing expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by a $131 million increase in personnel-related costs due to the growth in advertising sales headcount.
The foreign exchange gain in the year ended December 31, 2022 was primarily driven by the non-cash $353 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.
In the year ended December 31, 2024, the foreign exchange losses were primarily driven by the remeasurement of cash and content liability positions in currencies other than the functional currencies, partially offset by a non-cash gain of $122 million, net of hedging impacts, from the remeasurement of our €5,170 million Senior Notes.
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.
See Note 10 Income Taxes to the consolidated financial statements for further information regarding income taxes. 23 Table of Contents Liquidity and Capital Resources As of December 31, Change 2024 2023 2024 vs. 2023 (in thousands, except percentages) Cash, cash equivalents, restricted cash and short-term investments $ 9,586,343 $ 7,139,488 $ 2,446,855 34 % Short-term and long-term debt 15,582,804 14,543,261 1,039,543 7 % Cash, cash equivalents, restricted cash and short-term investments increased $2,447 million in the year ended December 31, 2024 primarily due to cash provided by operations, issuance of debt, and proceeds from issuance of common stock, partially offset by the repurchase of stock and repayment of debt.
In order to exclude the effect of foreign currency rate fluctuations on average monthly revenue per paying membership, we estimate current period revenue assuming foreign exchange rates had remained constant with foreign exchange rates from each of the corresponding months of the prior-year period.
In order to exclude the effect of foreign currency rate fluctuations on ARM, we calculate current period revenue assuming foreign exchange rates had remained constant with foreign exchange rates from each of the corresponding months of the prior-year period and exclude the impact of hedging gains or losses realized as revenues.
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.
Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Interest and other income (expense) $ 266,776 $ (48,772) $ 337,310 $ 315,548 647 % As a percentage of revenues 1 % — % 1 % Interest and other income (expense) increased for the year ended December 31, 2024 primarily due to foreign exchange losses of $18 million, net of the impacts of derivatives and hedging, compared to the losses of $293 million for the corresponding period in 2023.
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.
Actual operating results in future years could differ from our current assumptions, judgments and estimates. 26 Table of Contents We do not recognize certain tax benefits from uncertain tax positions within the provision for income taxes.
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.
For the year ended December 31, 2024, our revenues would have been approximately $1,424 million higher, excluding the impact of hedging and had foreign currency exchange rates remained constant with those for the year ended December 31, 2023.
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.
Results of Operations The following represents our consolidated performance highlights: As of/Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except revenue per membership and percentages) Financial Results: Streaming revenues $ 39,000,966 $ 33,640,458 $ 31,469,852 16 % DVD revenues (1) — 82,839 145,698 (100) % Total revenues $ 39,000,966 $ 33,723,297 $ 31,615,550 16 % Operating income $ 10,417,614 $ 6,954,003 $ 5,632,831 50 % Operating margin 27 % 21 % 18 % Global Streaming Memberships: Paid net membership additions 41,350 29,529 8,903 40 % Paid memberships at end of period (2) 301,626 260,276 230,747 16 % Average paying memberships 277,730 240,889 222,924 15 % Average monthly revenue per paying membership $ 11.70 $ 11.64 $ 11.76 1 % Constant currency change (3) 4 % (1) We discontinued our DVD-by-mail service in the year ended December 31, 2023.
We have built our own global content delivery network (“Open Connect”) to help us efficiently stream a high volume of content to our members over the internet. Delivery expenses, therefore, include equipment costs related to Open Connect, payroll and related personnel expenses and all third-party costs, such as cloud computing costs, associated with delivering content over the internet.
Delivery expenses, therefore, include equipment costs related to Open Connect, payroll and related personnel expenses and all third-party costs, such as cloud computing costs, associated with delivering content over the internet.
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.
Net cash provided by (used in) investing activities for the year ended December 31, 2024 decreased $2,724 million as compared to the year ended December 31, 2023, primarily due to there being no maturities of investments in the year ended December 31, 2024, as compared to maturities of investments of $1,395 million in the year ended December 31, 2023, coupled with an increase in purchases of investments of $1,237 million and an increase in purchases of property and equipment of $91 million.
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.
Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Technology and development $ 2,925,295 $ 2,675,758 $ 2,711,041 $ 249,537 9 % As a percentage of revenues 8 % 8 % 9 % The increase in technology and development expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 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) 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.
See Note 6 Debt in the accompanying notes to our consolidated financial statements for further detail on our debt obligations. 22 Table of Contents Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Interest expense $ 718,733 $ 699,826 $ 706,212 $ 18,907 3 % As a percentage of revenues 2 % 2 % 2 % Interest expense primarily consists of interest on our Notes of $718 million for the year ended December 31, 2024.
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.
Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Cost of revenues $ 21,038,464 $ 19,715,368 $ 19,168,285 $ 1,323,096 7 % As a percentage of revenues 54 % 58 % 61 % The increase in cost of revenues for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was due to a $1,104 million increase in content amortization relating to our existing and new content.
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.
We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan.
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.
Interest and Other Income (Expense) Interest and other income (expense) consists primarily of foreign exchange gains and losses on foreign currency denominated balances, gains and losses on certain derivative instruments, and interest earned on cash, cash equivalents and short-term investments.
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.
Provision for Income Taxes Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Provision for income taxes $ 1,254,026 $ 797,415 $ 772,005 $ 456,611 57 % Effective tax rate 13 % 13 % 15 % The effective tax rate for the year ended December 31, 2024 remained relatively flat as compared to the year ended December 31, 2023.
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.
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. 25 Table of Contents Critical Accounting Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.
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.
Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) General and administrative $ 1,702,039 $ 1,720,285 $ 1,572,891 $ (18,246) (1) % As a percentage of revenues 4 % 5 % 5 % General and administrative expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 remained relatively flat.
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.
Interest Expense Interest expense consists primarily of the interest associated with our outstanding debt obligations, including the amortization of debt issuance costs.
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.
The discontinuance of our DVD business had an immaterial impact on our operations and financial results.
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.
These cash inflows were partially offset by the repayment upon maturity of the $400 million aggregate principal amount of our 5.750% Senior Notes in the year ended December 31, 2024 as compared to no repayments of debt in the corresponding period in 2023, coupled with a $218 million increase in the repurchases of common stock.
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.
Operating margin for the year ended December 31, 2024 increased six percentage points as compared to the prior comparative period, primarily due to revenues growing at a faster rate as compared to the growth in cost of revenues, sales and marketing, and technology and development expenses, coupled with lower general and administrative expenses. 19 Table of Contents Streaming Revenues We primarily derive revenues from monthly membership fees for services related to streaming content to our members.
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.
The amount of principal and interest due in the next twelve months is $2,487 million. As of December 31, 2024, no amounts had been borrowed under our $3 billion Revolving Credit Agreement. See Note 6 Debt in the accompanying notes to our consolidated financial statements. We anticipate that we may periodically raise additional debt capital.
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.
In the fiscal year ended December 31, 2024, the Company repurchased 9,861,935 shares of common stock for an aggregate amount of $6,211 million (excluding the 1% excise tax on stock repurchases as a result of the Inflation Reduction Act of 2022). As of December 31, 2024, $17.1 billion remains available for repurchases.
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.
Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands, except percentages) Streaming revenues $ 39,000,966 $ 33,640,458 $ 31,469,852 $ 5,360,508 16 % Streaming revenues for the year ended December 31, 2024 increased 16% as compared to the year ended December 31, 2023, primarily due to the growth in average paying memberships and price increases, partially offset by unfavorable changes in foreign exchange rates.
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.
As of December 31, 2024, the expected timing of those payments are as follows: Contractual obligations (in thousands): Total Next 12 Months Beyond 12 Months Content obligations (1) $ 23,248,931 $ 11,424,696 $ 11,824,235 Debt (2) 19,841,462 2,486,945 17,354,517 Operating lease obligations (3) 2,761,120 514,625 2,246,495 Total $ 45,851,513 $ 14,426,266 $ 31,425,247 (1) As of December 31, 2024, content obligations were comprised of $4.4 billion included in "Current content liabilities" and $1.8 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $17.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
The following tables summarize streaming revenue and other streaming membership information by region for the years ended December 31, 2023, 2022 and 2021.
The following tables summarize streaming revenues and other streaming membership information by region for the years ended December 31, 2024, 2023 and 2022. Hedging gains of $124 million are included in “Streaming revenues” for the year ended December 31, 2024. No hedging gains and losses were recognized as “Streaming revenues” in the comparative prior year periods.
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.
Debt, net of debt issuance costs and discounts, increased $1,040 million primarily due to the issuance of $1,800 million in additional Senior Notes, partially offset by the repayment upon maturity of the $400 million aggregate principal amount of our 5.750% Senior Notes and the remeasurement of our euro-denominated notes in the year ended December 31, 2024.
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.
Net cash used in financing activities for the year ended December 31, 2024 decreased $1,876 million as compared to the year ended December 31, 2023, primarily due to proceeds from the issuance of debt of $1,794 million in the year ended December 31, 2024 and a $663 million increase in the proceeds from the issuance of common stock.
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.
The increase in interest expense for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was due to the increase in debt.
Removed
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.
Added
(2) 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.
Removed
Free Cash Flow We define free cash flow as cash provided by (used in) operating activities less purchases of property and equipment and change in other assets.
Added
Constant currency percentage change in ARM is calculated as the percentage change between current period constant currency ARM and the prior comparative period ARM. The impact of hedging gains or losses is excluded from both the current and prior periods.
Removed
We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make strategic acquisitions and investments and for certain other activities like stock repurchases.
Added
The unfavorable foreign exchange rate impacts in the year ended December 31, 2024 were primarily driven by the devaluation of the Argentine peso relative to the U.S. dollar coupled with significant price increases in the local currency in this jurisdiction.
Removed
Free cash flow is considered a non-GAAP financial measure and should not be considered in isolation of, or as a substitute for, net income, operating income, net cash provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.
Added
See Note 7 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Company’s derivative and non-derivative financial instruments.
Removed
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.
Added
Other costs of revenues include expenses associated with the acquisition, licensing and production of content, streaming delivery costs, and other operating costs.
Removed
Working capital differences primarily include deferred revenue, taxes and semi-annual interest payments on our outstanding debt. Our receivables from members generally settle quickly.
Added
Streaming delivery costs are primarily related to our global content delivery network (“Open Connect”). We have built our own Open Connect network to help us efficiently stream a high volume of content to our members over the internet.
Removed
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.
Added
Other sales and marketing expenses increased $129 million primarily due to a $54 million increase in marketing expenses due to the timing of marketing spend on our content slate, coupled with an increase in expenses incurred in connection with our advertising offering, including increased payments to advertising sales partners and other advertising distribution expenses.
Removed
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%.
Added
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 24 Table of Contents commitments.
Removed
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.
Added
In addition, we may be required to pay deposits of approximately $800 million related to certain direct and indirect taxes in the next twelve months, which are in excess of our typical annual obligations.
Removed
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.
Added
Cash Flows The following table summarizes our cash flows: Year Ended December 31, Change 2024 2023 2022 2024 vs. 2023 (in thousands) Net cash provided by operating activities $ 7,361,364 $ 7,274,301 $ 2,026,257 $ 87,063 1 % Net cash provided by (used in) investing activities (2,181,784) 541,751 (2,076,392) (2,723,535) (503) % Net cash used in financing activities (4,074,427) (5,950,803) (664,254) (1,876,376) (32) % Net cash provided by operating activities for the year ended December 31, 2024 increased $87 million as compared to the year ended December 31, 2023, primarily driven by a $3,304 million or 61% increase in net income, an increase in adjustments for non-cash expenses, and favorable changes in working capital, partially offset by an increase in payments for content assets.
Removed
Critical Accounting Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Added
The payments for content assets increased $3,862 million, from $13,140 million to $17,003 million, or 29%.
Removed
Participations and residuals are expensed in line with the amortization of production costs.
Added
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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+11 added−3 removed3 unchanged
Biggest changeFor 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.
Biggest changeExcluding the impact of hedging gains or losses realized as revenues, our revenues for the year ended December 31, 2024 would have been approximately $1,424 million higher had foreign currency exchange rates remained constant with those in the same period of 2023.
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.
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.
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.
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, 2024, our cash equivalents were generally invested in money market funds and time deposits.
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.
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 AOCI and reclassify the amounts into “Revenues” on the Consolidated Statements of Operations in the same period the forecasted transaction affects earnings.
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.
Foreign Currency Risk We operate our business globally and transact in multiple currencies. Currencies denominated in other than the U.S. dollar accounted for 56% of revenue and 29% of operating expenses for the year ended December 31, 2024.
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.
If the U.S dollar strengthened by 10% as of December 31, 2024 and December 31, 2023, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $187 million and $71 million lower, respectively.
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.
We therefore have foreign currency risk related to these currencies, which are primarily the euro, the British pound, the Brazilian real, Argentine peso, and the Mexican peso. 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.
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.
If the U.S dollar weakened by 10% as of December 31, 2024 and December 31, 2023, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $1.9 billion and $958 million lower, respectively.
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.
Changes in interest rates could adversely affect the market value of these securities. As of December 31, 2024, we had $15.7 billion of debt, consisting of fixed rate unsecured debt in fifteen tranches due between 2025 and 2054. Refer to Note 6 Debt to the consolidated financial statements for details about all issuances.
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.
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. We enter 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 from changes in foreign currency exchange rates.
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.
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.
Removed
We 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.
Added
Interest paid on such funds fluctuates with the prevailing interest rate. Our short-term investments are primarily comprised of investments in government securities. These securities are classified as available-for-sale and are recorded at fair value with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (“AOCI”) within Stockholders' equity in the Consolidated Balance Sheets.
Removed
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.
Added
The unfavorable foreign exchange rate impact in the year ended December 31, 2024 was primarily driven by the devaluation of the Argentine peso relative to the U.S. dollar coupled with significant price increases in the local currency in this jurisdiction.
Removed
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.
Added
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. We enter into foreign exchange forward contracts to mitigate fluctuations in forecasted U.S. dollar-equivalent revenues from changes in foreign currency exchange rates.
Added
This adverse change in AOCI would be expected to offset a corresponding favorable foreign currency change in the underlying exposures when recognized in earnings. 27 Table of Contents We use non-derivative instruments to mitigate foreign exchange risk related to our net investments in certain foreign subsidiaries.
Added
These non-derivative instruments 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 a portion of our foreign currency-denominated Senior Notes in euros as net investment hedges and the gains or losses on these non-derivative instruments are reported as a component of AOCI and remain in AOCI until the hedged net investment is sold or liquidated, at which point the amounts recognized in AOCI are reclassified into earnings.
Added
In the year ended December 31, 2024, we began entering into foreign exchange forward contracts to mitigate the foreign exchange risk on intercompany transactions and monetary assets and liabilities that are not denominated in the functional currencies of the Company and its subsidiaries.
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. Certain contracts are not designated as hedging instruments and the gains or losses on these derivative instruments are recorded in “Interest and other income (expense)” in the Consolidated Statements of Operations.
Added
We also designate certain contracts as fair value hedges to mitigate the foreign exchange risk on the remeasurement of our foreign-currency denominated debt. The gains or losses on these derivative instruments included in the assessment of hedge effectiveness are recorded in “Interest and other income (expense),” net with the offsetting foreign currency remeasurement gains and losses on the hedged items.
Added
If an adverse change in exchange rates of 10% was applied to our monetary assets and liabilities denominated in currencies other than the functional currencies as of December 31, 2024 and December 31, 2023, income before income taxes would have been approximately $38 million and $516 million lower, respectively, after considering the offsetting impact of the foreign currency exchange contracts and our net investment hedges.
Added
The decrease in the hypothetical adverse change in income before taxes from $516 million as of December 31, 2023 to $38 million as of December 31, 2024 is primarily driven by our use of non-derivative and derivative instruments to mitigate foreign exchange risk related to the remeasurement of foreign-currency denominated balances during the year ended December 31, 2024.

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