UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35727

Netflix, Inc.

(Exact name of Registrant as specified in its charter)


Delaware			77-0467272
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

~~100 Winchester Circle,~~121 Albright Way,	Los Gatos,	California	95032
(Address of principal executive offices)			(Zip Code)

(408) 540-3700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	NFLX	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~September 30, 2022,~~March 31, 2023, there were ~~445,020,494~~444,536,878 shares of the registrant’s common stock, par value $0.001, outstanding.

Table of Contents


		Page
	Part I. Financial Information
Item 1.	Consolidated Financial Statements

	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Cash Flows	5
	Consolidated Balance Sheets	6
	Consolidated Statements of Stockholders' Equity	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3227
Item 4.	Controls and Procedures	3227
	Part II. Other Information
Item 1.	Legal Proceedings	3228
Item 1A.	Risk Factors	3329
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329
Item 6.	Exhibits	3329
Exhibit Index		3430
Signatures		3430

Table of Contents

NETFLIX, INC.

Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Revenues	Revenues	$	7,925,589	$	7,483,467	$	23,763,497	$	21,988,526	Revenues	$	8,161,503	$	7,867,767
Cost of revenues	Cost of revenues	4,788,665		4,206,589		13,764,125		12,093,108		Cost of revenues	4,803,625		4,284,705
Marketing	Marketing	567,954		635,948		1,698,892		1,752,433		Marketing	555,362		555,978
Technology and development	Technology and development	662,739		563,887		2,037,115		1,626,415		Technology and development	687,275		657,530
General and administrative	General and administrative	373,213		321,790		1,180,438		953,831		General and administrative	400,924		397,928
Operating income	Operating income	1,533,018		1,755,253		5,082,927		5,562,739		Operating income	1,714,317		1,971,626
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(172,575)		(190,429)		(535,609)		(576,191)		Interest expense	(174,239)		(187,579)
Interest and other income		261,404		96,135		677,275		302,702
Interest and other income (expense)										Interest and other income (expense)	(71,204)		195,645
Income before income taxes	Income before income taxes	1,621,847		1,660,959		5,224,593		5,289,250		Income before income taxes	1,468,874		1,979,692
Provision for income taxes	Provision for income taxes	(223,605)		(211,888)		(787,953)		(780,451)		Provision for income taxes	(163,754)		(382,245)
Net income	Net income	$	1,398,242	$	1,449,071	$	4,436,640	$	4,508,799	Net income	$	1,305,120	$	1,597,447

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	3.14	$	3.27	$	9.98	$	10.18	Basic	$	2.93	$	3.60
Diluted	Diluted	$	3.10	$	3.19	$	9.83	$	9.90	Diluted	$	2.88	$	3.53
Weighted-average shares of common stock outstanding:	Weighted-average shares of common stock outstanding:									Weighted-average shares of common stock outstanding:
Basic	Basic	444,878		442,778		444,529		443,052		Basic	445,244		444,146
Diluted	Diluted	450,344		454,925		451,168		455,230		Diluted	452,417		452,984

See accompanying notes to the consolidated financial statements.

Table of Contents

NETFLIX, INC.

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Net income	Net income	$	1,398,242	$	1,449,071	$	4,436,640	$	4,508,799	Net income	$	1,305,120	$	1,597,447
Other comprehensive loss:
Other comprehensive income (loss):										Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	(103,167)		(29,610)		(207,148)		(64,233)		Foreign currency translation adjustments	25,611		(33,675)

Comprehensive income	Comprehensive income	$	1,295,075	$	1,419,461	$	4,229,492	$	4,444,566	Comprehensive income	$	1,330,731	$	1,563,772

See accompanying notes to the consolidated financial statements.

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NETFLIX, INC.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Cash flows from operating activities:	Cash flows from operating activities:									Cash flows from operating activities:
Net income	Net income	$	1,398,242	$	1,449,071	$	4,436,640	$	4,508,799	Net income	$	1,305,120	$	1,597,447
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:									Adjustments to reconcile net income to net cash provided by operating activities:
Additions to content assets	Additions to content assets	(4,582,671)		(4,666,237)		(12,853,846)		(12,047,563)		Additions to content assets	(2,458,666)		(3,584,164)
Change in content liabilities	Change in content liabilities	60,867		(29,246)		(95,054)		(607,494)		Change in content liabilities	(354,791)		(347,149)
Amortization of content assets	Amortization of content assets	3,653,592		2,963,051		10,081,305		8,489,050		Amortization of content assets	3,459,984		3,166,365
Depreciation and amortization of property, equipment and intangibles	Depreciation and amortization of property, equipment and intangibles	85,188		70,253		243,295		144,428		Depreciation and amortization of property, equipment and intangibles	90,335		74,602
Stock-based compensation expense	Stock-based compensation expense	152,062		95,078		421,663		303,891		Stock-based compensation expense	99,099		119,209
Foreign currency remeasurement gain on debt		(348,458)		(136,488)		(814,792)		(326,744)
Foreign currency remeasurement loss (gain) on debt										Foreign currency remeasurement loss (gain) on debt	80,651		(161,821)
Other non-cash items	Other non-cash items	102,513		102,211		409,855		282,971		Other non-cash items	120,008		101,968
Deferred income taxes	Deferred income taxes	(57,797)		50,967		(242,523)		261,827		Deferred income taxes	(98,782)		(68,906)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:									Changes in operating assets and liabilities:
Other current assets	Other current assets	(120,071)		(95,145)		44,485		(369,073)		Other current assets	(88,522)		41,157
Accounts payable	Accounts payable	53,875		24,836		(283,617)		(40,164)		Accounts payable	(89,668)		(215,444)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	212,072		269,774		324,116		276,241		Accrued expenses and other liabilities	185,299		350,763
Deferred revenue	Deferred revenue	(48,420)		(4,732)		(42,053)		64,640		Deferred revenue	(2,390)		16,743
Other non-current assets and liabilities	Other non-current assets and liabilities	(4,184)		(11,014)		(47,075)		(144,925)		Other non-current assets and liabilities	(68,937)		(167,931)
Net cash provided by operating activities	Net cash provided by operating activities	556,810		82,379		1,582,399		795,884		Net cash provided by operating activities	2,178,740		922,839
Cash flows from investing activities:	Cash flows from investing activities:									Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(84,960)		(167,327)		(296,136)		(358,606)		Purchases of property and equipment	(62,019)		(121,158)
Change in other assets		—		(21,304)		—		(26,919)

Acquisitions	Acquisitions	—		—		(193,397)		—		Acquisitions	—		(124,521)
Purchases of short-term investments										Purchases of short-term investments	(201,634)		—
Net cash used in investing activities	Net cash used in investing activities	(84,960)		(188,631)		(489,533)		(385,525)		Net cash used in investing activities	(263,653)		(245,679)
Cash flows from financing activities:	Cash flows from financing activities:									Cash flows from financing activities:

Repayments of debt	Repayments of debt	—		—		(700,000)		(500,000)		Repayments of debt	—		(700,000)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	4,113		18,445		29,041		86,265		Proceeds from issuance of common stock	26,028		13,678
Repurchases of common stock	Repurchases of common stock	—		(100,000)		—		(600,022)		Repurchases of common stock	(400,101)		—
Net cash provided by (used in) financing activities		4,113		(81,555)		(670,959)		(1,013,757)
Net cash used in financing activities										Net cash used in financing activities	(374,073)		(686,322)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(180,058)		(63,843)		(336,704)		(82,504)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	26,423		(11,448)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	295,905		(251,650)		85,203		(685,902)		Net increase (decrease) in cash, cash equivalents and restricted cash	1,567,437		(20,610)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	5,844,409		7,804,618		6,055,111		8,238,870		Cash, cash equivalents and restricted cash at beginning of period	5,170,582		6,055,111
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	6,140,314	$	7,552,968	$	6,140,314	$	7,552,968	Cash, cash equivalents and restricted cash at end of period	$	6,738,019	$	6,034,501

See accompanying notes to the consolidated financial statements.

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NETFLIX, INC.

Consolidated Balance Sheets

(in thousands, except share and par value data)


		As of					As of
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	6,113,733	$	6,027,804	Cash and cash equivalents	$	6,714,594	$	5,147,176
Short-term investments						Short-term investments	1,112,910		911,276
Other current assets	Other current assets	2,703,170		2,042,021		Other current assets	2,655,119		3,208,021
Total current assets	Total current assets	8,816,903		8,069,825		Total current assets	10,482,623		9,266,473
Content assets, net	Content assets, net	32,777,340		30,919,539		Content assets, net	32,349,184		32,736,713
Property and equipment, net	Property and equipment, net	1,372,754		1,323,453		Property and equipment, net	1,413,094		1,398,257
Other non-current assets	Other non-current assets	4,595,190		4,271,846		Other non-current assets	5,245,444		5,193,325
Total assets	Total assets	$	47,562,187	$	44,584,663	Total assets	$	49,490,345	$	48,594,768
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Current content liabilities	Current content liabilities	$	4,225,890	$	4,292,967	Current content liabilities	$	4,344,580	$	4,480,150
Accounts payable	Accounts payable	560,156		837,483		Accounts payable	591,987		671,513
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,803,555		1,449,351		Accrued expenses and other liabilities	1,718,069		1,514,650
Deferred revenue	Deferred revenue	1,176,323		1,209,342		Deferred revenue	1,262,271		1,264,661
Short-term debt	Short-term debt	—		699,823		Short-term debt	399,163		—
Total current liabilities	Total current liabilities	7,765,924		8,488,966		Total current liabilities	8,316,070		7,930,974
Non-current content liabilities	Non-current content liabilities	2,955,368		3,094,213		Non-current content liabilities	2,908,029		3,081,277
Long-term debt	Long-term debt	13,888,117		14,693,072		Long-term debt	14,037,965		14,353,076
Other non-current liabilities	Other non-current liabilities	2,424,637		2,459,164		Other non-current liabilities	2,400,085		2,452,040
Total liabilities	Total liabilities	27,034,046		28,735,415		Total liabilities	27,662,149		27,817,367
Commitments and contingencies (Note 7)	Commitments and contingencies (Note 7)					Commitments and contingencies (Note 7)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, $0.001 par value; 4,990,000,000 shares authorized at September 30, 2022 and December 31, 2021; 445,020,494 and 443,963,107 issued and outstanding at September 30, 2022 and December 31, 2021, respectively		4,473,962		4,024,561
Treasury stock at cost (1,564,478 shares at September 30, 2022)		(824,190)		(824,190)
Common stock, $0.001 par value; 4,990,000,000 shares authorized at March 31, 2023 and December 31, 2022; 444,536,878 and 445,346,776 issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock, $0.001 par value; 4,990,000,000 shares authorized at March 31, 2023 and December 31, 2022; 444,536,878 and 445,346,776 issued and outstanding at March 31, 2023 and December 31, 2022, respectively	4,762,395		4,637,601
Treasury stock at cost (2,786,534 and 1,564,478 shares at March 31, 2023 and December 31, 2022, respectively)						Treasury stock at cost (2,786,534 and 1,564,478 shares at March 31, 2023 and December 31, 2022, respectively)	(1,228,920)		(824,190)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(247,643)		(40,495)		Accumulated other comprehensive loss	(191,695)		(217,306)
Retained earnings	Retained earnings	17,126,012		12,689,372		Retained earnings	18,486,416		17,181,296
Total stockholders’ equity	Total stockholders’ equity	20,528,141		15,849,248		Total stockholders’ equity	21,828,196		20,777,401
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	47,562,187	$	44,584,663	Total liabilities and stockholders’ equity	$	49,490,345	$	48,594,768

See accompanying notes to the consolidated financial statements.

Table of Contents

NETFLIX, INC.

Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Total stockholders' equity, beginning balances	Total stockholders' equity, beginning balances	$	19,075,974	$	13,863,871	$	15,849,248	$	11,065,240	Total stockholders' equity, beginning balances	$	20,777,401	$	15,849,248

Common stock and additional paid-in capital:	Common stock and additional paid-in capital:									Common stock and additional paid-in capital:
Beginning balances	Beginning balances	$	4,316,870	$	3,721,246	$	4,024,561	$	3,447,698	Beginning balances	$	4,637,601	$	4,024,561
Issuance of common stock upon exercise of options	Issuance of common stock upon exercise of options	5,030		36,207		27,738		100,942		Issuance of common stock upon exercise of options	25,695		11,810
Stock-based compensation expense	Stock-based compensation expense	152,062		95,078		421,663		303,891		Stock-based compensation expense	99,099		119,209
Ending balances	Ending balances	$	4,473,962	$	3,852,531	$	4,473,962	$	3,852,531	Ending balances	$	4,762,395	$	4,155,580

Treasury stock:	Treasury stock:									Treasury stock:
Beginning balances	Beginning balances	$	(824,190)	$	(500,022)	$	(824,190)	$	—	Beginning balances	$	(824,190)	$	(824,190)
Repurchases of common stock to be held as treasury stock	Repurchases of common stock to be held as treasury stock	—		(100,000)		—		(600,022)		Repurchases of common stock to be held as treasury stock	(404,730)		—
Ending balances	Ending balances	$	(824,190)	$	(600,022)	$	(824,190)	$	(600,022)	Ending balances	$	(1,228,920)	$	(824,190)

Accumulated other comprehensive loss
Accumulated other comprehensive loss:										Accumulated other comprehensive loss:
Beginning balances	Beginning balances	$	(144,476)	$	9,775	$	(40,495)	$	44,398	Beginning balances	$	(217,306)	$	(40,495)
Other comprehensive loss		(103,167)		(29,610)		(207,148)		(64,233)
Other comprehensive income (loss)										Other comprehensive income (loss)	25,611		(33,675)
Ending balances	Ending balances	$	(247,643)	$	(19,835)	$	(247,643)	$	(19,835)	Ending balances	$	(191,695)	$	(74,170)

Retained earnings:	Retained earnings:									Retained earnings:
Beginning balances	Beginning balances	$	15,727,770	$	10,632,872	$	12,689,372	$	7,573,144	Beginning balances	$	17,181,296	$	12,689,372
Net income	Net income	1,398,242		1,449,071		4,436,640		4,508,799		Net income	1,305,120		1,597,447
Ending balances	Ending balances	$	17,126,012	$	12,081,943	$	17,126,012	$	12,081,943	Ending balances	$	18,486,416	$	14,286,819

Total stockholders' equity, ending balances	Total stockholders' equity, ending balances	$	20,528,141	$	15,314,617	$	20,528,141	$	15,314,617	Total stockholders' equity, ending balances	$	21,828,196	$	17,544,039

See accompanying notes to the consolidated financial statements.

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NETFLIX, INC.

Notes to Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying interim consolidated financial statements of Netflix, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (the “SEC”) on January ~~27, 2022.~~26, 2023. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the amortization of content ~~asset amortization policy~~assets and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Interim results are not necessarily indicative of the results for a full year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

~~Recently adopted accounting pronouncements~~

~~In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08,~~ ~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606,~~ ~~Revenue from Contracts with Customers. The Company adopted ASU 2021-08 in the first quarter of 2022 and the adoption had no material impact to the Company’s consolidated financial statements.~~

2. Revenue Recognition

The Company's primary source of revenues is from monthly membership fees. Members are billed in advance of the start of their monthly membership and revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities. The Company is the principal in all its relationships where partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”), provide access to the service as the Company retains control over service delivery to its members. Typically, payments made to the partners, such as for marketing, are expensed. However, if there is no distinct service provided in exchange for the payments made to the partners or if the price that the member pays is established by the partners and there is no standalone price for the Netflix service (for instance, in a bundle), these payments are recognized as a reduction of revenues.

The following tables summarize ~~streaming~~ revenues, paid net membership additions, and ending paid memberships ~~at end of period~~ by region for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022, ~~and 2021,~~ respectively:

United States and Canada (UCAN)


		As of/ Three Months Ended				As of/ Nine Months Ended					As of/ Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)									(in thousands)
Revenues	Revenues	$	3,601,565	$	3,257,697	$	10,489,852	$	9,663,312	Revenues	$	3,608,645	$	3,350,424
Paid net membership additions (losses)	Paid net membership additions (losses)	104		73		(1,828)		88		Paid net membership additions (losses)	102		(636)
Paid memberships at end of period (1)	Paid memberships at end of period (1)	73,387		74,024		73,387		74,024		Paid memberships at end of period (1)	74,398		74,579

Europe, Middle East, and Africa (EMEA)

Table of Contents

~~Europe, Middle East, and Africa (EMEA)~~


		As of/ Three Months Ended				As of/ Nine Months Ended					As of/ Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)									(in thousands)
Revenues	Revenues	$	2,375,814	$	2,432,239	$	7,394,880	$	7,176,393	Revenues	$	2,517,641	$	2,561,831
Paid net membership additions (losses)	Paid net membership additions (losses)	568		1,804		(502)		3,802		Paid net membership additions (losses)	644		(303)
Paid memberships at end of period (1)	Paid memberships at end of period (1)	73,534		70,500		73,534		70,500		Paid memberships at end of period (1)	77,373		73,733

Latin America (LATAM)


		As of/ Three Months Ended				As of/ Nine Months Ended					As of/ Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)									(in thousands)
Revenues	Revenues	$	1,023,945	$	915,297	$	3,053,127	$	2,612,826	Revenues	$	1,070,192	$	998,948
Paid net membership additions (losses)	Paid net membership additions (losses)	312		330		(25)		1,451		Paid net membership additions (losses)	(450)		(351)
Paid memberships at end of period (1)	Paid memberships at end of period (1)	39,936		38,988		39,936		38,988		Paid memberships at end of period (1)	41,249		39,610

Asia-Pacific (APAC)


		As of/ Three Months Ended				As of/ Nine Months Ended					As of/ Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)									(in thousands)
Revenues	Revenues	$	889,037	$	834,002	$	2,713,510	$	2,395,896	Revenues	$	933,523	$	916,754
Paid net membership additions		1,429		2,176		3,596		4,559
Paid net membership additions (losses)										Paid net membership additions (losses)	1,455		1,087
Paid memberships at end of period (1)	Paid memberships at end of period (1)	36,228		30,051		36,228		30,051		Paid memberships at end of period (1)	39,478		33,719


(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. Certain members have the option to add extra member sub accounts. These extra member sub accounts are not included in paid memberships. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellations, as a result of a failed method of payment, become effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.

Total U.S. revenues, inclusive of DVD revenues not reported in the tables above, were $3.3 billion and ~~$9.7~~$3.1 billion ~~respectively,~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively. DVD revenues were $32 million and ~~$3.0 billion and $9.0 billion, respectively,~~$40 million for the three ~~and nine~~ months ended ~~September 30, 2021. DVD revenues were $35 million~~March 31, 2023 and ~~$112 million, respectively, for the three and nine months ended September 30,~~ 2022, ~~and $44 million and $140 million, respectively, for three and nine months ended September 30, 2021.~~respectively.

Deferred revenue consists of membership fees billed that have not been recognized, as well as gift cards and other prepaid memberships that have not been fully redeemed. As of ~~September 30, 2022,~~March 31, 2023, total deferred revenue was ~~$1,176~~$1,262 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. ~~The $33 million decrease in~~Total deferred revenue as of March 31, 2023 remained relatively flat as compared to the balance of ~~$1,209~~$1,265 million as of December 31, ~~2021 is primarily due to a decrease in the purchase of gift cards, partially offset by an increase in average monthly revenue per paying member.~~2022.

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3. Earnings Per Share

Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the period. Potential shares of common stock consist of incremental shares issuable upon the assumed exercise of stock options. The computation of earnings per share is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands, except per share data)									(in thousands, except per share data)
Basic earnings per share:	Basic earnings per share:									Basic earnings per share:
Net income	Net income	$	1,398,242	$	1,449,071	$	4,436,640	$	4,508,799	Net income	$	1,305,120	$	1,597,447
Shares used in computation:	Shares used in computation:									Shares used in computation:
Weighted-average shares of common stock outstanding	Weighted-average shares of common stock outstanding	444,878		442,778		444,529		443,052		Weighted-average shares of common stock outstanding	445,244		444,146
Basic earnings per share	Basic earnings per share	$	3.14	$	3.27	$	9.98	$	10.18	Basic earnings per share	$	2.93	$	3.60

Diluted earnings per share:	Diluted earnings per share:									Diluted earnings per share:
Net income	Net income	$	1,398,242	$	1,449,071	$	4,436,640	$	4,508,799	Net income	$	1,305,120	$	1,597,447
Shares used in computation:	Shares used in computation:									Shares used in computation:
Weighted-average shares of common stock outstanding	Weighted-average shares of common stock outstanding	444,878		442,778		444,529		443,052		Weighted-average shares of common stock outstanding	445,244		444,146
Employee stock options	Employee stock options	5,466		12,147		6,639		12,178		Employee stock options	7,173		8,838
Weighted-average number of shares	Weighted-average number of shares	450,344		454,925		451,168		455,230		Weighted-average number of shares	452,417		452,984
Diluted earnings per share	Diluted earnings per share	$	3.10	$	3.19	$	9.83	$	9.90	Diluted earnings per share	$	2.88	$	3.53

Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential shares of common stock excluded from the diluted calculation:

Three Months Ended Nine Months Ended
September 30,
2022 September 30,
2021 September 30,
2022 September 30,
2021
(in thousands)
Employee stock options 8,536 279 6,487 441

Three Months Ended

March 31,
2023

March 31,
2022

(in thousands)

Employee stock options

5,847

2,749

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4. Cash, Cash Equivalents, ~~and~~ Restricted Cash, and Short-term Investments

The Company’s investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. The following tables summarize the Company's cash, cash equivalents, ~~and~~ restricted cash and short-term investments as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


		As of September 30, 2022									As of March 31, 2023
		Cash and cash equivalents		Other Current Assets		Non-current Assets		Total			Cash and cash equivalents		Short-term investments		Other Current Assets		Non-current Assets		Total
		(in thousands)									(in thousands)
Cash	Cash	$	5,363,669	$	2,819	$	23,641	$	5,390,129	Cash	$	3,787,630	$	—	$	3,889	$	19,483	$	3,811,002
Level 1 securities:	Level 1 securities:									Level 1 securities:
Money market funds	Money market funds	750,064		—		121		750,185		Money market funds	2,561,649		—		—		53		$	2,561,702
Level 2 securities:										Level 2 securities:
Time Deposits (1)										Time Deposits (1)	365,315		1,112,910		—		—		$	1,478,225

		$	6,113,733	$	2,819	$	23,762	$	6,140,314		$	6,714,594	$	1,112,910	$	3,889	$	19,536	$	7,850,929

As of December 31, 2021
Cash and cash equivalents Other Current Assets Non-current Assets Total
(in thousands)
Cash $ 4,103,613 $ 3,189 $ 23,972 $ 4,130,774
Level 1 securities:
Money market funds 1,924,191 — 146 1,924,337
$ 6,027,804 $ 3,189 $ 24,118 $ 6,055,111


	As of December 31, 2022
	Cash and cash equivalents		Short-term investments		Other Current Assets		Non-current Assets		Total
	(in thousands)
Cash	$	4,071,584	$	—	$	3,410	$	19,874	$	4,094,868
Level 1 securities:
Money market funds	569,826		—		—		122		569,948
Level 2 securities:
Time Deposits (1)	505,766		911,276		—		—		1,417,042

	$	5,147,176	$	911,276	$	3,410	$	19,996	$	6,081,858

(1) The majority of the Company's time deposits are domestic deposits, which mature within one year.

Other current assets include restricted cash for deposits related to self ~~insurance.~~insurance and letter of credit agreements. Non-current assets include restricted cash related to letter of credit agreements. The fair value of cash equivalents and short-term investments included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.

See Note 6 Debt to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes.

There were no material gross realized gains or losses in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~or 2021.~~respectively.

5. Balance Sheet Components

Content Assets, Net

Content assets consisted of the following:


		As of					As of
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in thousands)					(in thousands)
Licensed content, net	Licensed content, net	$	12,571,064	$	13,799,221	Licensed content, net	$	12,533,388	$	12,732,549

Produced content, net	Produced content, net					Produced content, net
Released, less amortization	Released, less amortization	7,936,197		6,877,743		Released, less amortization	9,306,337		9,110,518
In production	In production	11,484,835		9,235,975		In production	9,872,138		10,255,940
In development and pre-production	In development and pre-production	785,244		1,006,600		In development and pre-production	637,321		637,706
		20,206,276		17,120,318			19,815,796		20,004,164

Content assets, net	Content assets, net	$	32,777,340	$	30,919,539	Content assets, net	$	32,349,184	$	32,736,713

As of ~~September 30, 2022,~~March 31, 2023, approximately ~~$5,500~~$5,430 million, ~~$2,836~~$2,781 million, and ~~$1,865~~$1,952 million of the ~~$12,571~~$12,533 million unamortized cost of the licensed content is expected to be amortized in each of the next three ~~years, respectively.~~years. As of ~~September 30, 2022,~~March 31, 2023, approximately ~~$3,131~~

$3,553 million, ~~$2,058~~$2,393 million, and ~~$1,363~~$1,692 million of the ~~$7,936~~$9,306 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three ~~years, respectively.~~years.

As of ~~September 30, 2022,~~March 31, 2023, the amount of accrued participations and residuals was not material.

The following ~~tables represent~~table represents the amortization of content assets:


		Three Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)					(in thousands)
Licensed content	Licensed content	$	1,967,720	$	1,965,514	Licensed content	$	1,723,678	$	1,884,438
Produced content	Produced content	1,685,872		997,537		Produced content	1,736,306		1,281,927
Total	Total	$	3,653,592	$	2,963,051	Total	$	3,459,984	$	3,166,365

Nine Months Ended
September 30,
2022 September 30,
2021
(in thousands)
Licensed content $ 5,751,940 $ 5,679,398
Produced content 4,329,365 2,809,652
Total $ 10,081,305 $ 8,489,050

Property and Equipment, Net

Property and equipment and accumulated depreciation consisted of the following:


		As of						As of
		September 30, 2022		December 31, 2021		Estimated Useful Lives		March 31, 2023		December 31, 2022		Estimated Useful Lives
		(in thousands)						(in thousands)
Land	Land	$	84,726	$	82,381		Land	$	86,452	$	85,005
Buildings	Buildings	50,026		48,123		30 years	Buildings	60,420		52,106		30 years
Leasehold improvements	Leasehold improvements	1,037,193		863,342		Over life of lease	Leasehold improvements	1,050,836		1,040,570		Over life of lease
Furniture and fixtures	Furniture and fixtures	154,980		139,809		3 years	Furniture and fixtures	153,836		153,682		3 years
Information technology	Information technology	427,223		380,452		3 years	Information technology	443,073		442,681		3 years
Corporate aircraft	Corporate aircraft	110,978		110,978		8 years	Corporate aircraft	115,578		115,578		8-10 years
Machinery and equipment	Machinery and equipment	27,277		32,426		3-5 years	Machinery and equipment	27,068		26,821		3-5 years
Capital work-in-progress	Capital work-in-progress	190,373		282,248			Capital work-in-progress	284,181		235,555
Property and equipment, gross	Property and equipment, gross	2,082,776		1,939,759			Property and equipment, gross	2,221,444		2,151,998
Less: Accumulated depreciation	Less: Accumulated depreciation	(710,022)		(616,306)			Less: Accumulated depreciation	(808,350)		(753,741)
Property and equipment, net	Property and equipment, net	$	1,372,754	$	1,323,453		Property and equipment, net	$	1,413,094	$	1,398,257

Leases

The Company has entered into operating leases primarily for real estate. Operating leases are included in "Other non-current assets" on the Company's Consolidated Balance Sheets, and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to make lease payments are included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Company's Consolidated Balance Sheets. The Company has also entered into various short-term operating leases, primarily for marketing billboards, with an initial term of twelve months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows:


	Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Cash paid for operating lease liabilities	$	113,407	$	103,141
Right-of-use assets obtained in exchange for new operating lease obligations	20,894		141,298


	As of
	March 31, 2023		December 31, 2022
	(in thousands)
Operating lease right-of-use assets, net	$	2,175,020	$	2,227,122

Current operating lease liabilities	363,304		355,985
Non-current operating lease liabilities	2,155,415		2,222,503
Total operating lease liabilities	$	2,518,719	$	2,578,488

Three Months Ended
September 30,
2022 September 30,
2021
(in thousands)
Cash paid for operating lease liabilities $ 105,848 $ 89,916
Right-of-use assets obtained in exchange for new operating lease obligations 2,938 252,377

Nine Months Ended
September 30, 2022 September 30, 2021
(in thousands)
Cash paid for operating lease liabilities $ 308,747 $ 251,827
Right-of-use assets obtained in exchange for new operating lease obligations 183,540 485,173

As of
September 30,
2022 December 31,
2021
(in thousands)
Operating lease right-of-use assets, net $ 2,211,507 $ 2,446,573
Current operating lease liabilities 334,339 315,189
Non-current operating lease liabilities 2,209,725 2,408,486
Total operating lease liabilities $ 2,544,064 $ 2,723,675

Other Current Assets

Other current assets consisted of the following:

As of
September 30,
2022 December 31,
2021
(in thousands)
Trade receivables $ 875,042 $ 804,320
Prepaid expenses 391,832 323,818
Other 1,436,296 913,883
Total other current assets $ 2,703,170 $ 2,042,021


	As of
	March 31, 2023		December 31, 2022
	(in thousands)
Trade receivables	$	1,025,509	$	988,898
Prepaid expenses	485,997		392,735
Other	1,143,613		1,826,388
Total other current assets	$	2,655,119	$	3,208,021

The ~~increase~~decrease in Other was primarily driven by receipt of amounts due tounder a ~~modification of a~~modified content licensing arrangement.

~~Table of Contents~~

6. Debt

As of ~~September 30, 2022,~~March 31, 2023, the Company had aggregate outstanding notes of ~~$13,888~~$14,437 million, net of ~~$82~~$76 million of issuance costs, with varying maturities (the "Notes"). Of the outstanding balance, $399 million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, ~~2021,~~2022, the Company had aggregate outstanding notes of ~~$15,393~~$14,353 million, net of ~~$92~~$79 million of issuance costs. Each of the Notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates. A portion of the outstanding Notes is denominated in foreign currency (comprised of €5,170 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement ~~gain~~loss totaling ~~$348~~$81 million ~~and $815 million, respectively,~~ for the three ~~and nine~~ months ended ~~September 30, 2022)~~March 31, 2023).

The following table provides a summary of the Company's outstanding debt and the fair values based on quoted market prices in less active markets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


		Principal Amount at Par						Level 2 Fair Value as of					Principal Amount at Par						Level 2 Fair Value as of
		September 30, 2022		December 31, 2021		Issuance Date	Maturity	September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022		Issuance Date	Maturity	March 31, 2023		December 31, 2022
		(in millions)						(in millions)					(in millions)						(in millions)
5.500% Senior Notes		—		700		February 2015	February 2022	—		704
5.750% Senior Notes	5.750% Senior Notes	400		400		February 2014	March 2024	407		437		5.750% Senior Notes	$	400	$	400	February 2014	March 2024	$	404	$	404
5.875% Senior Notes	5.875% Senior Notes	800		800		February 2015	February 2025	805		899		5.875% Senior Notes	800		800		February 2015	February 2025	817		811
3.000% Senior Notes (1)	3.000% Senior Notes (1)	460		535		April 2020	June 2025	447		581		3.000% Senior Notes (1)	510		503		April 2020	June 2025	503		495
3.625% Senior Notes	3.625% Senior Notes	500		500		April 2020	June 2025	473		529		3.625% Senior Notes	500		500		April 2020	June 2025	487		479
4.375% Senior Notes	4.375% Senior Notes	1,000		1,000		October 2016	November 2026	948		1,111		4.375% Senior Notes	1,000		1,000		October 2016	November 2026	991		980
3.625% Senior Notes (1)	3.625% Senior Notes (1)	1,275		1,480		May 2017	May 2027	1,206		1,702		3.625% Senior Notes (1)	1,412		1,391		May 2017	May 2027	1,403		1,338
4.875% Senior Notes	4.875% Senior Notes	1,600		1,600		October 2017	April 2028	1,501		1,829		4.875% Senior Notes	1,600		1,600		October 2017	April 2028	1,610		1,557
5.875% Senior Notes	5.875% Senior Notes	1,900		1,900		April 2018	November 2028	1,847		2,293		5.875% Senior Notes	1,900		1,900		April 2018	November 2028	2,002		1,930
4.625% Senior Notes (1)	4.625% Senior Notes (1)	1,079		1,252		October 2018	May 2029	1,011		1,565		4.625% Senior Notes (1)	1,194		1,177		October 2018	May 2029	1,222		1,151
6.375% Senior Notes	6.375% Senior Notes	800		800		October 2018	May 2029	798		999		6.375% Senior Notes	800		800		October 2018	May 2029	862		830
3.875% Senior Notes (1)	3.875% Senior Notes (1)	1,177		1,366		April 2019	November 2029	1,041		1,651		3.875% Senior Notes (1)	1,303		1,284		April 2019	November 2029	1,283		1,201
5.375% Senior Notes	5.375% Senior Notes	900		900		April 2019	November 2029	850		1,068		5.375% Senior Notes	900		900		April 2019	November 2029	917		885
3.625% Senior Notes (1)	3.625% Senior Notes (1)	1,079		1,252		October 2019	June 2030	927		1,493		3.625% Senior Notes (1)	1,194		1,177		October 2019	June 2030	1,153		1,078
4.875% Senior Notes	4.875% Senior Notes	1,000		1,000		October 2019	June 2030	914		1,169		4.875% Senior Notes	1,000		1,000		October 2019	June 2030	998		944
		$	13,970	$	15,485			$	13,175	$	18,030		$	14,513	$	14,432			$	14,652	$	14,083

(1) The following Senior Notes have a principal amount denominated in euro: 3.000% Senior Notes for €470 million, 3.625% Senior Notes for €1,300 million, 4.625% Senior Notes for €1,100 million, 3.875% Senior Notes for €1,200 million, and 3.625% Senior Notes for €1,100 million.

Table of Contents

~~In February 2022, the Company repaid upon maturity the $700 million aggregate principal amount of its 5.500% Senior Notes.~~

Each of the Notes are repayable in whole or in part upon the occurrence of a change of control, at the option of the holders, at a purchase price in cash equal to 101% of the principal plus accrued interest. The Company may redeem the Notes prior to maturity in whole or in part at an amount equal to the principal amount thereof plus accrued and unpaid interest and an applicable premium. The Notes include, among other terms and conditions, limitations on the Company's ability to create, incur or allow certain liens; enter into sale and lease-back transactions; create, assume, incur or guarantee additional indebtedness of certain of the Company's subsidiaries; and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company's and its subsidiaries assets, to another person. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company was in compliance with all related covenants.

Revolving Credit Facility

On ~~June 17, 2021,~~March 6, 2023, the Company amended its $1 billion unsecured revolving credit facility ("Revolving Credit Agreement") to replace the London interbank offered rate to a variable secured overnight financing rate (the “Term SOFR Rate”) as the rate to which interest payments are indexed, among other ~~things, extend the maturity date from March 29, 2024 to~~things. The Revolving Credit Agreement matures on June 17, ~~2026 and to increase the size of the facility from $750 million to $1 billion.~~2026. Revolving loans may be borrowed, repaid and reborrowed until June 17, 2026, at which time all amounts borrowed must be repaid. The Company may use the proceeds of future borrowings under the Revolving Credit Agreement for working capital and general corporate purposes. As of ~~September 30, 2022,~~March 31, 2023, no amounts have been borrowed under the Revolving Credit Agreement.

~~Table of Contents~~

~~Borrowings~~The borrowings under the Revolving Credit Agreement bear interest, at the Company’s option, of either (i) a floating rate equal to a base rate (the “Alternate Base Rate”) or (ii) a rate equal to ~~an adjusted London interbank offered rate (the “Adjusted LIBO Rate”)~~the Term SOFR Rate (or the applicable benchmark replacement), plus a margin of 0.75%. The Alternate Base Rate is defined as the greatest of (A) the rate of interest published by the Wall Street Journal, from time to time, as the prime rate, (B) the federal funds rate, plus 0.500% and (C) the ~~Adjusted LIBO~~Term SOFR Rate for a one-month ~~interest period,~~tenor, plus 1.00%. The ~~Adjusted LIBO~~Term SOFR Rate is ~~defined as~~ the London interbank offered rate for deposits in U.S. dollars, for the relevant interest period, adjusted for statutory reserve requirements, but in no event shall the Adjusted LIBO Rate be less than 0.00% per annum. Regulatory authorities that oversee financial markets have announced that publication of the Adjusted LIBO Rate based upon U.S. Dollars is expected to cease on June 30, 2023. The Revolving Credit Agreement contains customary provisions for the replacement of the Adjusted LIBO Rate with an alternate benchmark rate, including a rate based on theforward-looking secured overnight financing rate ~~published~~administered by the Federal Reserve Bank of New York asor a successor administrator, for the ~~Adjusted LIBO~~relevant interest period, but in no event shall the Term SOFR Rate is phased out in the lending market. The Company does not anticipate that the replacement of the Adjusted LIBO Rate with such alternative benchmark rate, as provided in the Revolving Credit Agreement, will materially impact its liquidity or financial position.be less than 0.00% per annum.

The Company is also obligated to pay a commitment fee on the undrawn amounts of the Revolving Credit Agreement at an annual rate of 0.10%. The Revolving Credit Agreement requires the Company to comply with certain covenants, including covenants that limit or restrict the ability of the Company’s subsidiaries to incur debt and limit or restrict the ability of the Company and its subsidiaries to grant liens and enter into sale and leaseback transactions; and, in the case of the Company or a guarantor, merge, consolidate, liquidate, dissolve or sell, transfer, lease or otherwise dispose of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company was in compliance with all related covenants.

7. Commitments and Contingencies

Content

As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~$21.6~~$21.5 billion of obligations comprised of ~~$4.2~~$4.3 billion included in "Current content liabilities" and ~~$3.0~~$2.9 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and ~~$14.4~~$14.3 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.

As of December 31, ~~2021,~~2022, the Company had ~~$23.2~~$21.8 billion of obligations comprised of ~~$4.3~~$4.5 billion included in "Current content liabilities" and $3.1 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and ~~$15.8~~$14.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.

The expected timing of payments for these content obligations is as follows:


		As of					As of
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in thousands)					(in thousands)
Less than one year	Less than one year	$	9,667,326	$	10,019,306	Less than one year	$	9,771,665	$	10,038,483
Due after one year and through three years	Due after one year and through three years	8,961,147		9,238,315		Due after one year and through three years	9,536,111		9,425,551
Due after three years and through five years	Due after three years and through five years	2,639,608		3,238,977		Due after three years and through five years	1,964,812		2,124,307
Due after five years	Due after five years	304,664		664,762		Due after five years	253,283		243,606
Total content obligations	Total content obligations	$	21,572,745	$	23,161,360	Total content obligations	$	21,525,871	$	21,831,947

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Content obligations include amounts related to the acquisition, licensing and production of content. Obligations that are in non-U.S. dollar currencies are translated to the U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements as well as other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant.

Legal Proceedings

From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company's view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An

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unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position, liquidity or results of operations.

The Company is involved in litigation matters not listed herein but does not consider the matters to be material either individually or in the aggregate at this time. The Company's view of the matters not listed may change in the future as the litigation and events related thereto unfold.

Indemnification

In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.

The Company's obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.

It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

8. Stockholders’ Equity

Stock Option Plan

In June 2020, the Company's stockholders approved the 2020 Stock Plan, which was adopted by the Company’s Board of Directors in March 2020 subject to stockholder approval. The 2020 Stock Plan ~~is the successor to the 2011 Stock Plan and~~ provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants.

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A summary of the activities related to the Company’s stock option plans is as follows:


			Options Outstanding					Options Outstanding
		Shares Available for Grant	Number of Shares	Weighted- Average Exercise Price (per share)			Shares Available for Grant	Number of Shares	Weighted- Average Exercise Price (per share)		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2021		20,145,360	17,595,851	$	219.83
Balances as of December 31, 2022						Balances as of December 31, 2022	16,454,103	19,896,861	$	242.22
Granted	Granted	(2,812,627)	2,812,627	265.11		Granted	(591,343)	591,343	317.39
Exercised	Exercised	—	(1,057,387)	26.26		Exercised	—	(412,158)	62.29
Expired	Expired	—	(4,871)	11.35		Expired	—	(574)	13.14
Balances as of September 30, 2022		17,332,733	19,346,220	$	237.05
Balances as of March 31, 2023						Balances as of March 31, 2023	15,862,760	20,075,472	$	248.14	5.58	$	2,545,760
Vested and expected to vest as of March 31, 2023						Vested and expected to vest as of March 31, 2023		20,075,472	$	248.14	5.58	$	2,545,760
Exercisable as of March 31, 2023						Exercisable as of March 31, 2023		20,014,050	$	247.85	5.56	$	2,544,913

The aggregate intrinsic value ofin the ~~Company's outstanding stock options as of September 30, 2022 was $1,329 million and~~table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the ~~third~~first quarter of ~~2022~~2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of the ~~third~~first quarter of ~~2022.~~2023. This amount changes based on the fair market value of the Company’s common stock. The weighted-average remaining contractual term of the Company's outstanding stock options as of September 30, 2022 included in the table above was 5.58 years. All options outstanding are vested and exercisable.

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A summary of the amounts related to option exercises, is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
		(in thousands)									(in thousands)
Total intrinsic value of options exercised	Total intrinsic value of options exercised	$	65,087	$	263,507	$	262,879	$	581,817	Total intrinsic value of options exercised	$	116,310	$	114,762
Cash received from options exercised	Cash received from options exercised	4,113		18,445		29,041		86,265		Cash received from options exercised	26,028		13,678

Stock-based Compensation

Stock options ~~granted~~ are generally vested in full upon grant date and exercisable for the full ten year contractual term regardless of employment status. Stock options granted to certain named executive officers vest on the one-year anniversary of the grant date, subject to the employee’s continuous employment or service with the Company through the vesting date. The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021				March 31, 2023			March 31, 2022
Dividend yield	Dividend yield	—		%	—		%	—		%	—		%	Dividend yield	—		%	—		%
Expected volatility	Expected volatility	50		%	34		%	38% - 50%			34% - 41%			Expected volatility	46		%	38		%
Risk-free interest rate	Risk-free interest rate	2.98		%	1.37		%	1.71% - 2.98%			1.08% - 1.62%			Risk-free interest rate	3.63		%	1.71		%
Suboptimal exercise factor	Suboptimal exercise factor	4.73			3.85			4.71 - 4.73			3.81 - 3.85			Suboptimal exercise factor	4.22			4.71
Weighted-average fair value (per share)	Weighted-average fair value (per share)	$	127		$	240		$	150		$	250		Weighted-average fair value (per share)	$	186		$	228
Total stock-based compensation expense (in thousands)	Total stock-based compensation expense (in thousands)	$	152,062		$	95,078		$	421,663		$	303,891		Total stock-based compensation expense (in thousands)	$	99,099		$	119,209
Total income tax impact on provision (in thousands)	Total income tax impact on provision (in thousands)	$	33,724		$	21,443		$	93,472		$	68,354		Total income tax impact on provision (in thousands)	$	21,711		$	26,413

~~The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior.~~

The Company calculates expected volatility based solely on implied volatility. The Company believes that implied volatility of publicly traded options in its common stock is more reflective of market conditions, and given consistently high trade volumes of the options, can reasonably be expected to be a better indicator of expected volatility than historical volatility of its common stock.

In valuing shares issued under the Company’s employee stock option plans, the Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with terms similar to the contractual term of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully vested upon grant date.

Stock Repurchases

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. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. The Company is not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, general economic, business and market conditions, and alternative investment

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opportunities. The Company may discontinue any repurchases of its common stock at any time without prior notice. ~~There were no repurchases during~~During the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023, the Company repurchased 1,222,056 shares for an aggregate amount of $400 million. As of ~~September 30, 2022, $4.4~~March 31, 2023, $4.0 billion remain available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of ~~September 30, 2022,~~March 31, 2023, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.

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9. Income Taxes


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021				March 31, 2023			March 31, 2022
		(in thousands, except percentages)													(in thousands, except percentages)
Provision for income taxes	Provision for income taxes	$	223,605		$	211,888		$	787,953		$	780,451		Provision for income taxes	$	163,754		$	382,245
Effective tax rate	Effective tax rate	14		%	13		%	15		%	15		%	Effective tax rate	11		%	19		%

The effective tax ~~rate~~rates for the three months ended ~~September 30, 2022~~March 31, 2023 differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act, ~~the Federal~~research and ~~California Research and Development (“R&D”)~~development credits, and the recognition of excess tax benefits of stock-based compensation. The effective tax ~~rate~~rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 differed from the Federal statutory rate primarily due to an increase in foreign taxes, offset by the impact of international provisions of the Tax Cuts and Jobs Act ~~the Federal and California R&D credits,~~ and the recognition of excess tax benefits of stock-based compensation. The effective tax rates for the three and nine months ended September 30, 2021 differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act and recognition of excess tax benefits of stock-based compensation.

The ~~increase~~decrease in the effective tax rate for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to the same period in ~~2021~~2022 was primarily due to a ~~reduction~~decrease in ~~excess tax benefits of stock-based compensation. The effective tax rate for the nine months ended September 30, 2022 was consistent compared to the same period in 2021.~~foreign taxes. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of ~~$14~~$24 million, ~~and $57 million, respectively,~~ compared to the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 of ~~$57 million and $123 million, respectively.~~$25 million.

Gross unrecognized tax benefits were ~~$230~~$234 million and ~~$203~~$227 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The gross unrecognized tax benefits, ~~as of September 30, 2022,~~ if recognized by the Company, will result in a reduction of approximately ~~$152~~$162 million to the provision for income taxes thereby favorably impacting the Company’s effective tax rate.

The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for the years 2016 through 2018 and is subject to examination for 2019 through ~~2021.~~2022. The foreign and state tax returns for the years 2015 through ~~2021~~2022 are subject to examination by various states and foreign jurisdictions. While the Company is in various stages of inquiries and examinations by federal, state and foreign taxing authorities, we believe that our tax positions will more likely than not be sustained. Nonetheless, it is possible that future obligations related to these matters could arise.

Given the potential outcome of the current ~~examination,~~examinations as well as the impact of the current ~~examination~~examinations on the potential expiration of the statute of limitations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, an estimate of the range of reasonably possible adjustments cannot be made at this time.

10. Segment and Geographic Information

The Company operates as one operating segment. The Company's chief operating decision maker ("CODM") ~~are~~is its co-chief executive officers, who review financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources.

Total U.S. revenues were $3.3 billion and ~~$9.7~~$3.1 billion ~~respectively,~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and $3.0 billion and $9.0 billion, respectively, for the three and nine months ended September 30, 2021.~~respectively. See Note 2 Revenue Recognition for additional information about streaming revenue by region.

The Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, were located as follows:

As of
September 30,
2022 December 31,
2021
(in thousands)
United States $ 2,785,303 $ 2,833,059
International 798,958 936,967

~~11. Subsequent Event~~

~~On October 3, 2022, the Company completed the acquisition of Animal Logic, an Australian animation studio. The Company anticipates accounting for the transaction as a business combination.~~

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	As of
	March 31, 2023		December 31, 2022
	(in thousands)
United States	$	2,721,743	$	2,745,071
International	866,371		880,308

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding: our core strategy; our ability to improve our content offerings and service; our future financial performance, including expectations regarding revenues, deferred revenue, operating income and margin, net income, expenses, and profitability; liquidity, including the sufficiency of our capital resources, ~~adequacy of existing facilities,~~ net cash provided by (used in) operating activities, access to financing sources, and free cash flows; capital allocation strategies, including any stock repurchases or repurchase programs; seasonality; ~~the~~stock price volatility; impact of foreign exchange rate fluctuations, including on net income, revenues and average revenues per paying member; impact of interest rate fluctuations; ~~the impact~~adequacy of ~~the discontinuance of the LIBO Rate;~~existing facilities; future regulatory changes and their impact on our business; intellectual property; price changes and testing; impact of recently adopted accounting pronouncements; accounting treatment for changes related to content ~~assets and~~assets; acquisitions; membership growth, including impact of content and pricing changes on membership growth; partnerships; member viewing patterns; dividends; future contractual obligations, including unknown content obligations and timing of payments; our global content and marketing investments, including investments in original programming; content amortization; resolution of tax examinations; tax expense; unrecognized tax benefits; deferred tax assets; and our ability to effectively manage change and ~~growth; and the impact of the coronavirus (COVID-19) pandemic and our response to it.~~growth. These forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those included in forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) on January ~~27, 2022,~~26, 2023, in particular the risk factors discussed under the heading “Risk Factors” in Part I, Item ~~IA.~~1A.

We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.

Investors and others should note that we announce material financial information to our investors using our investor relations website (ir.netflix.net), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media and blogs to communicate with our members and the public about our company, our services and other issues. It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels and blogs listed on our investor relations website.

Overview

We are one of the world’s leading entertainment services with ~~approximately 223~~over 232 million paid memberships in over 190 countries enjoying TV series, ~~documentaries, feature~~ films and ~~mobile~~ games across a wide variety of genres and languages. Members can ~~engage~~play, pause and resume watching as much as they want, ~~anytime, anywhere, on any internet-connected screen. Members can play, pause and resume to watch,~~ anytime, anywhere, and can change their plans at any time. ~~Additionally, we continue to offer our DVD-by-mail service in the United States (“U.S.”).~~

We are a pioneer in the delivery of streaming entertainment, launching our streaming service in 2007. Since this launch, we have developed an ecosystem for internet-connected screens and continue to add content that enables consumers to enjoy entertainment directly on their internet-connected screens. As a result of these efforts, we have experienced growing consumer acceptance of, and interest in, the delivery of streaming entertainment.

Our core strategy is to grow our ~~streaming~~ business globally within the parameters of our operating margin target. We ~~are~~strive to continuously ~~improving~~improve our members’ experience by ~~expanding our content with a focus on a programming mix of~~offering compelling content that delights ~~our members~~them and attracts new members. ~~For example, in 2021 we added mobile games~~We seek to drive conversation around our ~~service. In addition,~~content to further enhance member joy, and we are continuously enhancing our user interface ~~and extending our streaming service~~ to ~~more internet-connected screens. Certain of~~help our members ~~can download a selection of titles for offline viewing.~~more easily choose content that they will find enjoyable.

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.

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Results of Operations

The following represents our consolidated performance highlights:


		As of/ Three Months Ended						Change						As of/ Three Months Ended						Change
		September 30, 2022			September 30, 2021			Q3'22 vs. Q3'21						March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
		(in thousands, except revenue per membership and percentages)												(in thousands, except revenue per membership and percentages)
Financial Results:	Financial Results:												Financial Results:
Streaming revenues	Streaming revenues	$	7,890,361		$	7,439,235		$	451,126		6	%	Streaming revenues	$	8,130,001		$	7,827,957		$	302,044		4	%
DVD revenues(1)	DVD revenues(1)	35,228			44,232			(9,004)			(20)	%	DVD revenues(1)	31,502			39,810			(8,308)			(21)	%
Total revenues	Total revenues	$	7,925,589		$	7,483,467		$	442,122		6	%	Total revenues	$	8,161,503		$	7,867,767		$	293,736		4	%

Operating income	Operating income	1,533,018			1,755,253			$	(222,235)		(13)	%	Operating income	$	1,714,317		$	1,971,626		$	(257,309)		(13)	%
Operating margin	Operating margin	19		%	23		%	(4)		%			Operating margin	21		%	25		%	(4)		%

Global Streaming Memberships:	Global Streaming Memberships:												Global Streaming Memberships:
Paid net membership additions		2,413			4,383			(1,970)			(45)	%
Paid net membership additions (losses)													Paid net membership additions (losses)	1,751			(203)			1,954			963	%
Paid memberships at end of period	Paid memberships at end of period	223,085			213,563			9,522			4	%	Paid memberships at end of period	232,498			221,641			10,857			5	%
Average paying memberships	Average paying memberships	221,879			211,372			10,507			5	%	Average paying memberships	231,623			221,743			9,880			4	%
Average monthly revenue per paying membership	Average monthly revenue per paying membership	$	11.85		$	11.73		$	0.12		1	%	Average monthly revenue per paying membership	$	11.70		$	11.77		$	(0.07)		(1)	%

(1) In April 2023, we announced our plans to discontinue our DVD-by-mail service, which we do not expect to have a material effect on our operations or financial results.

Consolidated revenues for the three months ended ~~September 30, 2022~~March 31, 2023 increased 6%4% as compared to the three months ended ~~September 30, 2021~~March 31, 2022. The increase in our consolidated revenues was due to the 5%4% growth in average paying memberships, ~~and~~partially offset by a 1% ~~increase~~decrease in average monthly revenue per paying membership. The ~~increase~~decrease in average monthly revenue per paying membership ~~resulted from our price changes, partially offset by~~was primarily due to the strengthening of the U.S. dollar relative to certain foreign ~~currencies.~~currencies and changes in plan mix, partially offset by our price changes.

~~The decrease in operating margin is primarily due to revenues growing~~Operating expenses grew at a ~~slower~~faster rate ~~as compared to the 23% increase in content amortization. Revenue growth during the quarter~~than revenue, which was unfavorably impacted by fluctuations in foreign exchange rates, ~~while content amortization increased~~resulting in a decrease in operating margin as ~~a result of delays in content releases due~~compared to the ~~COVID-19 pandemic impacting the comparable~~ prior ~~year~~comparative period.

The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part I, Item 1A: “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional details. While our productions have resumed, our productions could experience disruption, as could the productions of our third-party content suppliers. Other partners could similarly have their operations disrupted, including those partners that we use for our operations as well as development, production, and post-production of content. Production disruptions and new health and safety protocols and requirements can result in additional costs including additional pay to cast and crew and use of Personal Protective Equipment (“PPE”) and testing. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, suppliers or vendors, or on our financial results.

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. As of ~~September 30, 2022,~~March 31, 2023, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $26 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.

The following tables summarize streaming revenue and other streaming membership information by region for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

~~United States and Canada (UCAN)~~

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

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As of/ Three Months Ended Change
September 30, 2022 September 30, 2021 Q3'22 vs. Q3'21
(in thousands, except revenue per membership and percentages)
Revenues $ 3,601,565 $ 3,257,697 $ 343,868 11 %
Paid net membership additions 104 73 31 42 %
Paid memberships at end of period 73,387 74,024 (637) (1) %
Average paying memberships 73,335 73,988 (653) (1) %
Average monthly revenue per paying membership $ 16.37 $ 14.68 $ 1.69 12 %
Constant currency change (1) 12 %
United States and Canada (UCAN)

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~


		As of/ Nine Months Ended				Change					As of/ Three Months Ended				Change
		September 30, 2022		September 30, 2021		YTD'22 vs. YTD'21					March 31, 2023		March 31, 2022		Q1'23 vs. Q1'22
		(in thousands, except revenue per membership and percentages)									(in thousands, except revenue per membership and percentages)
Revenues	Revenues	$	10,489,852	$	9,663,312	$	826,540	9	%	Revenues	$	3,608,645	$	3,350,424	$	258,221	8	%
Paid net membership additions (losses)	Paid net membership additions (losses)	(1,828)		88		(1,916)		(2,177)	%	Paid net membership additions (losses)	102		(636)		738		116	%
Paid memberships at end of period	Paid memberships at end of period	73,387		74,024		(637)		(1)	%	Paid memberships at end of period	74,398		74,579		(181)		—	%
Average paying memberships	Average paying memberships	74,054		74,105		(51)		—	%	Average paying memberships	74,347		74,897		(550)		(1)	%
Average monthly revenue per paying membership	Average monthly revenue per paying membership	$	15.74	$	14.49	$	1.25	9	%	Average monthly revenue per paying membership	$	16.18	$	14.91	$	1.27	9	%
Constant currency change (1)	Constant currency change (1)							9	%	Constant currency change (1)							9	%

Europe, Middle East, and Africa (EMEA)

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

As of/ Three Months Ended Change
September 30, 2022 September 30, 2021 Q3'22 vs. Q3'21
(in thousands, except revenue per membership and percentages)
Revenues $ 2,375,814 $ 2,432,239 $ (56,425) (2) %
Paid net membership additions 568 1,804 (1,236) (69) %
Paid memberships at end of period 73,534 70,500 3,034 4 %
Average paying memberships 73,250 69,598 3,652 5 %
Average monthly revenue per paying membership $ 10.81 $ 11.65 $ (0.84) (7) %
Constant currency change (1) 7 %

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~


		As of/ Nine Months Ended				Change					As of/ Three Months Ended				Change
		September 30, 2022		September 30, 2021		YTD'22 vs. YTD'21					March 31, 2023		March 31, 2022		Q1'23 vs. Q1'22
		(in thousands, except revenue per membership and percentages)									(in thousands, except revenue per membership and percentages)
Revenues	Revenues	$	7,394,880	$	7,176,393	$	218,487	3	%	Revenues	$	2,517,641	$	2,561,831	$	(44,190)	(2)	%
Paid net membership additions (losses)	Paid net membership additions (losses)	(502)		3,802		(4,304)		(113)	%	Paid net membership additions (losses)	644		(303)		947		313	%
Paid memberships at end of period	Paid memberships at end of period	73,534		70,500		3,034		4	%	Paid memberships at end of period	77,373		73,733		3,640		5	%
Average paying memberships	Average paying memberships	73,495		68,601		4,894		7	%	Average paying memberships	77,051		73,885		3,166		4	%
Average monthly revenue per paying membership	Average monthly revenue per paying membership	$	11.18	$	11.62	$	(0.44)	(4)	%	Average monthly revenue per paying membership	$	10.89	$	11.56	$	(0.67)	(6)	%
Constant currency change (1)	Constant currency change (1)							7	%	Constant currency change (1)							1	%

Latin America (LATAM)


	As of/ Three Months Ended				Change
	March 31, 2023		March 31, 2022		Q1'23 vs. Q1'22
	(in thousands, except revenue per membership and percentages)
Revenues	$	1,070,192	$	998,948	$	71,244	7	%
Paid net membership additions (losses)	(450)		(351)		(99)		(28)	%
Paid memberships at end of period	41,249		39,610		1,639		4	%
Average paying memberships	41,474		39,786		1,688		4	%
Average monthly revenue per paying membership	$	8.60	$	8.37	$	0.23	3	%
Constant currency change (1)							8	%

Asia-Pacific (APAC)


	As of/ Three Months Ended				Change
	March 31, 2023		March 31, 2022		Q1'23 vs. Q1'22
	(in thousands, except revenue per membership and percentages)
Revenues	$	933,523	$	916,754	$	16,769	2	%
Paid net membership additions (losses)	1,455		1,087		368		34	%
Paid memberships at end of period	39,478		33,719		5,759		17	%
Average paying memberships	38,751		33,176		5,575		17	%
Average monthly revenue per paying membership	$	8.03	$	9.21	$	(1.18)	(13)	%
Constant currency change (1)							(6)	%

Table of Contents

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

As of/ Three Months Ended Change
September 30, 2022 September 30, 2021 Q3'22 vs. Q3'21
(in thousands, except revenue per membership and percentages)
Revenues $ 1,023,945 $ 915,297 $ 108,648 12 %
Paid net membership additions 312 330 (18) (5) %
Paid memberships at end of period 39,936 38,988 948 2 %
Average paying memberships 39,780 38,823 957 2 %
Average monthly revenue per paying membership $ 8.58 $ 7.86 $ 0.72 9 %
Constant currency change (1) 16 %

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~

As of/ Nine Months Ended Change
September 30, 2022 September 30, 2021 YTD'22 vs. YTD'21
(in thousands, except revenue per membership and percentages)
Revenues $ 3,053,127 $ 2,612,826 $ 440,301 17 %
Paid net membership additions (losses) (25) 1,451 (1,476) (102) %
Paid memberships at end of period 39,936 38,988 948 2 %
Average paying memberships 39,728 38,272 1,456 4 %
Average monthly revenue per paying membership $ 8.54 $ 7.59 $ 0.95 13 %
Constant currency change (1) 17 %

~~Asia-Pacific (APAC)~~

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

As of/ Three Months Ended Change
September 30, 2022 September 30, 2021 Q3'22 vs. Q3'21
(in thousands, except revenue per membership and percentages)
Revenues $ 889,037 $ 834,002 $ 55,035 7 %
Paid net membership additions 1,429 2,176 (747) (34) %
Paid memberships at end of period 36,228 30,051 6,177 21 %
Average paying memberships 35,514 28,963 6,551 23 %
Average monthly revenue per paying membership $ 8.34 $ 9.60 $ (1.26) (13) %
Constant currency change (1) (3) %

~~Table of Contents~~

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~

As of/ Nine Months Ended Change
September 30, 2022 September 30, 2021 YTD'22 vs. YTD'21
(in thousands, except revenue per membership and percentages)
Revenues $ 2,713,510 $ 2,395,896 $ 317,614 13 %
Paid net membership additions 3,596 4,559 (963) (21) %
Paid memberships at end of period 36,228 30,051 6,177 21 %
Average paying memberships 34,316 27,500 6,816 25 %
Average monthly revenue per paying membership $ 8.79 $ 9.68 $ (0.89) (9) %
Constant currency change (1) (1) %

(1) We believe constant currency information is useful in analyzing the underlying trends in average monthly revenue per paying membership. 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. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, our revenues would have been approximately ~~$548 million and $1,167~~$346 million higher had foreign currency exchange rates remained constant with those for the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

Cost of Revenues

Amortization of content assets makes up the majority of cost of revenues. Expenses ~~directly~~ associated with the acquisition, licensing and production of content (such as payroll and related personnel expenses, costs associated with obtaining rights to music included in our content, overall deals with talent, miscellaneous production related costs and participations and residuals), streaming delivery costs and other operations costs make up the remainder of cost of revenues. 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. 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.

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~


		Three Months Ended						Change					Three Months Ended						Change
		September 30, 2022			September 30, 2021			Q3'22 vs. Q3'21					March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
		(in thousands, except percentages)											(in thousands, except percentages)
Cost of revenues	Cost of revenues	$	4,788,665		$	4,206,589		$	582,076	14	%	Cost of revenues	$	4,803,625		$	4,284,705		$	518,920	12	%
As a percentage of revenues	As a percentage of revenues	60		%	56		%					As a percentage of revenues	59		%	54		%

The increase in cost of revenues was primarily due to a ~~$691~~$294 million increase in content amortization relating to our existing and new content, including more exclusive and original programming.

~~Nine~~ Other costs of revenues increased $225 million, primarily due to an increase in other content expenses in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the ~~nine~~three months ended ~~September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
Cost of revenues $ 13,764,125 $ 12,093,108 $ 1,671,017 14 %
As a percentage of revenues 58 % 55 %

~~The increase in cost of revenues was primarily due to a $1,592 million increase in content amortization relating to our existing and new content, including more exclusive and original programming.~~March 31, 2022.

Marketing

~~Table of Contents~~

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 internet service providers (“ISPs”). Advertising expenses include promotional activities such as digital and television advertising. Marketing expenses also include payroll and related expenses for personnel that support marketing activities.


	Three Months Ended						Change
	March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
	(in thousands, except percentages)
Marketing	$	555,362		$	555,978		$	(616)	—	%
As a percentage of revenues	7		%	7		%

~~Three~~

Marketing expenses for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021~~

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
Marketing $ 567,954 $ 635,948 $ (67,994) (11) %
As a percentage of revenues 7 % 8 %

~~The decrease in marketing expenses was primarily due to a $68 million decrease in advertising expenses.~~

~~Nine months ended September 30,~~March 31, 2022 ~~as compared to the nine months ended September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
Marketing $ 1,698,892 $ 1,752,433 $ (53,541) (3) %
As a percentage of revenues 7 % 8 %

The decrease in marketing expenses was primarily due to a $142 million decrease in advertising expenses and $20 million decrease in payments to our marketing partners, partially offset by a $111 million increase in personnel-related costs.remained relatively flat.

Technology and Development

Technology and development expenses consist primarily of payroll and related expenses for technology personnel responsible for making improvements to our service offerings, including testing, maintaining and modifying our user interface, our recommendations, merchandising and infrastructure. Technology and development expenses also include costs associated with general use computer hardware and software.

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
Technology and development $ 662,739 $ 563,887 $ 98,852 18 %
As a percentage of revenues 8 % 8 %

~~The increase in technology and development expenses was primarily due to a $89 million increase in personnel-related costs.~~

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~


		Nine Months Ended						Change					Three Months Ended						Change
		September 30, 2022			September 30, 2021			YTD'22 vs. YTD'21					March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
		(in thousands, except percentages)											(in thousands, except percentages)
Technology and development	Technology and development	$	2,037,115		$	1,626,415		$	410,700	25	%	Technology and development	$	687,275		$	657,530		$	29,745	5	%
As a percentage of revenues	As a percentage of revenues	9		%	7		%					As a percentage of revenues	8		%	8		%

2422

Table of Contents

The increase in technology and development expenses was primarily due to a ~~$364~~$26 million increase in personnel-related costs.

General and Administrative

General and administrative expenses consist primarily of payroll and related expenses for corporate personnel. General and administrative expenses also include professional fees and other general corporate expenses.

~~Three~~


	Three Months Ended						Change
	March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
	(in thousands, except percentages)
General and administrative	$	400,924		$	397,928		$	2,996	1	%
As a percentage of revenues	5		%	5		%

General and administrative expenses for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021~~

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
General and administrative $ 373,213 $ 321,790 $ 51,423 16 %
As a percentage of revenues 5 % 4 %

~~The increase in general and administrative expenses was primarily due to a $47 million increase in personnel-related costs.~~

~~Nine months ended September 30,~~March 31, 2022 ~~as compared to the nine months ended September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
General and administrative $ 1,180,438 $ 953,831 $ 226,607 24 %
As a percentage of revenues 5 % 4 %

~~The increase in general and administrative expenses was primarily due to a $242 million increase in personnel-related costs.~~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.

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~


	Three Months Ended						Change
	March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
	(in thousands, except percentages)
Interest expense	$	174,239		$	187,579		$	(13,340)	(7)	%
As a percentage of revenues	2		%	2		%

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
Interest expense $ 172,575 $ 190,429 $ (17,854) (9) %
As a percentage of revenues 2 % 3 %

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
Interest expense $ 535,609 $ 576,191 $ (40,582) (7) %
As a percentage of revenues 2 % 3 %

~~Table of Contents~~

Interest expense primarily consists of interest on our Notes of ~~$172 million and $528~~$174 million for the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. The decrease in interest expense for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 as compared to the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was due to the lower average aggregate principal of interest bearing notes outstanding.

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 ~~cash equivalents.~~short-term investments.

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
Interest and other income $ 261,404 $ 96,135 $ 165,269 172 %
As a percentage of revenues 3 % 1 %

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~


		Nine Months Ended						Change					Three Months Ended						Change
		September 30, 2022			September 30, 2021			YTD'22 vs. YTD'21					March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
		(in thousands, except percentages)											(in thousands, except percentages)
Interest and other income		$	677,275		$	302,702		$	374,573	124	%
Interest and other income (expense)												Interest and other income (expense)	$	(71,204)		$	195,645		$	(266,849)	(136)	%
As a percentage of revenues	As a percentage of revenues	3		%	1		%					As a percentage of revenues	(1)		%	2		%

Interest and other income ~~increased~~(expense) decreased in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 primarily due to foreign exchange losses of $107 million, compared to gains of ~~$249~~$192 million ~~and $680 million, respectively, compared to foreign exchange gains of $103 million and $301 million, respectively,~~ for the corresponding ~~periods~~period in ~~2021.~~2022. In the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the foreign exchange ~~gains~~losses were primarily driven by the non-cash ~~gains~~loss of ~~$348~~$81 million ~~and $815 million, respectively,~~ from the remeasurement of our €5,170 million Senior Notes, ~~partially offset by~~coupled with the remeasurement of cash and content liability positions in currencies other than the functional currencies. In the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the foreign exchange gains were primarily driven by the $162 million non-cash ~~gains of $136 million and $327 million, respectively,~~gain from the remeasurement of our €5,170 million Senior Notes, ~~partially offset by~~coupled with the remeasurement of cash and content liability positions in currencies other than the functional currencies. The change in foreign currency gains and losses was partially offset by higher interest income earned in the three months ended March 31, 2023 as compared to the corresponding period in 2022.

Provision for Income Taxes

2623

Table of Contents

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

Three Months Ended Change
September 30,
2022 September 30,
2021 Q3'22 vs. Q3'21
(in thousands, except percentages)
Provision for income taxes $ 223,605 $ 211,888 $ 11,717 6 %
Effective tax rate 14 % 13 %

~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
Provision for income taxes $ 787,953 $ 780,451 $ 7,502 1 %
Effective tax rate 15 % 15 %


	Three Months Ended						Change
	March 31, 2023			March 31, 2022			Q1'23 vs. Q1'22
	(in thousands, except percentages)
Provision for income taxes	$	163,754		$	382,245		$	(218,491)	(57)	%
Effective tax rate	11		%	19		%

Liquidity and Capital Resources


		As of				Change					As of				Change
		September 30, 2022		December 31, 2021		September 30, 2022 vs. December 31, 2021					March 31, 2023		December 31, 2022		March 31, 2023 vs. December 31, 2022
		(in thousands, except percentages)									(in thousands, except percentages)
Cash, cash equivalents and restricted cash		$	6,140,314	$	6,055,111	$	85,203	1	%
Cash, cash equivalents, restricted cash and short-term investments										Cash, cash equivalents, restricted cash and short-term investments	$	7,850,929	$	6,081,858	$	1,769,071	29	%
Short-term and long-term debt	Short-term and long-term debt	13,888,117		15,392,895		(1,504,778)		(10)	%	Short-term and long-term debt	14,437,128		14,353,076		84,052		1	%

Cash, cash equivalents, ~~and~~ restricted cash and short-term investments increased ~~$85~~$1,769 million in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to cash provided by operations, ~~partially~~primarily offset by the ~~repayment~~repurchase of ~~debt, purchases of property and equipment and acquisitions.~~stock.

Debt, net of debt issuance costs, ~~decreased $1,505~~increased $84 million primarily due to the remeasurement of our euro-denominated ~~notes, coupled with the repayment upon maturity of the $700 million aggregate principal~~notes. The amount of ~~our 5.500% Senior Notes in February 2022. The amount of~~principal and interest on our outstanding notes due in the next twelve months is ~~$664~~$685 million. As of ~~September 30, 2022,~~March 31, 2023, no amounts had been borrowed under the $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. Our ability to obtain this or any additional financing that we may choose ~~to,~~ or need, ~~to, obtain~~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. We may not be able to obtain such financing on terms acceptable to us or at all. If we raise additional funds through the issuance of equity 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.

In March 2021, our Board of Directors authorized the repurchase of up to $5 billion of our common stock, with no expiration date. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. We are not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including our stock price, general economic, business and market conditions, and alternative investment opportunities. We may

~~Table of Contents~~

discontinue any repurchases of our common stock at any time without prior notice. ~~There were no repurchases during~~For the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023, the Company repurchased 1,222,056 shares of common stock for an aggregate amount of $400 million. As of ~~September 30, 2022, $4.4~~March 31, 2023, $4.0 billion remains available for repurchases.

~~On October 3, 2022, we completed the acquisition of Animal Logic, an Australian animation studio. The transaction was funded with a portion of our existing cash balances.~~

Our primary uses of cash include the acquisition, licensing and production of content, marketing programs, streaming delivery and personnel-related ~~costs.~~costs, as well as for strategic acquisitions and investments. Cash payment terms for non-original content have historically been in line with the amortization period. Investments in original content, and in particular content that we produce and own, require more cash upfront relative to licensed content. For example, production costs are paid as the content is created, well in advance of when the content is available on the service and amortized. We expect to continue to significantly invest in global content, particularly in original content, which will impact our liquidity. We currently anticipate that cash flows from operations, available funds and access to financing sources, including our revolving credit facility, will continue to be sufficient to meet our cash needs for the next twelve months and beyond.

Table of Contents

Our material cash requirements from known contractual and other obligations primarily relate to our content, debt and lease obligations. ~~Expected~~As of March 31, 2023, the expected timing of those payments are as follows:

Total Next 12 Months Beyond 12 Months
Content obligations (1) $ 21,572,745 $ 9,667,326 $ 11,905,419
Debt (2) 17,962,625 664,269 17,298,356
Operating lease obligations (3) 3,328,042 447,421 2,880,621
Total $ 42,863,412 $ 10,779,016 $ 32,084,396


	Payments due by Period
Contractual obligations (in thousands):	Total		Next 12 Months		Beyond 12 Months
Content obligations (1)	$	21,525,871	$	9,771,665	$	11,754,206
Debt (2)	17,898,596		685,089		17,213,507
Operating lease obligations (3)	3,309,657		472,369		2,837,288

Total	$	42,734,124	$	10,929,123	$	31,805,001

(1)As of ~~September 30, 2022,~~March 31, 2023, content obligations were comprised of ~~$4.2~~$4.3 billion included in “Current content liabilities” and ~~$3.0~~$2.9 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and ~~$14.4~~$14.3 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition. ~~See Note 7~~ ~~Commitments and Contingencies~~ ~~to the consolidated financial statements for further details.~~

The material cash requirements above do not include any estimated obligation for the unknown future titles, payment for which could range from less than one year to more than five years. However, these unknown obligations are expected to be significant and we believe could include approximately $1 billion to $4 billion over the next three years, with the payments for the vast majority of such amounts expected to occur after the next twelve months. The foregoing range is based on considerable management judgments and the actual amounts may differ. Once we know the title that we will receive and the license fees, we include the amount in the contractual obligations table above.

(2)Debt obligations include our Notes consisting of principal and interest payments. See Note 6 Debt to the consolidated financial statements for further details.

(3)Operating lease obligations are comprised of operating lease liabilities included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Consolidated Balance Sheets, inclusive of imputed interest. Operating lease obligations also include additional obligations that are not reflected on the Consolidated Balance Sheets as they did not meet the criteria for recognition. See Note 5 Balance Sheet Components in the accompanying notes to our consolidated financial statements for further details regarding leases.

As of ~~September 30, 2022,~~March 31, 2023, we had gross unrecognized tax benefits of ~~$230~~$234 million. At this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.

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. 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. 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 ~~(used in)~~ operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.

~~Table of Contents~~

In assessing liquidity in relation to our results of operations, we compare free cash flow to net income, noting that the major recurring differences are excess content payments over amortization, non-cash stock-based compensation expense, non-cash remeasurement gain/loss on our euro-denominated debt, and other working capital differences. Working capital differences include deferred revenue, excess property and equipment purchases over depreciation, taxes and semi-annual interest payments on our outstanding debt. Our receivables from members generally settle quickly.

~~Three months ended September 30, 2022 as compared to the three months ended September 30, 2021~~

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		Three Months Ended				Change					Three Months Ended				Change
		September 30, 2022		September 30, 2021		Q3'22 vs. Q3'21					March 31, 2023		March 31, 2022		Q1'23 vs. Q1'22
		(in thousands, except percentages)									(in thousands, except percentages)
Net cash provided by operating activities	Net cash provided by operating activities	$	556,810	$	82,379	$	474,431	576	%	Net cash provided by operating activities	$	2,178,740	$	922,839	$	1,255,901	136	%
Net cash used in investing activities	Net cash used in investing activities	(84,960)		(188,631)		(103,671)		(55)	%	Net cash used in investing activities	(263,653)		(245,679)		17,974		7	%
Net cash provided by (used in) financing activities		4,113		(81,555)		85,668		105	%
Net cash used in financing activities										Net cash used in financing activities	(374,073)		(686,322)		(312,249)		(45)	%

Non-GAAP reconciliation of free cash flow:	Non-GAAP reconciliation of free cash flow:									Non-GAAP reconciliation of free cash flow:
Net cash provided by operating activities	Net cash provided by operating activities	556,810		82,379		474,431		576	%	Net cash provided by operating activities	2,178,740		922,839		1,255,901		136	%
Purchases of property and equipment	Purchases of property and equipment	(84,960)		(167,327)		82,367		49	%	Purchases of property and equipment	(62,019)		(121,158)		(59,139)		(49)	%
Change in other assets		—		(21,304)		21,304		100	%

Free cash flow	Free cash flow	$	471,850	$	(106,252)	$	578,102	544	%	Free cash flow	$	2,116,721	$	801,681	$	1,315,040	164	%

Net cash provided by operating activities increased ~~$474~~$1,256 million to ~~$557~~$2,179 million for the three months ended ~~September 30, 2022.~~March 31, 2023. The increase in net cash provided by operating activities was primarily driven by a ~~$442 million or 6% increase~~decrease in ~~revenues,~~payments for content assets, coupled with a ~~decrease~~$294 million or 4% increase in ~~cash payments for content assets.~~revenues. The payments for content assets decreased ~~$174~~$1,118 million, from ~~$4,695~~$3,931 million to ~~$4,522~~$2,813 million, or 4%28%, as compared to the increase in the amortization of content assets of ~~$691~~$294 million, from ~~$2,963~~$3,166 million to ~~$3,654~~$3,460 million, or ~~23%~~9%. ~~In addition, we had~~The increase in net cash provided by operating activities was partially offset by increased payments associated with higher operating expenses, primarily related to increased ~~personnel costs~~headcount to support our continued improvements in our streaming service and our international expansion.

Net cash used in investing activities ~~decreased $104~~increased $18 million for the three months ended ~~September 30, 2022,~~March 31, 2023, primarily due to ~~a decrease in~~ purchases of ~~property and equipment.~~

~~Net cash provided~~short-term investments, partially offset by ~~(used in) financing activities increased $86 million for the three months ended September 30, 2022, primarily due to~~ there being no ~~repurchases of common stock~~acquisitions in the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to ~~repurchases of common stock~~acquisitions for an aggregate amount of ~~$100~~$125 million in the three months ended ~~September 30, 2021.~~

~~Free cash flow was $926 million lower than net income for the three months ended September 30,~~March 31, 2022, ~~primarily due to $868 million of cash payments for content assets over amortization expense~~ and $348 million of non-cash remeasurement gain on our euro-denominated debt, partially offset by $152 million of non-cash stock-based compensation expense and $138 million in other favorable working capital differences.

Free cash flow was $1,555 million lower than net income for the three months ended September 30, 2021, primarily due to $1,732 million of cash payments for content assets over amortization expense and $136 million of non-cash remeasurement gain on our euro-denominated debt, partially offset by $218 million in other favorable working capital differences and $95 million of non-cash stock-based compensation expense.

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~~Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021~~

Nine Months Ended Change
September 30,
2022 September 30,
2021 YTD'22 vs. YTD'21
(in thousands, except percentages)
Net cash provided by operating activities $ 1,582,399 $ 795,884 $ 786,515 99 %
Net cash used in investing activities (489,533) (385,525) 104,008 27 %
Net cash used in financing activities (670,959) (1,013,757) (342,798) (34) %
Non-GAAP reconciliation of free cash flow:
Net cash provided by operating activities 1,582,399 795,884 786,515 99 %
Purchases of property and equipment (296,136) (358,606) (62,470) (17) %
Change in other assets — (26,919) (26,919) (100) %
Free cash flow $ 1,286,263 $ 410,359 $ 875,904 213 %

Net cash provided by operating activities increased $787 million to $1,582 million for the nine months ended September 30, 2022. The increase in net cash provided by operating activities was primarily driven by a $1,775 million or 8% increase in revenues, partially offset by an increase in investments in content that require more upfront cash payments. The payments for content assets increased $293 million, from $12,655 million to $12,949 million, or 2% as compared to the increase in the amortization of content assets of $1,592 million, from $8,489 million to $10,081 million, or 19%. In addition, we had increased payments associated with higher operating expenses, primarily related to increased personnel costs to support our continued improvements in our streaming service and our international expansion

~~Net cash used in investing activities increased $104 million for the nine months ended September 30, 2022, primarily due to the increase in acquisitions, partially offset by~~ a decrease in purchases of property and equipment.

Net cash used in financing activities decreased ~~$343~~$312 million infor the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily due to there being no ~~repurchases~~repayment of ~~common stock~~debt in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~repurchases of common stock for an aggregate amount of $600 million in the nine months ended September 30, 2021, partially offset by~~ the repayment upon maturity of the $700 million aggregate principal amount of our 5.500% Senior Notes in February 2022, ~~as compared to~~partially offset by the ~~repayment upon maturity~~repurchases of ~~the $500 million~~common stock for an aggregate ~~principal~~ amount of ~~our 5.375% Senior Notes~~$400 million in ~~February 2021.~~the three months ended March 31, 2023.

Free cash flow was ~~$3,150~~$812 million higher than net income for the three months ended March 31, 2023, primarily due to $647 million of amortization expense over cash payments for content assets, $99 million non-cash stock-based compensation expense and $81 million of non-cash remeasurement loss on our euro-denominated debt, partially offset by $15 million in other non-favorable working capital differences.

Free cash flow was $796 million lower than net income for the ~~nine~~three months ended ~~September 30,~~March 31, 2022, primarily due to ~~$2,868~~$765 million of cash payments for content assets over amortization expense and ~~$815~~$162 million of non-cash remeasurement gain on our euro-denominated debt, partially offset by ~~$422~~$119 million of non-cash stock-based compensation expense and ~~$111 million in other favorable working capital differences.~~

Free cash flow was $4,098 million lower than net income for the nine months ended September 30, 2021, primarily due to $4,166 million of cash payments for content assets over amortization expense and $327 million of non-cash remeasurement gain on our euro-denominated debt, partially offset by $304 million of non-cash stock-based compensation expense and $91$12 million in other favorable working capital differences.

Indemnification

The information set forth under Note 7 Commitments and Contingencies to the consolidated financial statements under the caption “Indemnification” is incorporated herein by reference.

Critical Accounting Estimates

The preparation of ~~consolidated~~ financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ~~generally accepted in~~and the ~~United States~~Company’s discussion and analysis of ~~America requires~~its financial condition and operating results require the Company’s management to make ~~estimates~~judgments, assumptions and ~~assumptions~~estimates that affect the ~~reported~~ amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reported periods. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

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~~Content~~

We acquire, license and produce content, including original programming, in order to offer our members unlimited viewing of video entertainment. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to content assets and the changes in related liabilities, are classified within "Net cash provided by (used in) operating activities" on the Consolidated Statements of Cash Flows.

We recognize content assets (licensed and produced) as "Content assets, net" on the Consolidated Balance Sheets. For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. For produced content, we capitalize costs associated with the production, including development cost, direct costs and production overhead. Participations and residuals are expensed in line with the amortization of production costs.

Based on factors including historical and estimated viewing patterns, we amortize the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use or ten years, beginning with the 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. We review factors that impact the amortization of the content assets on a regular basis. Our estimates related to these factors require considerable management judgment.

Our business model is subscription based as opposed to a model generating revenues at a specific title level. Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. To date, we have not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off.

~~Income Taxes~~

We record a provision for income taxes for the anticipated tax consequences of our reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain.

Although we believe our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.

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. 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 businesses. Actual operating results in future years could differ from our current assumptions, judgments and estimates. However, we believe that it is more likely than not that most of the deferred tax assets recorded on our Consolidated Balance Sheets will ultimately be realized. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. As of September 30, 2022, the valuation allowance of $353 million was related to the California R&D credits and certain foreign tax attributes that we do not expect to realize.

We did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. At September 30, 2022, our estimated gross unrecognized tax benefits were $230 million of which $152 million, if recognized, would favorably impact our future earnings. Due to uncertainties in any tax audit outcome, our estimates of the ultimate settlement of our unrecognized tax positions may change and the actual tax benefits may differ significantly from the estimates.

~~Recent Accounting Pronouncements~~

~~The information set forth under~~reported. Note 1, ~~to the consolidated financial statements under the caption~~ “Basis of Presentation and Summary of Significant Accounting Policies” ~~is incorporated herein by reference.~~

of the Notes to consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022, describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

For financial market risks related to changes in interest rates, reference is made to Item 7A “Quantitative and Qualitative Disclosures About Market Risk” contained in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Our exposure to market risk has not changed significantly since December 31, ~~2021.~~2022.

Interest Rate Risk

At March 31, 2023, our cash equivalents and short-term investments were generally invested in money market funds and time deposits. Interest paid on such funds fluctuates with the prevailing interest rate.

As of March 31, 2023, we had $14.5 billion of debt, consisting of fixed rate unsecured debt in fourteen tranches due between 2024 and 2030. Refer to Note 6 Debt to the consolidated financial statements for details about all issuances. 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.

Foreign Currency Risk

Currencies denominated in other than the U.S. dollar ~~accounted~~account for 57% of revenue for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. We therefore have foreign currency risk related to these currencies, which are primarily the euro, the British pound, the Brazilian real, the Canadian dollar, the Mexican Peso, the ~~Australian dollar,~~Japanese yen, and the ~~Japanese yen.~~Australian dollar.

Accordingly, changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our revenue and operating income as expressed in U.S. dollars. In the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, our revenues would have been approximately ~~$1,167~~$346 million higher had foreign currency exchange rates remained consistent with those in the same period of ~~2021.~~2022.

We have also experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on the settlement and the remeasurement of monetary assets and liabilities denominated in currencies that are not the functional currency. In the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we recognized a ~~$680~~$107 million foreign exchange ~~gain~~loss primarily due to the non-cash remeasurement of our Senior Notes denominated in euros, ~~partially offset by~~coupled with the remeasurement of cash and content liabilities denominated in currencies other than the functional currencies.

In addition, the effect of exchange rate changes on cash, cash equivalents and restricted cash as disclosed on the Consolidated Statements of Cash Flow for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~a decrease~~an increase of ~~$337~~$26 million.

We do not use foreign exchange contracts or derivatives to hedge any foreign currency exposures. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our continued international expansion increases our exposure to exchange rate fluctuations and, as a result, such fluctuations could have a significant impact on our future results of operations.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our management, including our co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022,~~March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

The information set forth under Note 7 Commitments and Contingencies in the notes to the consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference.

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Item 1A.Risk Factors

There have been no material changes from the risk factors previously disclosed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Company Purchases of Equity Securities

~~In March 2021, the Company’s Board of Directors authorized the repurchase of up to $5 billion of its common stock, with no expiration date. There were no~~Stock repurchases during the three months ended ~~September 30, 2022. As of September 30, 2022, $4.4 billion remains available for repurchases.~~March 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)
January 1 - 31, 2023	—	$	—	—	$	4,400,000
February 1 - 28, 2023	454,686	$	356.55	454,686	$	4,237,883
March 1 - 31, 2023	767,370	$	310.00	767,370	$	4,000,000
Total	1,222,056			1,222,056


(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. For further information regarding stock repurchase activity, see Note 8 Stockholders’ Equity to the consolidated financial statements in this Quarterly Report.
(2) Average price paid per share includes costs associated with the repurchases.

Item 6.Exhibits

(a) Exhibits:

See Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.

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EXHIBIT INDEX

Exhibit Number Exhibit Description Incorporated by Reference Filed
Herewith
Form File No. Exhibit Filing Date
3.1
Restated Certificate of Incorporation
8-K 001-35727 3.1 June 8, 2022
3.2
Amended and Restated Bylaws
8-K 001-35727 3.2 June 8, 2022
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
101 The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags X
104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL X

Exhibit Number

Exhibit Description

Incorporated by Reference

Filed
Herewith

Form

File No.

Exhibit

Filing Date

3.1

Restated Certificate of Incorporation

8-K

001-35727

3.1

June 8, 2022

3.2

Amended and Restated Bylaws

8-K

001-35727

3.2

February 24, 2023

10.1†

Amended and Restated Executive Severance and Retention Incentive Plan

10.2

Amended Revolving Credit Agreement

31.1

Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certifications of Co-Chief Executive Officers and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 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

104

The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL

* 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

SIGNATURES

Pursuant to the requirements 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.

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		NETFLIX, INC.
Dated:	~~October 20, 2022~~April 21, 2023	By:	/s/ ~~Reed Hastings~~Ted Sarandos
			~~Reed Hastings~~Ted Sarandos Co-Chief Executive Officer (Principal executive officer)

Dated:	~~October 20, 2022~~April 21, 2023	By:	/s/ ~~Spencer Neumann~~Greg Peters
			~~Spencer Neumann~~Greg Peters ~~Chief Financial~~Co-Chief Executive Officer (Principal ~~financial and~~executive officer)

Dated:	April 21, 2023	By:	/s/ Jeffrey Karbowski
			Jeffrey Karbowski Chief Accounting Officer (Principal accounting officer)

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	As of December 31, 2021
	Cash and cash equivalents		Other Current Assets		Non-current Assets		Total
	(in thousands)
Cash	$	4,103,613	$	3,189	$	23,972	$	4,130,774
Level 1 securities:
Money market funds	1,924,191		—		146		1,924,337

	$	6,027,804	$	3,189	$	24,118	$	6,055,111