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 March 31,June 30, 2023
OR

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)
Delaware77-0467272
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
121 Albright Way,Los Gatos,California95032
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareNFLXNASDAQ 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 FilerAccelerated filer
Non-accelerated filerSmaller 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 March 31,June 30, 2023, there were 444,536,878443,146,751 shares of the registrant’s common stock, par value $0.001, outstanding.



Table of Contents
 
Page
Part I. Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.

2

Table of Contents

NETFLIX, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

Three Months EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
RevenuesRevenues$8,161,503 $7,867,767 Revenues$8,187,301 $7,970,141 $16,348,804 $15,837,908 
Cost of revenuesCost of revenues4,803,625 4,284,705 Cost of revenues4,673,470 4,690,755 9,477,095 8,975,460 
MarketingMarketing555,362 555,978 Marketing627,168 574,960 1,182,530 1,130,938 
Technology and developmentTechnology and development687,275 657,530 Technology and development657,983 716,846 1,345,258 1,374,376 
General and administrativeGeneral and administrative400,924 397,928 General and administrative401,497 409,297 802,421 807,225 
Operating incomeOperating income1,714,317 1,971,626 Operating income1,827,183 1,578,283 3,541,500 3,549,909 
Other income (expense):Other income (expense):Other income (expense):
Interest expenseInterest expense(174,239)(187,579)Interest expense(174,812)(175,455)(349,051)(363,034)
Interest and other income (expense)Interest and other income (expense)(71,204)195,645 Interest and other income (expense)26,961 220,226 (44,243)415,871 
Income before income taxesIncome before income taxes1,468,874 1,979,692 Income before income taxes1,679,332 1,623,054 3,148,206 3,602,746 
Provision for income taxesProvision for income taxes(163,754)(382,245)Provision for income taxes(191,722)(182,103)(355,476)(564,348)
Net incomeNet income$1,305,120 $1,597,447 Net income$1,487,610 $1,440,951 $2,792,730 $3,038,398 
Earnings per share:Earnings per share:Earnings per share:
BasicBasic$2.93 $3.60 Basic$3.35 $3.24 $6.28 $6.84 
DilutedDiluted$2.88 $3.53 Diluted$3.29 $3.20 $6.18 $6.73 
Weighted-average shares of common stock outstanding:Weighted-average shares of common stock outstanding:Weighted-average shares of common stock outstanding:
BasicBasic445,244 444,146 Basic443,881 444,557 444,559 444,352 
DilutedDiluted452,417 452,984 Diluted451,572 450,169 451,990 451,578 










See accompanying notes to the consolidated financial statements.
3

Table of Contents
NETFLIX, INC.
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
Three Months EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Net incomeNet income$1,305,120 $1,597,447 Net income$1,487,610 $1,440,951 $2,792,730 $3,038,398 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Foreign currency translation adjustments
Foreign currency translation adjustments
25,611 (33,675)
Foreign currency translation adjustments
52,429 (70,306)78,040 (103,981)
Comprehensive incomeComprehensive income$1,330,731 $1,563,772 Comprehensive income$1,540,039 $1,370,645 $2,870,770 $2,934,417 
























See accompanying notes to the consolidated financial statements.
4

Table of Contents
NETFLIX, INC.

Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended
Three Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$1,305,120 $1,597,447 Net income$1,487,610 $1,440,951 $2,792,730 $3,038,398 
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 assetsAdditions to content assets(2,458,666)(3,584,164)Additions to content assets(3,683,007)(4,687,011)(6,141,673)(8,271,175)
Change in content liabilitiesChange in content liabilities(354,791)(347,149)Change in content liabilities46,119 191,228 (308,672)(155,921)
Amortization of content assetsAmortization of content assets3,459,984 3,166,365 Amortization of content assets3,410,021 3,261,348 6,870,005 6,427,713 
Depreciation and amortization of property, equipment and intangiblesDepreciation and amortization of property, equipment and intangibles90,335 74,602 Depreciation and amortization of property, equipment and intangibles89,385 83,505 179,720 158,107 
Stock-based compensation expenseStock-based compensation expense99,099 119,209 Stock-based compensation expense78,030 150,392 177,129 269,601 
Foreign currency remeasurement loss (gain) on debtForeign currency remeasurement loss (gain) on debt80,651 (161,821)Foreign currency remeasurement loss (gain) on debt28,952 (304,513)109,603 (466,334)
Other non-cash itemsOther non-cash items120,008 101,968 Other non-cash items121,483 205,374 241,491 307,342 
Deferred income taxesDeferred income taxes(98,782)(68,906)Deferred income taxes(103,172)(115,820)(201,954)(184,726)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Other current assetsOther current assets(88,522)41,157 Other current assets(183,049)123,399 (271,571)164,556 
Accounts payableAccounts payable(89,668)(215,444)Accounts payable38,332 (122,048)(51,336)(337,492)
Accrued expenses and other liabilitiesAccrued expenses and other liabilities185,299 350,763 Accrued expenses and other liabilities177,831 (238,719)363,130 112,044 
Deferred revenueDeferred revenue(2,390)16,743 Deferred revenue49,647 (10,376)47,257 6,367 
Other non-current assets and liabilitiesOther non-current assets and liabilities(68,937)(167,931)Other non-current assets and liabilities(117,950)125,040 (186,887)(42,891)
Net cash provided by operating activitiesNet cash provided by operating activities2,178,740 922,839 Net cash provided by operating activities1,440,232 102,750 3,618,972 1,025,589 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchases of property and equipmentPurchases of property and equipment(62,019)(121,158)Purchases of property and equipment(100,972)(90,018)(162,991)(211,176)
AcquisitionsAcquisitions— (124,521)Acquisitions— (68,876)— (193,397)
Purchases of short-term investmentsPurchases of short-term investments(201,634)— Purchases of short-term investments(303,228)— (504,862)— 
Net cash used in investing activities(263,653)(245,679)
Proceeds from maturities of short-term investmentsProceeds from maturities of short-term investments501,937 — 501,937 — 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities97,737 (158,894)(165,916)(404,573)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Repayments of debtRepayments of debt— (700,000)Repayments of debt— — — (700,000)
Proceeds from issuance of common stockProceeds from issuance of common stock26,028 13,678 Proceeds from issuance of common stock34,717 11,250 60,745 24,928 
Repurchases of common stockRepurchases of common stock(400,101)— Repurchases of common stock(645,146)— (1,045,247)— 
Net cash used in financing activities(374,073)(686,322)
Other financing activitiesOther financing activities(38,920)— (38,920)— 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(649,349)11,250 (1,023,422)(675,072)
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash26,423 (11,448)Effect of exchange rate changes on cash, cash equivalents and restricted cash39,626 (145,198)66,049 (156,646)
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash1,567,437 (20,610)Net increase (decrease) in cash, cash equivalents and restricted cash928,246 (190,092)2,495,683 (210,702)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period5,170,582 6,055,111 Cash, cash equivalents and restricted cash at beginning of period6,738,019 6,034,501 5,170,582 6,055,111 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$6,738,019 $6,034,501 Cash, cash equivalents and restricted cash at end of period$7,666,265 $5,844,409 $7,666,265 $5,844,409 
See accompanying notes to the consolidated financial statements.
5

Table of Contents
NETFLIX, INC.
Consolidated Balance Sheets
(in thousands, except share and par value data)

As ofAs of
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
(unaudited)(unaudited)
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$6,714,594 $5,147,176 Cash and cash equivalents$7,662,788 $5,147,176 
Short-term investmentsShort-term investments1,112,910 911,276 Short-term investments914,201 911,276 
Other current assetsOther current assets2,655,119 3,208,021 Other current assets2,929,347 3,208,021 
Total current assetsTotal current assets10,482,623 9,266,473 Total current assets11,506,336 9,266,473 
Content assets, netContent assets, net32,349,184 32,736,713 Content assets, net32,520,774 32,736,713 
Property and equipment, netProperty and equipment, net1,413,094 1,398,257 Property and equipment, net1,471,968 1,398,257 
Other non-current assetsOther non-current assets5,245,444 5,193,325 Other non-current assets5,318,395 5,193,325 
Total assetsTotal assets$49,490,345 $48,594,768 Total assets$50,817,473 $48,594,768 
Liabilities and Stockholders’ EquityLiabilities and Stockholders’ EquityLiabilities and Stockholders’ Equity
Current liabilities:Current liabilities:Current liabilities:
Current content liabilitiesCurrent content liabilities$4,344,580 $4,480,150 Current content liabilities$4,440,412 $4,480,150 
Accounts payableAccounts payable591,987 671,513 Accounts payable615,374 671,513 
Accrued expenses and other liabilitiesAccrued expenses and other liabilities1,718,069 1,514,650 Accrued expenses and other liabilities1,908,714 1,514,650 
Deferred revenueDeferred revenue1,262,271 1,264,661 Deferred revenue1,311,918 1,264,661 
Short-term debtShort-term debt399,163 — Short-term debt399,387 — 
Total current liabilitiesTotal current liabilities8,316,070 7,930,974 Total current liabilities8,675,805 7,930,974 
Non-current content liabilitiesNon-current content liabilities2,908,029 3,081,277 Non-current content liabilities2,849,387 3,081,277 
Long-term debtLong-term debt14,037,965 14,353,076 Long-term debt14,070,151 14,353,076 
Other non-current liabilitiesOther non-current liabilities2,400,085 2,452,040 Other non-current liabilities2,389,915 2,452,040 
Total liabilitiesTotal liabilities27,662,149 27,817,367 Total liabilities27,985,258 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 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, respectively4,762,395 4,637,601 
Treasury stock at cost (2,786,534 and 1,564,478 shares at March 31, 2023 and December 31, 2022, respectively)(1,228,920)(824,190)
Common stock, $0.001 par value; 4,990,000,000 shares authorized at June 30, 2023 and December 31, 2022; 443,146,751 and 445,346,776 issued and outstanding at June 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.001 par value; 4,990,000,000 shares authorized at June 30, 2023 and December 31, 2022; 443,146,751 and 445,346,776 issued and outstanding at June 30, 2023 and December 31, 2022, respectively4,874,208 4,637,601 
Treasury stock at cost (4,635,858 and 1,564,478 shares at June 30, 2023 and December 31, 2022, respectively)Treasury stock at cost (4,635,858 and 1,564,478 shares at June 30, 2023 and December 31, 2022, respectively)(1,876,753)(824,190)
Accumulated other comprehensive lossAccumulated other comprehensive loss(191,695)(217,306)Accumulated other comprehensive loss(139,266)(217,306)
Retained earningsRetained earnings18,486,416 17,181,296 Retained earnings19,974,026 17,181,296 
Total stockholders’ equityTotal stockholders’ equity21,828,196 20,777,401 Total stockholders’ equity22,832,215 20,777,401 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$49,490,345 $48,594,768 Total liabilities and stockholders’ equity$50,817,473 $48,594,768 




See accompanying notes to the consolidated financial statements.
6

Table of Contents
NETFLIX, INC.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands)
Three Months EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Total stockholders' equity, beginning balancesTotal stockholders' equity, beginning balances$20,777,401 $15,849,248 Total stockholders' equity, beginning balances$21,828,196 $17,544,039 $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 balancesBeginning balances$4,637,601 $4,024,561 Beginning balances$4,762,395 $4,155,580 $4,637,601 $4,024,561 
Issuance of common stock upon exercise of optionsIssuance of common stock upon exercise of options25,695 11,810 Issuance of common stock upon exercise of options33,783 10,898 59,478 22,708 
Stock-based compensation expenseStock-based compensation expense99,099 119,209 Stock-based compensation expense78,030 150,392 177,129 269,601 
Ending balancesEnding balances$4,762,395 $4,155,580 Ending balances$4,874,208 $4,316,870 $4,874,208 $4,316,870 
Treasury stock:Treasury stock:Treasury stock:
Beginning balancesBeginning balances$(824,190)$(824,190)Beginning balances$(1,228,920)$(824,190)$(824,190)$(824,190)
Repurchases of common stock to be held as treasury stockRepurchases of common stock to be held as treasury stock(404,730)— Repurchases of common stock to be held as treasury stock(647,833)— (1,052,563)— 
Ending balancesEnding balances$(1,228,920)$(824,190)Ending balances$(1,876,753)$(824,190)$(1,876,753)$(824,190)
Accumulated other comprehensive loss:Accumulated other comprehensive loss:Accumulated other comprehensive loss:
Beginning balancesBeginning balances$(217,306)$(40,495)Beginning balances$(191,695)$(74,170)$(217,306)$(40,495)
Other comprehensive income (loss)Other comprehensive income (loss)25,611 (33,675)Other comprehensive income (loss)52,429 (70,306)78,040 (103,981)
Ending balancesEnding balances$(191,695)$(74,170)Ending balances$(139,266)$(144,476)$(139,266)$(144,476)
Retained earnings:Retained earnings:Retained earnings:
Beginning balancesBeginning balances$17,181,296 $12,689,372 Beginning balances$18,486,416 $14,286,819 $17,181,296 $12,689,372 
Net incomeNet income1,305,120 1,597,447 Net income1,487,610 1,440,951 2,792,730 3,038,398 
Ending balancesEnding balances$18,486,416 $14,286,819 Ending balances$19,974,026 $15,727,770 $19,974,026 $15,727,770 
Total stockholders' equity, ending balancesTotal stockholders' equity, ending balances$21,828,196 $17,544,039 Total stockholders' equity, ending balances$22,832,215 $19,075,974 $22,832,215 $19,075,974 





















See accompanying notes to the consolidated financial statements.
7

Table of Contents
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, 2022 filed with the Securities and Exchange Commission (the “SEC”) on January 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 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, 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, 2022.


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 Company also earns revenue from advertisements presented on its streaming service, consumer products and various other sources. Revenues earned from sources other than monthly membership fees were not material for the three and six months ended June 30, 2023 and June 30, 2022.
The following tables summarize revenues, paid net membership additions (losses), and ending paid memberships by region for the three and six months ended March 31,June 30, 2023 and March 31,June 30, 2022, respectively:

United States and Canada (UCAN)
As of/ Three Months EndedAs of/ Three Months EndedAs of/ Six Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands) (in thousands)
RevenuesRevenues$3,608,645 $3,350,424 Revenues$3,599,448 $3,537,863 $7,208,093 $6,888,287 
Paid net membership additions (losses)Paid net membership additions (losses)102 (636)Paid net membership additions (losses)1,173 (1,296)1,275 (1,932)
Paid memberships at end of period (1)Paid memberships at end of period (1)74,398 74,579 Paid memberships at end of period (1)75,571 73,283 75,571 73,283 

Europe, Middle East, and Africa (EMEA)



8

Table of Contents
As of/ Three Months Ended
 March 31,
2023
March 31,
2022
 (in thousands)
Revenues$2,517,641 $2,561,831 
Paid net membership additions (losses)644 (303)
Paid memberships at end of period (1)77,373 73,733 
Europe, Middle East, and Africa (EMEA)
As of/ Three Months EndedAs of/ Six Months Ended
 June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
 (in thousands)
Revenues$2,562,170 $2,457,235 $5,079,811 $5,019,066 
Paid net membership additions (losses)2,434 (767)3,078 (1,070)
Paid memberships at end of period (1)79,807 72,966 79,807 72,966 

Latin America (LATAM)
As of/ Three Months EndedAs of/ Three Months EndedAs of/ Six Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands) (in thousands)
RevenuesRevenues$1,070,192 $998,948 Revenues$1,077,435 $1,030,234 $2,147,627 $2,029,182 
Paid net membership additions (losses)Paid net membership additions (losses)(450)(351)Paid net membership additions (losses)1,217 14 767 (337)
Paid memberships at end of period (1)Paid memberships at end of period (1)41,249 39,610 Paid memberships at end of period (1)42,466 39,624 42,466 39,624 

Asia-Pacific (APAC)
As of/ Three Months EndedAs of/ Three Months EndedAs of/ Six Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands) (in thousands)
RevenuesRevenues$933,523 $916,754 Revenues$919,273 $907,719 $1,852,796 $1,824,473 
Paid net membership additions (losses)Paid net membership additions (losses)1,455 1,087 Paid net membership additions (losses)1,068 1,080 2,523 2,167 
Paid memberships at end of period (1)Paid memberships at end of period (1)39,478 33,719 Paid memberships at end of period (1)40,546 34,799 40,546 34,799 
(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 $3.1$6.6 billion, respectively, for the three and six months ended March 31,June 30, 2023 and 2022, respectively.$3.3 billion and $6.4 billion, respectively, for the three and six months ended June 30, 2022. DVD revenues were $32$29 million and $40$60 million, respectively, for the three and six months ended March 31,June 30, 2023 and 2022, respectively.$37 million and $77 million, respectively, for the three and six months ended June 30, 2022.
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 March 31,June 30, 2023, total deferred revenue was $1,262$1,312 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. TotalThe $47 million increase in deferred revenue as of March 31, 2023 remained relatively flat as compared to the balance of $1,265 million as of December 31, 2022.2022 is a result of the increase in membership fees billed due to increased memberships.

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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 EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
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 incomeNet income$1,305,120 $1,597,447 Net income$1,487,610 $1,440,951 $2,792,730 $3,038,398 
Shares used in computation:Shares used in computation:Shares used in computation:
Weighted-average shares of common stock outstandingWeighted-average shares of common stock outstanding445,244 444,146 Weighted-average shares of common stock outstanding443,881 444,557 444,559 444,352 
Basic earnings per shareBasic earnings per share$2.93 $3.60 Basic earnings per share$3.35 $3.24 $6.28 $6.84 
Diluted earnings per share:Diluted earnings per share:Diluted earnings per share:
Net incomeNet income$1,305,120 $1,597,447 Net income$1,487,610 $1,440,951 $2,792,730 $3,038,398 
Shares used in computation:Shares used in computation:Shares used in computation:
Weighted-average shares of common stock outstandingWeighted-average shares of common stock outstanding445,244 444,146 Weighted-average shares of common stock outstanding443,881 444,557 444,559 444,352 
Employee stock optionsEmployee stock options7,173 8,838 Employee stock options7,691 5,612 7,431 7,226 
Weighted-average number of sharesWeighted-average number of shares452,417 452,984 Weighted-average number of shares451,572 450,169 451,990 451,578 
Diluted earnings per shareDiluted earnings per share$2.88 $3.53 Diluted earnings per share$3.29 $3.20 $6.18 $6.73 

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
March 31,
2023
March 31,
2022
(in thousands)
Employee stock options5,847 2,749 
Three Months EndedSix Months Ended
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands)
Employee stock options4,348 8,175 5,097 5,462 
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4. Cash, Cash Equivalents, 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, restricted cash and short-term investments as of March 31,June 30, 2023 and December 31, 2022:

As of March 31, 2023 As of June 30, 2023
Cash and cash equivalentsShort-term investmentsOther Current AssetsNon-current AssetsTotal Cash and cash equivalentsShort-term investmentsOther Current AssetsNon-current AssetsTotal
(in thousands) (in thousands)
CashCash$3,787,630 $— $3,889 $19,483 $3,811,002 Cash$4,662,668 $— $1,763 $1,660 $4,666,091 
Level 1 securities:Level 1 securities:Level 1 securities:
Money market fundsMoney market funds2,561,649 — — 53 $2,561,702 Money market funds2,628,351 — — 54 2,628,405 
Level 2 securities:Level 2 securities:Level 2 securities:
Time Deposits (1)Time Deposits (1)365,315 1,112,910 — — $1,478,225 Time Deposits (1)371,769 914,201 — — 1,285,970 
$6,714,594 $1,112,910 $3,889 $19,536 $7,850,929 $7,662,788 $914,201 $1,763 $1,714 $8,580,466 


 As of December 31, 2022
 Cash and cash equivalentsShort-term investmentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$4,071,584 $— $3,410 $19,874 $4,094,868 
Level 1 securities:
Money market funds569,826 — — 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 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 six months ended March 31,June 30, 2023 and 2022, respectively.

11


5. Balance Sheet Components

Content Assets, Net
Content assets consisted of the following:
As ofAs of
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
(in thousands)(in thousands)
Licensed content, netLicensed content, net$12,533,388 $12,732,549 Licensed content, net$12,622,409 $12,732,549 
Produced content, netProduced content, netProduced content, net
Released, less amortizationReleased, less amortization9,306,337 9,110,518 Released, less amortization9,286,399 9,110,518 
In productionIn production9,872,138 10,255,940 In production9,796,704 10,255,940 
In development and pre-productionIn development and pre-production637,321 637,706 In development and pre-production815,262 637,706 
19,815,796 20,004,164 19,898,365 20,004,164 



Content assets, netContent assets, net$32,349,184 $32,736,713 Content assets, net$32,520,774 $32,736,713 

As of March 31,June 30, 2023, approximately $5,430$5,495 million, $2,781$2,844 million, and $1,952$1,971 million of the $12,533$12,622 million unamortized cost of the licensed content is expected to be amortized in each of the next three years.  As of March 31,June 30, 2023, approximately $3,553$3,544 million, $2,393$2,420 million, and $1,692$1,710 million of the $9,306$9,286 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years.
As of March 31,June 30, 2023, the amount of accrued participations and residuals was not material.
The following table represents the amortization of content assets:
Three Months EndedThree Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
(in thousands)(in thousands)
Licensed contentLicensed content$1,723,678 $1,884,438 Licensed content$1,779,321 $1,899,782 
Produced contentProduced content1,736,306 1,281,927 Produced content1,630,700 1,361,566 
TotalTotal$3,459,984 $3,166,365 Total$3,410,021 $3,261,348 

Six Months Ended
 June 30,
2023
June 30,
2022
(in thousands)
Licensed content$3,502,999 $3,784,220 
Produced content3,367,006 2,643,493 
Total$6,870,005 $6,427,713 


12


Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
As ofAs of
March 31,
2023
December 31,
2022
Estimated Useful LivesJune 30,
2023
December 31,
2022
Estimated Useful Lives
(in thousands)(in thousands)
LandLand$86,452 $85,005 Land$86,662 $85,005 
BuildingsBuildings60,420 52,106 30 yearsBuildings60,720 52,106 30 years
Leasehold improvementsLeasehold improvements1,050,836 1,040,570 Over life of leaseLeasehold improvements1,068,757 1,040,570 Over life of lease
Furniture and fixturesFurniture and fixtures153,836 153,682 3 yearsFurniture and fixtures155,401 153,682 3 years
Information technologyInformation technology443,073 442,681 3 yearsInformation technology461,590 442,681 3 years
Corporate aircraftCorporate aircraft115,578 115,578 8-10 yearsCorporate aircraft133,998 115,578 8-10 years
Machinery and equipmentMachinery and equipment27,068 26,821 3-5 yearsMachinery and equipment27,384 26,821 3-5 years
Capital work-in-progressCapital work-in-progress284,181 235,555 Capital work-in-progress348,194 235,555 
Property and equipment, grossProperty and equipment, gross2,221,444 2,151,998 Property and equipment, gross2,342,706 2,151,998 
Less: Accumulated depreciationLess: Accumulated depreciation(808,350)(753,741)Less: Accumulated depreciation(870,738)(753,741)
Property and equipment, netProperty and equipment, net$1,413,094 $1,398,257 Property and equipment, net$1,471,968 $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.
Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows:
Three Months EndedThree Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
(in thousands)(in thousands)
Cash paid for operating lease liabilitiesCash paid for operating lease liabilities$113,407 $103,141 Cash paid for operating lease liabilities$114,760 $99,758 
Right-of-use assets obtained in exchange for new operating lease obligationsRight-of-use assets obtained in exchange for new operating lease obligations20,894 141,298 Right-of-use assets obtained in exchange for new operating lease obligations91,572 39,304 

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 liabilities363,304 355,985 
Non-current operating lease liabilities2,155,415 2,222,503 
Total operating lease liabilities$2,518,719 $2,578,488 
Six Months Ended
June 30,
2023
June 30,
2022
(in thousands)
Cash paid for operating lease liabilities$228,167 $202,899 
Right-of-use assets obtained in exchange for new operating lease obligations112,466 180,602 





As of
June 30,
2023
December 31,
2022
(in thousands)
Operating lease right-of-use assets, net$2,187,732 $2,227,122 
Current operating lease liabilities376,847 355,985 
Non-current operating lease liabilities2,147,306 2,222,503 
Total operating lease liabilities$2,524,153 $2,578,488 

13


Other Current Assets
Other current assets consisted of the following:
As ofAs of
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
(in thousands)(in thousands)
Trade receivablesTrade receivables$1,025,509 $988,898 Trade receivables$1,218,326 $988,898 
Prepaid expensesPrepaid expenses485,997 392,735 Prepaid expenses481,546 392,735 
OtherOther1,143,613 1,826,388 Other1,229,475 1,826,388 
Total other current assetsTotal other current assets$2,655,119 $3,208,021 Total other current assets$2,929,347 $3,208,021 
The decrease in Other was primarily driven by receipt of amounts due under a modified content licensing arrangement.


6. Debt
As of March 31,June 30, 2023, the Company had aggregate outstanding notes of $14,437$14,470 million, net of $76$72 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, 2022, the Company had aggregate outstanding notes of $14,353 million, net of $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 loss totaling $81$29 million and $110 million, respectively, for the three and six months ended March 31,June 30, 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 March 31,June 30, 2023 and December 31, 2022:
Principal Amount at ParLevel 2 Fair Value as ofPrincipal Amount at ParLevel 2 Fair Value as of
March 31,
2023
December 31,
2022
Issuance DateMaturityMarch 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
Issuance DateMaturityJune 30,
2023
December 31,
2022
(in millions)(in millions)(in millions)(in millions)
5.750% Senior Notes5.750% Senior Notes$400 $400 February 2014March 2024$404 $404 5.750% Senior Notes$400 $400 February 2014March 2024$401 $404 
5.875% Senior Notes5.875% Senior Notes800 800 February 2015February 2025817 811 5.875% Senior Notes800 800 February 2015February 2025804 811 
3.000% Senior Notes (1)3.000% Senior Notes (1)510 503 April 2020June 2025503 495 3.000% Senior Notes (1)513 503 April 2020June 2025503 495 
3.625% Senior Notes3.625% Senior Notes500 500 April 2020June 2025487 479 3.625% Senior Notes500 500 April 2020June 2025483 479 
4.375% Senior Notes4.375% Senior Notes1,000 1,000 October 2016November 2026991 980 4.375% Senior Notes1,000 1,000 October 2016November 2026979 980 
3.625% Senior Notes (1)3.625% Senior Notes (1)1,412 1,391 May 2017May 20271,403 1,338 3.625% Senior Notes (1)1,419 1,391 May 2017May 20271,387 1,338 
4.875% Senior Notes4.875% Senior Notes1,600 1,600 October 2017April 20281,610 1,557 4.875% Senior Notes1,600 1,600 October 2017April 20281,584 1,557 
5.875% Senior Notes5.875% Senior Notes1,900 1,900 April 2018November 20282,002 1,930 5.875% Senior Notes1,900 1,900 April 2018November 20281,972 1,930 
4.625% Senior Notes (1)4.625% Senior Notes (1)1,194 1,177 October 2018May 20291,222 1,151 4.625% Senior Notes (1)1,200 1,177 October 2018May 20291,216 1,151 
6.375% Senior Notes6.375% Senior Notes800 800 October 2018May 2029862 830 6.375% Senior Notes800 800 October 2018May 2029848 830 
3.875% Senior Notes (1)3.875% Senior Notes (1)1,303 1,284 April 2019November 20291,283 1,201 3.875% Senior Notes (1)1,310 1,284 April 2019November 20291,279 1,201 
5.375% Senior Notes5.375% Senior Notes900 900 April 2019November 2029917 885 5.375% Senior Notes900 900 April 2019November 2029904 885 
3.625% Senior Notes (1)3.625% Senior Notes (1)1,194 1,177 October 2019June 20301,153 1,078 3.625% Senior Notes (1)1,200 1,177 October 2019June 20301,145 1,078 
4.875% Senior Notes4.875% Senior Notes1,000 1,000 October 2019June 2030998 944 4.875% Senior Notes1,000 1,000 October 2019June 2030986 944 
$14,513 $14,432 $14,652 $14,083 $14,542 $14,432 $14,491 $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.
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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 March 31,June 30, 2023 and December 31, 2022, the Company was in compliance with all related covenants.
Revolving Credit Facility
On 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. The Revolving Credit Agreement matures on June 17, 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 March 31,June 30, 2023, no amounts have been borrowed under the Revolving Credit Agreement.
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 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 Term SOFR Rate for a one-month tenor, plus 1.00%. The Term SOFR Rate is the forward-looking secured overnight financing rate administered by the Federal Reserve Bank of New York or a successor administrator, for the relevant interest period, but in no event shall the Term SOFR Rate 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 March 31,June 30, 2023 and December 31, 2022, the Company was in compliance with all related covenants.


7. Commitments and Contingencies

Content
As of March 31,June 30, 2023, the Company had $21.5$20.9 billion of obligations comprised of $4.3$4.4 billion included in "Current content liabilities" and $2.9$2.8 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.3$13.7 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, 2022, the Company had $21.8 billion of obligations comprised of $4.5 billion included in "Current content liabilities" and $3.1 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.
The expected timing of payments for these content obligations is as follows:
As of As of 
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
(in thousands)(in thousands)
Less than one yearLess than one year$9,771,665 $10,038,483 Less than one year$9,818,370 $10,038,483 
Due after one year and through three yearsDue after one year and through three years9,536,111 9,425,551 Due after one year and through three years9,131,131 9,425,551 
Due after three years and through five yearsDue after three years and through five years1,964,812 2,124,307 Due after three years and through five years1,662,733 2,124,307 
Due after five yearsDue after five years253,283 243,606 Due after five years288,054 243,606 
Total content obligationsTotal content obligations$21,525,871 $21,831,947 Total content obligations$20,900,288 $21,831,947 
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Table of Contents
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 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 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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Table of Contents
A summary of the activities related to the Company’s stock option plans is as follows:
Options OutstandingOptions Outstanding
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)
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, 2022Balances as of December 31, 202216,454,103 19,896,861 $242.22 Balances as of December 31, 202216,454,103 19,896,861 $242.22 
GrantedGranted(591,343)591,343 317.39Granted(1,025,300)1,025,300 333.49
ExercisedExercised— (412,158)62.29 Exercised— (871,355)68.23 
ExpiredExpired— (574)13.14 Expired— (574)13.14 
Balances as of March 31, 202315,862,760 20,075,472 $248.14 5.58$2,545,760 
Vested and expected to vest as of March 31, 202320,075,472 $248.14 5.58$2,545,760 
Exercisable as of March 31, 202320,014,050 $247.85 5.56$2,544,913 
Balances as of June 30, 2023Balances as of June 30, 202315,428,803 20,050,232 $254.46 5.52$3,982,709 
Vested and expected to vest as of June 30, 2023Vested and expected to vest as of June 30, 202320,050,232 $254.46 5.52$3,982,709 
Exercisable as of June 30, 2023Exercisable as of June 30, 202319,918,808 $253.84 5.49$3,970,659 

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the firstsecond quarter of 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 firstsecond quarter of 2023. This amount changes based on the fair market value of the Company’s common stock.
A summary of the amounts related to option exercises, is as follows:
Three Months EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands)(in thousands)
Total intrinsic value of options exercisedTotal intrinsic value of options exercised$116,310 $114,762 Total intrinsic value of options exercised$137,791 $83,030 $254,101 $197,792 
Cash received from options exercisedCash received from options exercised26,028 13,678 Cash received from options exercised34,717 11,250 60,745 24,928 
Stock-based Compensation
Stock options 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 EndedThree Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Dividend yieldDividend yield— %— %Dividend yield— %— %— %— %
Expected volatilityExpected volatility46 %38 %Expected volatility43 %49 %43% - 46%38% - 49%
Risk-free interest rateRisk-free interest rate3.63 %1.71 %Risk-free interest rate3.57 %2.57 %3.57% - 3.63%1.71% - 2.57%
Suboptimal exercise factorSuboptimal exercise factor4.22 4.71 Suboptimal exercise factor4.27 4.71 4.22 - 4.274.71 
Weighted-average fair value (per share)Weighted-average fair value (per share)$186 $228 Weighted-average fair value (per share)$200 $138 $192 $167 
Total stock-based compensation expense (in thousands)Total stock-based compensation expense (in thousands)$99,099 $119,209 Total stock-based compensation expense (in thousands)$78,030 $150,392 $177,129 $269,601 
Total income tax impact on provision (in thousands)Total income tax impact on provision (in thousands)$21,711 $26,413 Total income tax impact on provision (in thousands)$17,148 $33,335 $38,859 $59,748 

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. During the three and six months ended March 31,June 30, 2023, the Company repurchased 1,222,0561,849,324 and 3,071,380 shares, respectively, for an aggregate amount of $400 million.$645 million and $1,045 million, respectively. As of March 31,June 30, 2023, $4.0$3.4 billion remain available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of March 31,June 30, 2023, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.


9. Income Taxes
Three Months Ended Three Months EndedSix Months Ended
March 31,
2023
March 31,
2022
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
(in thousands, except percentages) (in thousands, except percentages)
Provision for income taxesProvision for income taxes$163,754 $382,245 Provision for income taxes$191,722 $182,103 $355,476 $564,348 
Effective tax rateEffective tax rate11 %19 %Effective tax rate11 %11 %11 %16 %
The effective tax rates for the three and six months ended March 31,June 30, 2023 differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act, research and development credits, and the recognition of excess tax benefits of stock-based compensation. The effective tax rates for the three and six months ended March 31,June 30, 2022 differed from the Federal statutory rate primarily due to an increase in foreign taxes, offset by the impact of foreign taxes, international provisions of the Tax Cuts and Jobs Act, research and development credits, and the recognition of excess tax benefits of stock-based compensation.
The effective tax rate for the three months ended June 30, 2023 was consistent compared to the same period in 2022. The decrease in the effective tax rate for the threesix months ended March 31,June 30, 2023, as compared to the same period in 2022 was primarily due to a decrease in foreign taxes. For the three and six months ended March 31,June 30, 2023, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of $24$28 million and $52 million, compared to the three and six months ended March 31,June 30, 2022 of $25$18 million and $43 million.
Gross unrecognized tax benefits were $234$240 million and $227 million as of March 31,June 30, 2023 and December 31, 2022, respectively. The gross unrecognized tax benefits, if recognized by the Company, will result in a reduction of approximately $162$164 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 2022. The foreign and state tax returns for the years 2015 through 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 examinations as well as the impact of the current 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") 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 $3.1$6.6 billion, respectively, for the three and six months ended March 31,June 30, 2023, and 2022, respectively.$3.3 billion and $6.4 billion, respectively, for the three and six months ended June 30, 2022. 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 March 31,June 30, 2023 and December 31, 2022, were located as follows:
As ofAs of
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
(in thousands)(in thousands)
United StatesUnited States$2,721,743 $2,745,071 United States$2,795,979 $2,745,071 
InternationalInternational866,371 880,308 International863,721 880,308 


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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, 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; 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; adequacy of 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; 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; impact of work stoppages; content amortization; resolution of tax examinations; tax expense; unrecognized tax benefits; deferred tax assets; and our ability to effectively manage change and 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, 2022 filed with the Securities and Exchange Commission (“SEC”) on January 26, 2023, in particular the risk factors discussed under the heading “Risk Factors” in Part I, Item 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 over 232238 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages. Members can play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time.
Our core strategy is to grow our business globally within the parameters of our operating margin target. We strive to continuously improve our members’ experience by offering compelling content that delights them and attracts new members. We seek to drive conversation around our content to further enhance member joy, and we are continuously enhancing our user interface to help our members more easily choose content that they will find enjoyable.
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 EndedChangeAs of/ Three Months EndedChange
March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except revenue per membership and percentages)(in thousands, except revenue per membership and percentages)
Financial Results:Financial Results:Financial Results:
Streaming revenuesStreaming revenues$8,130,001 $7,827,957 $302,044 %Streaming revenues$8,158,326 $7,933,051 $225,275 %
DVD revenues (1)DVD revenues (1)31,502 39,810 (8,308)(21)%DVD revenues (1)28,975 37,090 (8,115)(22)%
Total revenuesTotal revenues$8,161,503 $7,867,767 $293,736 %Total revenues$8,187,301 $7,970,141 $217,160 %
Operating incomeOperating income$1,714,317 $1,971,626 $(257,309)(13)%Operating income$1,827,183 $1,578,283 $248,900 16 %
Operating marginOperating margin21 %25 %(4)%Operating margin22 %20 %%
Global Streaming Memberships:Global Streaming Memberships:Global Streaming Memberships:
Paid net membership additions (losses)Paid net membership additions (losses)1,751 (203)1,954 963 %Paid net membership additions (losses)5,892 (969)6,861 708 %
Paid memberships at end of periodPaid memberships at end of period232,498 221,641 10,857 %Paid memberships at end of period238,390 220,672 17,718 %
Average paying membershipsAverage paying memberships231,623 221,743 9,880 %Average paying memberships235,444 221,157 14,287 %
Average monthly revenue per paying membershipAverage monthly revenue per paying membership$11.70 $11.77 $(0.07)(1)%Average monthly revenue per paying membership$11.55 $11.96 $(0.41)(3)%

(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 March 31,June 30, 2023 increased 4%3% as compared to the three months ended March 31,June 30, 2022. The increase in our consolidated revenues was due to the 4%6% growth in average paying memberships, partially offset by a 1%3% decrease in average monthly revenue per paying membership. The decrease in average monthly revenue per paying membership was primarily due to the strengthening of the U.S. dollar relative to certain foreign currencies, higher membership growth in regions with lower average monthly revenue per paying membership and changes in plan mix,timing of paid net membership additions. These decreases were partially offset by our price changes.increases in certain regions.
Operating expenses grew at a faster rate than revenue, which was unfavorably impacted by fluctuations in foreign exchange rates, resulting in a decreaseThe increase in operating margin is primarily due to the 3% growth in revenue coupled with lower cost of revenues, technology and development expenses, and general and administrative expenses for the three months ended June 30, 2023 as compared to the corresponding prior comparativeyear period. The decrease in expenses was impacted by approximately $150 million of expenses related to cost restructuring initiatives incurred during the three months ended June 30, 2022 with no similar transactions for the three months ended June 30, 2023.

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 March 31,June 30, 2023, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $26$27 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $8 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.
We also earn revenue from advertisements presented on our streaming service, consumer products and various other sources. Revenues earned from sources other than monthly membership fees were not material for the three and six months ended June 30, 2023 and June 30, 2022.
The following tables summarize streaming revenue and other streaming membership information by region for the three and six months ended March 31,June 30, 2023 and 2022.


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United States and Canada (UCAN)
As of/ Three Months EndedChange
 March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
 (in thousands, except revenue per membership and percentages)
Revenues$3,608,645 $3,350,424 $258,221 %
Paid net membership additions (losses)102 (636)738 116 %
Paid memberships at end of period74,398 74,579 (181)— %
Average paying memberships74,347 74,897 (550)(1)%
Average monthly revenue per paying membership$16.18 $14.91 $1.27 %
Constant currency change (1)%
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
As of/ Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except revenue per membership and percentages)
Revenues$3,599,448 $3,537,863 $61,585 %
Paid net membership additions (losses)1,173 (1,296)2,469 191 %
Paid memberships at end of period75,571 73,283 2,288 %
Average paying memberships74,985 73,931 1,054 %
Average monthly revenue per paying membership$16.00 $15.95 $0.05 — %
Constant currency change (1)%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
As of/ Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except revenue per membership and percentages)
Revenues$7,208,093 $6,888,287 $319,806 %
Paid net membership additions (losses)1,275 (1,932)3,207 166 %
Paid memberships at end of period75,571 73,283 2,288 %
Average paying memberships74,666 74,414 252 — %
Average monthly revenue per paying membership$16.09 $15.43 $0.66 %
Constant currency change (1)%

Europe, Middle East, and Africa (EMEA)
As of/ Three Months EndedChange
 March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
 (in thousands, except revenue per membership and percentages)
Revenues$2,517,641 $2,561,831 $(44,190)(2)%
Paid net membership additions (losses)644 (303)947 313 %
Paid memberships at end of period77,373 73,733 3,640 %
Average paying memberships77,051 73,885 3,166 %
Average monthly revenue per paying membership$10.89 $11.56 $(0.67)(6)%
Constant currency change (1)%
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
As of/ Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except revenue per membership and percentages)
Revenues$2,562,170 $2,457,235 $104,935 %
Paid net membership additions (losses)2,434 (767)3,201 417 %
Paid memberships at end of period79,807 72,966 6,841 %
Average paying memberships78,590 73,350 5,240 %
Average monthly revenue per paying membership$10.87 $11.17 $(0.30)(3)%
Constant currency change (1)(1)%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022

Latin America (LATAM)
As of/ Three Months EndedChange
 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 %
Paid net membership additions (losses)(450)(351)(99)(28)%
Paid memberships at end of period41,249 39,610 1,639 %
Average paying memberships41,474 39,786 1,688 %
Average monthly revenue per paying membership$8.60 $8.37 $0.23 %
Constant currency change (1)%

Asia-Pacific (APAC)
As of/ Three Months EndedChange
 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 %
Paid net membership additions (losses)1,455 1,087 368 34 %
Paid memberships at end of period39,478 33,719 5,759 17 %
Average paying memberships38,751 33,176 5,575 17 %
Average monthly revenue per paying membership$8.03 $9.21 $(1.18)(13)%
Constant currency change (1)(6)%
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As of/ Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except revenue per membership and percentages)
Revenues$5,079,811 $5,019,066 $60,745 %
Paid net membership additions (losses)3,078 (1,070)4,148 388 %
Paid memberships at end of period79,807 72,966 6,841 %
Average paying memberships77,821 73,618 4,203 %
Average monthly revenue per paying membership$10.88 $11.36 $(0.48)(4)%
Constant currency change (1)— %

Latin America (LATAM)
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
As of/ Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except revenue per membership and percentages)
Revenues$1,077,435 $1,030,234 $47,201 %
Paid net membership additions (losses)1,217 14 1,203 8,593 %
Paid memberships at end of period42,466 39,624 2,842 %
Average paying memberships41,858 39,617 2,241 %
Average monthly revenue per paying membership$8.58 $8.67 $(0.09)(1)%
Constant currency change (1)%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
As of/ Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except revenue per membership and percentages)
Revenues$2,147,627 $2,029,182 $118,445 %
Paid net membership additions (losses)767 (337)1,104 328 %
Paid memberships at end of period42,466 39,624 2,842 %
Average paying memberships41,666 39,702 1,964 %
Average monthly revenue per paying membership$8.59 $8.52 $0.07 %
Constant currency change (1)%

Asia-Pacific (APAC)
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
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As of/ Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except revenue per membership and percentages)
Revenues$919,273 $907,719 $11,554 %
Paid net membership additions (losses)1,068 1,080 (12)(1)%
Paid memberships at end of period40,546 34,799 5,747 17 %
Average paying memberships40,012 34,259 5,753 17 %
Average monthly revenue per paying membership$7.66 $8.83 $(1.17)(13)%
Constant currency change (1)(7)%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
As of/ Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except revenue per membership and percentages)
Revenues$1,852,796 $1,824,473 $28,323 %
Paid net membership additions (losses)2,523 2,167 356 16 %
Paid memberships at end of period40,546 34,799 5,747 17 %
Average paying memberships39,382 33,718 5,664 17 %
Average monthly revenue per paying membership$7.84 $9.02 $(1.18)(13)%
Constant currency change (1)(6)%
(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 six months ended March 31,June 30, 2023, our revenues would have been approximately $346$231 million and $577 million higher had foreign currency exchange rates remained constant with those for the three and six months ended March 31,June 30, 2022.

Cost of Revenues
Amortization of content assets makes up the majority of cost of revenues. Expenses 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 incurred in making our content available to members.
Three Months EndedChange
March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
(in thousands, except percentages)
Cost of revenues$4,803,625$4,284,705$518,92012 %
As a percentage of revenues59 %54 %
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
Three Months EndedChange
June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except percentages)
Cost of revenues$4,673,470$4,690,755$(17,285)— %
As a percentage of revenues57 %59 %
Cost of revenues for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 remained relatively flat.
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
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Six Months EndedChange
June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
(in thousands, except percentages)
Cost of revenues$9,477,095$8,975,460$501,635 %
As a percentage of revenues58 %57 %
The increase in cost of revenues was primarily due to a $294$442 million increase in content amortization relating to our existing and new content, including more exclusive and original programming. Other costs of revenues increased $225 million, primarily due to an increase in other content expenses in the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.
Marketing
Marketing expenses consist primarily of advertising expenses and certain payments made to our marketing and advertising sales partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators, and 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 EndedChange
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%%

Marketing expenses for the threeThree months ended March 31,June 30, 2023 as compared to the three months ended March 31,June 30, 2022 remained relatively flat.
Three Months EndedChange
June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except percentages)
Marketing$627,168$574,960$52,208 %
As a percentage of revenues%%
The increase in marketing expenses was primarily due to an $88 million increase in advertising expenses, partially offset by a $20 million decrease in personnel-related costs and a $11 million decrease in payments to our marketing partners.
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
Six Months EndedChange
June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
(in thousands, except percentages)
Marketing$1,182,530$1,130,938$51,592 %
As a percentage of revenues%%
The increase in marketing expenses was primarily due to a $107 million increase in advertising expenses, partially offset by a $34 million decrease in personnel-related costs and a $20 million decrease in payments to our marketing partners.
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 EndedChange
March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
(in thousands, except percentages)
Technology and development$687,275$657,530$29,745%
As a percentage of revenues%%
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022

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Three Months EndedChange
June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except percentages)
Technology and development$657,983$716,846$(58,863)(8)%
As a percentage of revenues%%
The increasedecrease in technology and development expenses was primarily due to a $26$62 million decrease in personnel-related costs, partially offset by an increase in expenses related to continued improvements in our streaming service.
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022

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Six Months EndedChange
June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
(in thousands, except percentages)
Technology and development$1,345,258$1,374,376$(29,118)(2)%
As a percentage of revenues%%
The decrease in technology and development expenses was primarily due to a $36 million decrease in personnel-related costs.costs, partially offset by an increase in expenses related to continued improvements in our streaming service.
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 Months EndedChange
March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
(in thousands, except percentages)
General and administrative$400,924$397,928$2,996%
As a percentage of revenues%%

General and administrative expenses for the threeThree months ended March 31,June 30, 2023 as compared to the three months ended March 31,June 30, 2022
Three Months EndedChange
June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except percentages)
General and administrative$401,497$409,297$(7,800)(2)%
As a percentage of revenues%%
The decrease in general and administrative expenses was primarily due to a $15 million decrease in personnel-related costs and a decrease in administrative expenses, partially offset by an increase in third-party expenses, including costs for contractors and consultants.

Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
Six Months EndedChange
June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
(in thousands, except percentages)
General and administrative$802,421$807,225$(4,804)(1)%
As a percentage of revenues%%
General and administrative expenses for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 remained relatively flat.
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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 EndedChange
 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%%
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
 Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except percentages)
Interest expense$174,812$175,455$(643)— %
As a percentage of revenues%%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
 Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except percentages)
Interest expense$349,051$363,034$(13,983)(4)%
As a percentage of revenues%%
Interest expense primarily consists of interest on our Notes of $174$175 million and $349 million for the three and six months ended March 31,June 30, 2023. The decrease in interestInterest expense for the three months ended March 31,June 30, 2023 as compared to the three months ended March 31,June 30, 2022 remained relatively flat. The decrease in interest expense for the six months ended June 30, 2023 as compared to the six months ended June 30, 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 short-term investments.
 Three Months EndedChange
 March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
 (in thousands, except percentages)
Interest and other income (expense)$(71,204)$195,645$(266,849)(136)%
As a percentage of revenues(1)%%
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
 Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except percentages)
Interest and other income (expense)$26,961$220,226$(193,265)(88)%
As a percentage of revenues— %%
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
 Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except percentages)
Interest and other income (expense)$(44,243)$415,871$(460,114)(111)%
As a percentage of revenues— %%
Interest and other income (expense) decreased in the three and six months ended March 31,June 30, 2023 primarily due to foreign exchange losses of $107$23 million and $130 million, respectively, compared to gains of $192$239 million and $431 million, respectively, for the corresponding periodperiods in 2022. In the three months ended March 31,June 30, 2023, the foreign exchange losses were primarily driven by the non-cash losslosses of $81$29 million from the remeasurement of our €5,170 million Senior Notes, partially offset by the remeasurement of cash and content liability positions in currencies other than the functional currencies. In the six months ended June 30, 2023, the foreign exchange losses were primarily driven by the non-cash losses of $110 million from the remeasurement of our €5,170 million Senior Notes, coupled with the remeasurement of cash and content liability positions in currencies other than the functional currencies. In the three and six months ended March 31,June 30, 2022, the foreign exchange gains were primarily driven by the $162non-cash gains of $305 million non-cash gainand $466 million, respectively, from the remeasurement of our €5,170 million Senior Notes, coupled withpartially offset by 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 and six months ended March 31,June 30, 2023 as compared to the corresponding periodperiods in 2022.

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Provision for Income Taxes
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 Three Months EndedChange
 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 rate11 %19 %
Provision for Income Taxes
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
 Three Months EndedChange
 June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
 (in thousands, except percentages)
Provision for income taxes$191,722 $182,103 $9,619 %
Effective tax rate11 %11 %
Six months ended June 30, 2023 as compared to the six months ended June 30, 2022
 Six Months EndedChange
 June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
 (in thousands, except percentages)
Provision for income taxes$355,476 $564,348 $(208,872)(37)%
Effective tax rate11 %16 %
The effective tax rates for the three and six months ended March 31,June 30, 2023 differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act, research and development credits, and the recognition of excess tax benefits of stock-based compensation.
The effective tax rate for the three months ended June 30, 2023 was consistent compared to the same period in 2022. The decrease in the effective tax rate for the threesix months ended March 31,June 30, 2023, as compared to the same period in 2022 was primarily due to a decrease in foreign taxes.

Liquidity and Capital Resources
As ofChangeAs ofChange
March 31,
2023
December 31,
2022
March 31, 2023 vs. December 31, 2022June 30,
2023
December 31,
2022
June 30, 2023 vs. December 31, 2022
(in thousands, except percentages)(in thousands, except percentages)
Cash, cash equivalents, restricted cash and short-term investmentsCash, cash equivalents, restricted cash and short-term investments$7,850,929 $6,081,858 $1,769,071 29 %Cash, cash equivalents, restricted cash and short-term investments$8,580,466 $6,081,858 $2,498,608 41 %
Short-term and long-term debtShort-term and long-term debt14,437,128 14,353,076 84,052 %Short-term and long-term debt14,469,538 14,353,076 116,462 %

Cash, cash equivalents, restricted cash and short-term investments increased $1,769$2,499 million in the threesix months ended March 31,June 30, 2023 primarily due to cash provided by operations, primarilypartially offset by the repurchase of stock.
Debt, net of debt issuance costs, increased $84$116 million primarily due to the remeasurement of our euro-denominated notes. The amount of principal and interest on our outstanding notes due in the next twelve months is $685$1,086 million. As of March 31,June 30, 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 or need, including for potential strategic acquisitions and investments, will depend on, among other things, our development efforts, business plans, operating performance, and the condition of the capital markets at the time we seek financing. 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 discontinue any repurchases of our common stock at any time without prior notice. ForDuring the threesix months ended March 31,June 30, 2023, the Company repurchased 1,222,0563,071,380 shares of common stock for an aggregate amount of $400$1,045 million. As of March 31,June 30, 2023, $4.0$3.4 billion remains available for repurchases.
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Our primary uses of cash include the acquisition, licensing and production of content, marketing programs, streaming delivery and personnel-related costs, as well as for strategic acquisitions and investments. 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.
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Our material cash requirements from known contractual and other obligations primarily relate to our content, debt and lease obligations. As of March 31,June 30, 2023, the expected timing of those payments are as follows:

Payments due by PeriodPayments due by Period
Contractual obligations (in thousands):Contractual obligations (in thousands):TotalNext 12 MonthsBeyond 12 MonthsContractual obligations (in thousands):TotalNext 12 MonthsBeyond 12 Months
Content obligations (1)Content obligations (1)$21,525,871 $9,771,665 $11,754,206 Content obligations (1)$20,900,288 $9,818,370 $11,081,918 
Debt (2)Debt (2)17,898,596 685,089 17,213,507 Debt (2)18,002,660 1,086,201 16,916,459 
Operating lease obligations (3)Operating lease obligations (3)3,309,657 472,369 2,837,288 Operating lease obligations (3)3,223,471 490,130 2,733,341 
TotalTotal$42,734,124 $10,929,123 $31,805,001 Total$42,126,419 $11,394,701 $30,731,718 

(1)As of March 31,June 30, 2023, content obligations were comprised of $4.3$4.4 billion included in “Current content liabilities” and $2.9$2.8 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $14.3$13.7 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
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 March 31,June 30, 2023, we had gross unrecognized tax benefits of $234$240 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 operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.
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.
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Three Months EndedChange
March 31,
2023
March 31,
2022
Q1'23 vs. Q1'22
(in thousands, except percentages)
Net cash provided by operating activities$2,178,740 $922,839 $1,255,901 136 %
Net cash used in investing activities(263,653)(245,679)17,974 %
Net cash used in financing activities(374,073)(686,322)(312,249)(45)%
Non-GAAP reconciliation of free cash flow:
Net cash provided by operating activities2,178,740 922,839 1,255,901 136 %
Purchases of property and equipment(62,019)(121,158)(59,139)(49)%
Free cash flow$2,116,721 $801,681 $1,315,040 164 %
Three months ended June 30, 2023 as compared to the three months ended June 30, 2022
Three Months EndedChange
June 30,
2023
June 30,
2022
Q2'23 vs. Q2'22
(in thousands, except percentages)
Net cash provided by operating activities$1,440,232 $102,750 $1,337,482 1,302 %
Net cash provided by (used in) investing activities97,737 (158,894)256,631 162 %
Net cash provided by (used in) financing activities(649,349)11,250 (660,599)(5,872)%
Non-GAAP reconciliation of free cash flow:
Net cash provided by operating activities1,440,232 102,750 1,337,482 1,302 %
Purchases of property and equipment(100,972)(90,018)10,954 12 %
Free cash flow$1,339,260 $12,732 $1,326,528 10,419 %

Net cash provided by operating activities increased $1,256$1,337 million to $2,179$1,440 million for the three months ended March 31,June 30, 2023. The increase in net cash provided by operating activities was primarily driven by a decrease in payments for content assets, coupled with a $294$217 million or 4%3% increase in revenues. The payments for content assets decreased $1,118$859 million, from $3,931$4,496 million to $2,813$3,637 million, or 28%,19%. On May 1, 2023, the collective bargaining agreement between the Writers Guild of America (“WGA”) and the Alliance of Motion Picture and Television Producers (“AMPTP”) expired, and on May 2, 2023, the WGA commenced an industry-wide strike. On July 12, 2023, the collective bargaining agreement between the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) and the AMPTP expired, and on July 14, 2023, the SAG-AFTRA commenced an industry-wide strike. We have paused and expect to pause additional productions in response to the concurrent WGA and SAG-AFTRA strikes. As a result, the timing of certain production payments will be delayed until productions can resume and may increase the variability in payments for content assets in future periods.
Net cash provided by (used in) investing activities increased $257 million for the three months ended June 30, 2023, primarily due to proceeds from maturities of short-term investments and there being no acquisitions in the three months ended June 30, 2023, as compared to acquisitions for an aggregate amount of $69 million in the three months ended June 30, 2022, partially offset by purchases of short-term investments.
Net cash provided by (used in) financing activities decreased $661 million for the three months ended June 30, 2023, primarily due to the repurchases of common stock for an aggregate amount of $645 million in the three months ended June 30, 2023, as compared to no repurchases of common stock in the three months ended June 30, 2022.
Free cash flow was $148 million lower than net income for the three months ended June 30, 2023, primarily due to $227 million of cash payments for content assets exceeding amortization expense and $28 million in other non-favorable working capital differences, partially offset by $78 million of non-cash stock-based compensation expense and $29 million of non-cash remeasurement loss on our euro-denominated debt.
Free cash flow was $1,428 million lower than net income for the three months ended June 30, 2022, primarily due to $1,234 million of cash payments for content assets exceeding amortization expense, $305 million of non-cash remeasurement gain on our euro-denominated debt and $39 million in other non-favorable working capital differences, partially offset by $150 million of non-cash stock-based compensation expense.

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Six months ended June 30, 2023 as compared to the increase in the amortization of content assets of $294 million, from $3,166six months ended June 30, 2022
Six Months EndedChange
June 30,
2023
June 30,
2022
YTD'23 vs. YTD'22
(in thousands, except percentages)
Net cash provided by operating activities$3,618,972 $1,025,589 $2,593,383 253 %
Net cash used in investing activities(165,916)(404,573)(238,657)(59)%
Net cash used in financing activities(1,023,422)(675,072)348,350 52 %
Non-GAAP reconciliation of free cash flow:
Net cash provided by operating activities3,618,972 1,025,589 2,593,383 253 %
Purchases of property and equipment(162,991)(211,176)(48,185)(23)%
Free cash flow$3,455,981 $814,413 $2,641,568 324 %
Net cash provided by operating activities increased $2,593 million to $3,460$3,619 million or 9%.for the six months ended June 30, 2023. The increase in net cash provided by operating activities was partially offsetprimarily driven by increaseda decrease in payments associatedfor content assets, coupled with higher operating expenses, primarily relateda $511 million or 3% increase in revenues. The payments for content assets decreased $1,977 million, from $8,427 million to increased headcount to support our continued improvements in our streaming service and our international expansion.$6,450 million, or 23%.

Net cash used in investing activities increased $18decreased $239 million for the threesix months ended March 31,June 30, 2023, primarily due to purchasesproceeds from the maturities of short-term investments partially offset byand there being no acquisitions in the threesix months ended March 31,June 30, 2023, as compared to acquisitions for an aggregate amount of $125$193 million in the threesix months ended March 31,June 30, 2022, and a decrease inpartially offset by purchases of property and equipment.short-term investments.

Net cash used in financing activities decreased $312increased $348 million for the threesix months ended March 31,June 30, 2023, primarily due to repurchases of common stock for an aggregate amount of $1,045 million in the six months ended June 30, 2023, as compared to no repurchases of common stock in the six months ended June 30, 2022, partially offset by there being no repayment of debt in the threesix months ended March 31,June 30, 2023 as compared to the repayment upon maturity of the $700 million aggregate principal amount of our 5.500% Senior Notes in February 2022, partially offset by the repurchases of common stock for an aggregate amount of $400 million in the three months ended March 31, 2023.2022.

Free cash flow was $812$663 million higher than net income for the threesix months ended March 31,June 30, 2023 primarily due to $647$420 million of amortization expense overexceeding cash payments for content assets, $99$177 million of non-cash stock-based compensation expense and $81$110 million of non-cash remeasurement loss on our euro-denominated debt, partially offset by $15$44 million in other non-favorable working capital differences.

Free cash flow was $796$2,224 million lower than net income for the threesix months ended March 31,June 30, 2022 primarily due to $765$1,999 million of cash payments for content assets overexceeding amortization expense, and $162$466 million of non-cash remeasurement gain on our euro-denominated debt and $29 million in other non-favorable working capital differences, partially offset by $119$270 million of non-cash stock-based compensation expense and $12 million in other favorable working capital differences.expense.

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 financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” 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, 2022. Our exposure to market risk has not changed significantly since December 31, 2022.
Interest Rate Risk
At March 31,June 30, 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,June 30, 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 account for 57% of revenue for the threesix months ended March 31,June 30, 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 Japanese yen, and the 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 threesix months ended March 31,June 30, 2023, our revenues would have been approximately $346$577 million higher had foreign currency exchange rates remained consistent with those in the same period of 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 threesix months ended March 31,June 30, 2023, we recognized a $107$130 million foreign exchange loss primarily due to the non-cash remeasurement of our Senior Notes denominated in euros, 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 threesix months ended March 31,June 30, 2023 was an increase of $26$66 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 March 31,June 30, 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, 2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Company Purchases of Equity Securities
Stock repurchases during the three months ended March 31,June 30, 2023 were as follows:
PeriodTotal 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, 2023454,686 $356.55 454,686 $4,237,883 
March 1 - 31, 2023767,370 $310.00 767,370 $4,000,000 
Total1,222,056 1,222,056 
PeriodTotal 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)
April 1 - 30, 2023— $— — $4,000,000 
May 1 - 31, 20231,417,075 $336.81 1,417,075 $3,522,717 
June 1 - 30, 2023432,249 $388.35 432,249 $3,354,855 
Total1,849,324 1,849,324 
(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 5.Other Information
Rule 10b5-1 Trading Plans
The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for the three months ended June 30, 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), were as follows:
NameTitleActionDate AdoptedExpiration DateAggregate # of Securities to be Purchased/Sold
Ann Mather (1)DirectorAdoption5/4/20232/28/20256,385
Ted Sarandos (2)Co-CEO and DirectorAdoption5/5/20238/2/202455,386
(1) Ann Mather, a member of the Board of Directors, entered into a Rule 10b5-1 Plan on May 4, 2023. Ms. Mather's plan provides for the potential exercise of vested stock options and the associated sale of up to 6,385 shares of the Company’s common stock. The plan expires on February 28, 2025, or upon the earlier completion of all authorized transactions under the plan.
(2) Ted Sarandos, co-CEO and a member of the Board of Directors, entered into a Rule 10b5-1 Plan on May 5, 2023. Mr. Sarandos' plan provides for the potential exercise of vested stock options and the associated sale of up to 55,386 shares of the Company’s common stock. The plan expires on August 2, 2024, or upon the earlier completion of all authorized transactions under the plan.
None of our directors or officers adopted or terminated a "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K.

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 NumberExhibit DescriptionIncorporated by ReferenceFiled
Herewith
FormFile No.ExhibitFiling Date
8-K001-357273.1June 8, 2022
8-K001-357273.2February 24, 2023
X
X
X
X
X
X
101The 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 tagsX
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRLX
Exhibit NumberExhibit DescriptionIncorporated by ReferenceFiled
Herewith
FormFile No.ExhibitFiling Date
8-K001-357273.1June 8, 2022
8-K001-357273.2February 24, 2023
X
X
X
X
101The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 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 tagsX
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRLX


*    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:AprilJuly 21, 2023By:/s/ Ted Sarandos
Ted Sarandos
Co-Chief Executive Officer
(Principal executive officer)
Dated:AprilJuly 21, 2023By:/s/ Greg Peters
Greg Peters
Co-Chief Executive Officer
(Principal executive officer)
Dated:AprilJuly 21, 2023By:/s/ Jeffrey Karbowski
Jeffrey Karbowski
Chief Accounting Officer
(Principal accounting officer)
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