Netflix (NFLX) 17 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Spencer Wang	VP, Finance & IR
Gregory Peters	COO & Chief Product Officer
Spencer Neumann	CFO
Reed Hastings	Co-Founder, Chairman, President & Co-CEO
Theodore Sarandos	Co-CEO & Chief Content Officer
Kannan Venkateshwar	Barclays Bank

Call transcript

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Spencer Wang

Good afternoon, and welcome to the Netflix Q2 2020 Earnings Interview. I'm Spencer Wang, VP of IR and Corporate Development.

Joining me today are Co-CEOs, Reed Hastings and Ted Sarandos; COO, Greg Peters; and CFO, Spence Neumann.

Our interviewer this quarter is Kannan Venkateshwar from Barclays Capital.

As a reminder, we'll be making forward-looking statements and actual results may vary.

it Kannan turn question. his me let over for to first Now

Kannan Venkateshwar

you, my nailed and name. Thank you last Spencer,

So congratulations for that.

Spencer Wang

I practiced.

Kannan Venkateshwar

So here Greg, here. place role; bit thanks And I a can too, more. you guess me for I little the and guess Reed, to is on congratulations start and Ted your new relax having you best

the your in So maybe followed and are. your priorities, terms how course, in maybe of Ted, we we what the change, could a the just start how world you of And middle world. see Greg, you see priorities lot with just evolving, so off are by of of

could just you there. maybe So start

Theodore Sarandos

that the that world. more than we have me. I'm low, unbelievable We've Reed's navigated chances for whereas that relax Reed worked and next -- toughest the together He's are the for around years. Well, on role train the the streaming saying been those subs over million I'm is of to U.S. DVDs over going made the should from we've everyone has mailing and you. model very start source just should world. I it my know the an been continue a years, by XX And to to the around focus for to to successful little some of around Greg, thrilled more XXX And company decisions throw inspiration

Gregory Peters

from tremendous United and we stage perspective, that my outside think of From Ted. think coming a what States. see future you, I next mostly the will I Thank about our it's just when is growth

a many bit more proactive happening those more we and many, and more. activities is I chance hopefully, the not the drive local little years United benefit feels, of it opportunity work U.S. but And got teams a in optimization a in activities with able know, spend as little were and more might think and look So couple that years the to the now global of the outside U.S. push the Japan, as grow our just I the launching hiring employees lean of we improve outside and across to service alignment be growing bit a think you bit to outside ago business it more at there. members an there there. where alignment a base to more, This States, little productions, more members And our for will well operations Japanese try aspect more really our teams and service of Kannan, and those membership every and the many was

this of mini test that a sort in version I'll out of a be trial role. anticipate doing I as So more for or or like I what think a

Spencer Wang

as little our X just And who and shareholders but a may listeners for fun not actually know, speaks languages. fact small Greg

think as we will service, really the that I skill So company. global benefit become more set

Gregory Peters

he didn't well say speaks. Notice how he how

Reed Hastings

mean Are you Greg, do It's [indiscernible]. to that? do talking So amazing. time, find C++? all you pretty Java, you like How

decade opportunity to next as and clear, in international, a it, globe, the more We've a was but some definitely next a I totally start, good I'm be the I'm but across And Greg expand of about excited Netflix it great and couldn't referring, be excited It's help lot that. the just have we decade. about for forward as be to so to will is are looking We us. for decade growth. amazing the got

part-time It's not clear like deal. really I'm be in full me And okay. decade, for let two on of us that. a as it's a So Co-CEO, time.

and team next even over years. XX broadening the us faster definitely grow management it's So helping the

Kannan Venkateshwar

great. That's

compared in plans growth the out setup, new Netflix through now that Reed, mean have your kind I you're in job are And might is Netflix just potentially about? a from that XX you relatively of years what ordinary same a next that could -- of is us that's maybe, there maybe thinking the your to now be the you perspective, so So last the priorities help that think the if with sharing XX you Ted. years? any

Reed Hastings

premium it last to -- in really TV. then of years the shows day, just bigger with three external expansion And time mean, movies, that around we the a in which can make and series, us. it's and difference start essentially together for could just course, and the mean X the Greg XX for to consistent our local deals in And over click us The some quarter. model. spend cool. incredible emerging A in the he now together amazing years. I pulled only very we been work of it animation, about to it working watch result breadth increased ago, really There's of have of it's and better, But trust so will that good and the put good so unscripted, and I got a the language is it Ted's content, much more than us, thing billboard make Every just off next to years been be We expanding. of you making got stature, couple no having as on long. trying need the like be that's world had more then, And past strong next just front service think different. we've really better. beautiful to it of UI, Ted's good we've the on

more for of as or people, focus more and no doing in that change preparing it the at pleasing of so just execution think scale. higher the and us So scale greater

Theodore Sarandos

and want thrilled is being the and feel have together. all that do the and they time spend those have the I that I'm world, launch strong make brands, is whatever taste monumental such just your to shows team films a able we more people a we with around job, that the like it stars to to love and to such

Kannan Venkateshwar

are environment it the be right be just bit. up we That's Things might maybe like a with again opening but back to start of looks to now, in great. things And seemed -- seem little we middle the go could now.

environment think the around a you the different about us when organizations. work, So around around lot the workflows we you, has changed, way

much And what So or when going here changes actually a ways impacted for might your you about a plans either in from COVID are for can planned plans? cost Netflix some that you how be these think instances to perspective your permanent? forward, perspective benefit workload has longer? In stay

Reed Hastings

to Spence? want Do start, you

Spencer Neumann

change part mean doesn't mean what of that's Kannan, and we've television kind said our generally, and too that's Internet, much. stay, quarter, people also more it shows. important love film Reed the last I is here learned to a lives of know I even that we that Sure. as and

get -- just to and day that that is our every strategy about. So with that we with better content, better as talked product,

business world. acquire You as strategy ever. things can see we of seen as around remains here margin same in strategy it Obviously, terms the strategy the But and the in much the commission fundamentally, our can about and you There's point. real growth, but things big estate fundamentally we've at certain or in our content we talk growth of how in parts frankly, some the opportunities will, if hasn't some and changed. forward our on member pull

Theodore Sarandos

in in world it's production all how been up jump going teams could to shut a the remarkable months. back from been side. nimble ramping I the have the over production of few on I to completely to the full-blown mean down space

that putting a the think I things, into of permanent we're is will some good protocols the a of the world, production, thing. around place safety like which part become

around. extra that development in back and the was spent up, between efficient, and which will shoots the I this actually think preparedness time and on shutdown I will time think more make ramping the scripts stick

time. a screening, just things host better I some be parts today of being things last -- marketing history. many the will that, think, room in to certain just we'll from way efficiency come best are of And their some programming think not living to out and are going learned. when virtual -- world, the content think of releasing hotel things have for a probably content put been long it different I functions, The teams front those the of how we to in be smarter, with that, to that how the comes I this junkets writers do it's that done the the the we've talent and and pickup press almost of there's a on our of think remarkable working with but all in able world you those press we've publicity being instead I the time of uninterrupted tragic been from that, appropriate our And on backfill and the and room.

Gregory Peters

to back an about we the to before opportunity and plans content of And pile visual creating learn during artists to quite But just opportunity great make collectively bunch I as this artists, more pattern. sort about. be happened. technical at it to excited more think accelerate great been that working artists, home and that, incrementally we sure in it's will things think us they're effects effective think that that on period creators, we're was allows animating that is we'll infrastructure a on to were We that distributed to I I example think, go all has One, a this well accelerate collaborate already a that been assets. it's from the effective think when serve normal and

Kannan Venkateshwar

half That's did of you great. the the the first subscriber close to look we did. of all obviously, that numbers And in terms XXXX when at numbers, guys

an your seem growth. lot seem and And that be a reach expectation also down. over forward so of you this record But period, think to embed when levels, doesn't context, it that we've in does of guidance seen of pull slowing cord-cutting to about

seem parts of the right some be again, world, now. down shutting to And

think be if through next So us quarter help for great. would the that guidance, could the the you framework for and just growth

Spencer Neumann

Sure.

take it. take Let that I'll me one.

for of about it. you not itself. Kannan, nailed in thinking when the QX, think about just mean So and QX really we're I we guidance

QX the look kind two -- that ever the look and we've to had in is quarter. QX. have at look at in million what XXXX, the actually a at done in ever you of And QX a in we've by in the second is quarterly across we XX added period. we just We million which we period so in quarters of growth grew if largest happened And ago period, numbers. context that if XX.X two the years members, totality at And best just it row, we look the where

than we've XX.X QX this QX. already that that top same X we're So means big of that big done, on is very guidance, was more is ever deliver time in year, if which what on we, members growing growth which million period, think we million a

sticking nice better. the members thing highly service They're actually better is or So keeps actually well newer that around as us with than are getting pre-COVID. those And our engaged.

So members Netflix Netflix and engaged members around XXXX is newer future those better gives stick stay reason service going more much to members and to XXXX, to highly be than entice and a to which also existing even join.

opportunity the as So seeing. of There's just pull you're growth as is we near-term ever. kind that forward think that big that

Kannan Venkateshwar

And out as components extraordinary which margin X%, proportion other new a obviously, low. and spend marketing is Okay. you obviously about the what revenues of is think when of is guidance, the stands

to into next half would the marketing respect you with when back-ended versus and that about of than more should next as first usual. be year, to lower and being spend year, you year that also think this half So second of go content your guidance continue year suggest -- this the

the engagement is the marketing the way forward? also does result of So growth lower of And that a amount all, you to of first it? as spend going is that read mean structurally, need to right this on kind

Theodore Sarandos

time Well, unique about the that's a one Netflix spend lot of services, things members our on our of every day.

most building Netflix. and stars talk the turns conversation, goes we shows it to our energy the on the march efficient, a it's about into the way our impactful dollars that and in even media, to when members make terms been out zeitgeist, kind sure we've meaning more talk how to through global some traditional them around less time, always our on you're on And Netflix not that of traditional is we the of investment Netflix. buzz time, that is But and amplify place our more not just channels. in more and the to for do through So best towards

world our to and spending through you're to but where choices. to yes, more a So cut attention there's a less shows, attract of doing trying buzz lot

Spencer Neumann

about it will which doing new I'd in Ted is channels. still touched year, a sorts earlier, marketing general, world maybe bit across is be of not assume thing as which more about And PR what marketing amount those of this tremendous is of like would on virtual because only be and does billion $X the just we in add lower and we're spend, seeing our is marketing, little which of spend flat things those of kind awards, But junkets of look of of and in much it actually terms things. some this a

is nature. in temporary Now some of that

and I of Some near-term, cost/benefit think of to But you're a -- some is that be consistent right more guess, as is shift, how happening effective most what's this is learnings forward. world. our the I of from permanent some it's can it in that just we strategic as with result, going

Kannan Venkateshwar

Okay.

we so think And when about...

Reed Hastings

has that viewing. to able We're amazing generate been service seeing, Kannan, just the

the that. so advantage and we're as better take better, And gets to service able of

Kannan Venkateshwar

there Right. think incremental your year margin next looks every but basis is And the consistent more but guidance or points for when like broader the now, it opportunity is less year, about year next in XXX framework. context, for guidance margins have improving we been with about you that

So Or just else into there next that go year? that guiding is as is something we conservativeness?

Reed Hastings

it the a call is growth Let's tamping expectations. This opportunity great us. for down

tend time. upside, for into members, revenue content to which more any So we put more would growth generates over our

into about and more converting more that, that service upside is then So taking through growth it we've been and quality. good pretty which

So that the be plan. would

Spencer Neumann

managing in I And why manage wanted and but next basis Reed's to looking that very increase would spend to our term, near would let trying we're this that XX% Yes. XXXX, get the multiyear, to which year, to that the -- really point, I in know at point, may strategically just kind to still service. to to is But that another continuing we're, XXX margins, we folks strategically say did increase of that which year this some in always to there margin invest we're we us be upside points signal margin.

Theodore Sarandos

reiterating in where better XXXX than is 'XX. Netflix environment And an Netflix worth

Spencer Neumann

Yes.

Kannan Venkateshwar

great. That's

Ted, how when amount that? about so follow it's we up And comment, we just are Are about frame in the to of say that content? talking talking you 'XX, versus subscribers? on So should 'XX better we

Theodore Sarandos

about content a Netflix Katherine of to this the of Why trajectory from rest series that's I'm a way. I a of right time XX talking from kind the where brand-new The month, Cursed, about King that the forward going it releasing coming legend. at large-scale now standstill. the your reimagines of movie starring think mean the of most world at Langford see Arthur big, you're Reasons a called is

Joey birthed movies, sequel to original a Netflix of Kissing on our Jacob have movement the Booth biggest with kind We that of one X, King rom-com the Elordi. and

successful it most rolling in most its one in with a action high-octane big and us for global was Foxx when Joseph hit on We came Academy, have named season first our out Project of go Umbrella new series 'XX Jamie into that and and season a Gordon-Levitt. a big, of right Power thriller Netflix

it's ongoing year, had beat content and dabbled So programming. this. of that and Think programming. kind in reality of barely Last competition about we

our had as the big is in but was with biggest our phenomenon. genre -- of was alone, -- wild Floor U.S., quarter as percentage just our to that in not that a is Handle, programming. hits a to watching, Hot in it of Handle, Too Too we Lava in Japan all two and of as which Hot This ever in

keep consumers. expanding learnings, value genres compounding programming to and those me, that, great they it a is keep make for across that compounding and So all

Kannan Venkateshwar

That's great.

bit So guess a few on sticking content and obviously, we a that's over shows changed for that I theme the so animation mix, When about the last with reality years bit. and think now on. quite

XX was to reality shown is in lot do on time. of them be ways up, Hot shows a particular So when this some about the because there mix, Handle seem better return top Too you list, like a in some for to think have investment

So and, even slightly think slightly fair better mix, think documentary when framework reality programming are in more this when or the about the of return in invest And that? therefore, mix the you favor shows engagement? a you is being it that is shifting is to maybe about as consider, is which what this versus something, you returns

Theodore Sarandos

of in becomes not cost invest that the to how is The unscripted love savings it important reality but in people programming people's the for big motivation have this lives. production, and and

for and us. an kind if ignore more destination that dominates be more would go-to programming not your of So trying be broadcast, silly to to it of entertainment, area we're of

-- dabbled been only in really then this to space marginal programming, now our to and unscripted really We we've over -- or consumer So the very, the and our the accomplished very reality. into. then competition of space, third in that in moved only is dabbling space that it which is cost we've have documentary But for the kind And got expand the show competition that fourth was not -- the savings. motivation love unscripted.

Kannan Venkateshwar

on a right HBO terms think And aggregators gatekeepers. playing about the you legacy this the is you mean network a in notably, this it where do when like now of just past the it. of a Peacock for risk see course, this, world Amazon disputes the feels And are disputes, about becoming they're Netflix? as the How out? having going I cable think well. MVPD on almost future essentially there's with in Got Okay. the Roku. from distribution to problems lot And not perspective, getting Greg, And of carried and

Gregory Peters

those be entertainment a get and really to negotiations watch they're thrilled with they impacts that collaborating all, partners together a around it watch where wide range We've the create working, those that when investing of the really service on an this wide, manufacturer they can't between have. the and lucky it's unfortunate better reach our -- to us. and model. positive working get provider It's alongside, to really really device better experiences. Netflix of right? just the most And point more experiences. for experiences First really with the great it's devices device It's to device manufacturing to shows very think win-win-win, those better -- world those I And been it's devices. of consumers device of We benefactors members more because of consumers those to that's more ultimately, make sort manufacturers experiences win a for attractive. It's and a importantly great for valuable, a on

investing that to So in keep we're model. going

features have it better, technology nothing our easier ingest make do about the really we those partners, to will and that, make to think qualities that that positive devices be we're benefits. think are process leverage We and manufacturing show that basically teams work continue. the better that up model we how hopeful do investing for expect to to to we to produce whole the but whole of that for in experiences, those able side those their I manufacturers And

Kannan Venkateshwar

And wireless and globally. these your as number guess deals MVPDs deals well then is companies, as I have you distribution Okay. just a for model other the with of

organic that markets U.S. quarter versus become broader a suggest framework growth So like would about as guidance as well the more when growth you important marginally, the these next than of the channels. rest think bit world, the your the for mature

you trying for are you objective with into get these role about you're distribution thinking these wholesale they going how of have deals? what's the What deal when So And kind solve a guys? to forward? do

Gregory Peters

Yes.

right, by total percentage channel. I you that we think People think at of we in we remain these about small but do sort But it think what up the wanting evaluating might a what the the adding There how much acceleration, they with are we There's and also relatively of dominant mode. us sort growth I are the very economics acceleration we're -- still grow then it different important that involved. which we think our a these note of fronts. of like large looking really channel will to X acquisition understand be it's that but have much is is revenue get how to partnerships right? criteria, directly that on sort much impacts, some call membership signing which importance, as organic Obviously, cannibalization.

of that to So sure member look then and we consumer doing from positive it the on the experience, basis. experience. what's lens want these revenue that the very important And we is make evaluate a sort other what's at we're actually

member at all through friction-free possibly as is partners qualitatively what sort engagement working we're with So and service, really then to and positive of so of both that as And to high-quality to those we're churn we're that that metrics, that's back looking we understanding And at And how it we our journey with say I that looking make positive, can. fronts. frequently channels. too, as we're those delivering it sure make sure up the people to obviously very the characteristics those on experience right? use members a would

territories your in to it's that an to in, expand working these accelerant do that expect point, to partners to sort earlier in, multiple phase. so continue a territories deals. to to also both these penetrated we're And of deals great with but still further point, we're your We're we

partnership. And do kind places to so that great both we think are of

Kannan Venkateshwar

I trending about come That's to growth more I mid-single-digit effect it's recently, plans. little the strip because increases, which lower the of that pricing, than distribution to guess out bit of great. of you Netflix. that for you to a some the at algorithm range time but over when been But newer is price think we've expect, discussion also the some slightly then pricing And extent, the think in it's linked looking when

about? about kind thinking forward? that still you Is algorithm, of thinking going mid-single-digit pricing you growth same it the changed? a So how when equation the are you're that think about has Or profile that

Gregory Peters

Yes.

the months, sure escape last they just that has we've focused when entertainment. really, members on been start reiterating to we mentioned important the just I moment for service several for been that and turn our last us making think for time a to of with there it's principally what

in And when time, about able as so more But service adding that to that look forward, well. say invested being more And we've adding country that serve we more actually, content, is I role. we're in different the service very period in of to much would features period making mode. every to enthusiastic valuable a

an value have be to all those it them which a so then by sort And us, more members, like ask bit of continue good that at it's assess a we value better priority different and into time. that on really experiences And bunch plan. We'll country. specific going the not value little country factors also that using metrics look macro metrics, more those might them. to we've to like signals when product indicating create a great that hey, amazing members, plan We'll we much them job can content, more factors time we're engagement, to created our to of more done so look for to even further so And of go back our we invest over we so for signs but very indicate are closely our that at churn. for -- and sort have have for more and building it's stories, back for at your

Spencer Wang

ARPU an to Kannan, number towards you, just ARPU growth remind narrowly we number. And don't or manage an

for is optimizing on Our revenue. orientation really

Kannan Venkateshwar

Great.

that this of revenue yield, way And pricing are is maximization, you is dynamic so in can broadly the income it, important about churn. which component of other this statement. impact right and entire have think obviously, manage the on we now, a but whole -- part a of a movements it, have massive the small that when is And churn you part on the units scale even given

help in you given could consumer structurally you If and when behavior cohorts that be the leading as earlier? think through that cohorts would across better engagement a that in are think this the that just in newer churn, performance increase about gone COVID to engagement, is period versus great. potentially came so us And up, has period churn

Gregory Peters

you want that do one? Spence, Yes. take to

Spencer Neumann

is the members I short like members mean that these the pre-existing start. Sure, can that are business. very story, newer I members the much of Kannan, look

broad-based, everywhere Lat the the So of and Am. then Actually, that it's and very is as a They're or in highly and across in members million world, EMEA can retention coming these in in pre-COVID. engaged. a APAC couple every are you each see better and million cohort from few good U.K. than

So and content, and new similar. this pretty Ted and base, film if and -- said, the Greg don't surprisingly, or know, membership I add that. not they But -- or we both older, look as TV loves others, you'd to

Gregory Peters

we think the other people with the when that pre-COVID. I backing big members sort they're metrics of point, maybe this of really escape, structural of similar sort was Spence's very up at the see it lockdown we which one result other being than I sort and churn of service, being to thing high-level look some turning inform to in a pieces, how change for engaging we added say, engagement quarantine and very, to would us

Reed Hastings

a oversimplified, but little of going faster. come income Internet to think it's Kannan, temporary. always They're as a back. It's as it just it's when maybe the increases, someone matter of gets And timing to gets as their I churns, say, I better, going as our was service

Netflix. stay work drop service us. that of always they and they taste going to years. people love it of get temporary if improve want enough think we to for spend the they as to we're a hard money hope out, with to we'd We But XX So

Theodore Sarandos

movies the they think all been missed of us on to that of It's member, as interesting where Netflix to to see us the watch way used for reruns world Friday have where the and our you of show to they to premiering the their in to now now the biggest come relationship Netflix. with that networks be at night movies, the the the they favorite evolution place other on where shows to

an folks watching subset churn this of terms constantly their So but behavior. in nothing unique and relationship in of evolving it's their

exciting. it's So

Kannan Venkateshwar

guess there amount an I one you when the there's content then of points enormous has And discussion great. big content of now. discovery product and about an because been services itself, That's streaming enormous the number think of are

we've of order sort all that to what got to to in so through And watch. figure out

So you when through I of A/B lot run Greg, mean, a year, you I you them. content the about think discovery, all run hundreds tests of know

kind looking terms sense are has you're what top things the some So done? in improving at If You of of just that issue. could have XX of about the give how that experience? you list. us the thinking sort How you're of

Gregory Peters

Well, I'll about of just my get is list question, the Yes. then of course. one top talk big macro favorite questions, the XX -- which I'll and to

for It great be think process button. our about as possibly choosing us at more rate. creates an make that's And have top one is, of that and the of incredible the one. can. finding in that's not right? a importantly, experiences some make XX of to delightful for about options more engagement. entertainment not member going experience participate consumer members, are we of a has it's is example to we that to Ted's a it game speaks And But not to know accelerating available that our we almost all go perfect opportunities want for team have wonderful. we going thanks a around broader what And the team that easily those and changing. both to conversation that to that what real we an I sort is of do, as we way overall challenges And as in and little make ever It's that think at more a choosing I kind watch to can they off suddenly and and a we think positive a is aspect story indicative content like easy better. actually then it And of as that work to happening actually of fantastic asking So of existed is evolve be need it's in thing click members literally where collection to of have, the shows. most they But lift shows the that think those social nice, But created the producing think need product simply every experience. so popular a that

pick those interest So to a the member, pick perfect and about more compelling titles the every in each and do user recommendations those growing think world work And features that that we is. and can We're about better that's members what needs specific how diverse want thinking specific around from in we of how adapt how evolve our a that needs have think are day, to do how responsive be the experiences what we to our a way included growing have we are we make for so the exactly those teams to they those that we experiences. single titles member's there. way, of present do number

but change, going years from of changes, ago So sort to answer X and members of of next to through those to at we is experience have world. a would to that literally a are even making just Netflix our I be hundreds of And the in there's invite look that joy sort of unhelpful around transformative. the years progress to sort the come today, go aggregate perhaps back are that And all compared we make more when content to committed how progress and for you X process. make stunning to they're to much it's wealth you things going like can

Kannan Venkateshwar

that one and was I was when not of has content Ted had came we of given mix a rate it mean feeling do feeling think risk you XXXX, enough much. at to content? so feel made are not that was I shows in is you there Do -- a this that content, is I the you the have? the success terms in think you to you're in that that where like the Or this of the portfolio take was And he balance guess Where in terms amount of of portfolio? in of comment more Netflix Reed, raises enough questions point

Reed Hastings

And excellent stuff doing in or feel bets years. out that has up. amazing, number mean. X a X -- now privy that will Ted it's I the that to I'm come about I little big of we're coming

out turn will it. I'll it great so of some truly be And and proud of

there's with But be extraordinary we one so we're for primary, of just hit can please that we services, to you're to that And you to someone just want convenience, an be most have to course, going to other want to you and Hamilton hits one from We taking risks. to else's hit you the you I'm occasionally, choice. And hit those think the to and want to. for friend, easy many go like to those excited when simple Netflix, service So come turn always the have your best film. right? that never go and any part, the about of your

Kannan Venkateshwar

differently? expect have going does make else maybe not right? are we of studios to get there to better That's about So issues seems are Ted, mix world. a the it in able are be you like kind the comments in And more that being mode perspective, on And you we what when think while about more obviously, are originals to great. 'XX think can your things But now? there production the impact some think on year? of disruption the back-end-weighted. initially from a your the quickly, worldwide, it movie-heavy quite in do then when the right about this, you you shutdown slightly later still around also bit Maybe we about release and it getting because side, content slate the still compared other given And would QX,

Theodore Sarandos

is very I once last we cycle. that our of of quarter, work benefits all Well, of mentioned at one our ahead far releasing series release the

steady we're continue So flow. release ongoing that's to to how this able

So even during the shutdown, we're shows. partially shot lot on a of

So back scratch we them again. not like starting pick from when it's up,

much ramping it's outside parts in And our up different of we're Angeles and of Brazil, got So the in about. week in world, running North of days we're preproduction. shooting normal and terms this a around that of couple -- India volume really a America, fashion in we've Los excited pretty and of various stages

Now that's back around. coming

a prep they our film benefit to nature turned production with lot offer do as at the up both kind very of when our shows with ability a our work a consumer pick the terms kind of require long the think creatives to lot nimble down. things of lot And one could, unique cycle. post-production running. on up that keep to post-production remotely would of as other So at the already a of a shut out the be then And to that to who I far that has creative of work, that hidden TV, be and a a cycle in time dime, do we're on the beginning, big, similar was

just see do finishing having we're we've opportunities. now. that YouTube, coming that the up We with Cobra the up then third Collins seasons, finished right that a start a later that So for called were to I get up that, And did yet-to-air few a when first a competitive was some who from it releasing. they picked super brought were we a by love; show pick was it studios show don't Kai with see not that the to television we've year season seasons couple movies brand-new, market up but time good hard us X also and we And picked with. of not a way, Lily years they Paris to this brand-new X there's pivoting got that to of ago devastated with and I in that. nearly really Emily to we

in to have Kai excited the we're family. So Netflix Cobra

there's kinds adjustments. of So all

with like it's and create work to couple fast, Our things you excited months lead ability a me the the ago, really to license jump those to do Tiger finale of think in make and bed to of and King our morning. very out produce, ability long I episode all do very saw Netflix that us come in

Kannan Venkateshwar

of about movies I think that? pieces is difference versus movies different or That's great. shows? even in you within there of versus characteristics content? content, And there can us pieces TV versus shows better Do is any better about mean genres, different different of retention when tell anything origination you retain originate TV or TV shows'

Theodore Sarandos

do many is make. usually acquisitive, a TV on going attention, they're have in all Netflix that be than our film, members. what great earlier experience higher of same, Both be world, films think And those to And choices they they you how cited anywhere they the looking they're retention-driving the so them behave the about what how consumers friends, well. chances very to exact and tell going in could after, joy attraction can successful, things. it's can to gets I be to A if and also bring a afterwards, be that retain excited, having for. -- terms about have when thing series But great could lot it the how as of to really that can are can --

it you're for. just mood what in on So the depends

Spencer Wang

X for or X time we Kannan, more have questions.

Kannan Venkateshwar

Sure.

So XX%, mean I margin of that maybe, the the your financials. income free EBITDA was Spencer, XX%. out a cash the mean was was guidance operating came terms obviously couple and and margin one of questions I flow things of the in --

we just forward? do you gap? how us flows help And could the So going cash bridge about think

Spencer Wang

variance. for noticing positive flow free CapEx. Sure. X is say the Kannan. cash margin, Thanks things obviously one Number that I'd explain

So margin free basis and operating flow that of margin. was about difference points the between XXX the the cash

item The accrue interest income quarterly, cash falls expense pay we was reduces second our expense flow. interest free obviously obviously which semiannually. we keep that cash but below there, primarily expense, mind in interest just operating And while

in cash interest X you have -- So actually expense about QX. of roughly quarters

Spencer Neumann

potential window forward-looking add because that cash That's And great, about cash for going business add. it our Spencer's or a to just sort a you I'd of forward, think Yes. was unique bit the opportunity point. into of When I'd just Spencer. generation of pandemic. flow

So and business growth of our are the into we into forward-investing content. generally

is because cash letter, in our cash excess -- the pause said can flow a given the quarter, in basically, And So result essentially see year. that of expense resulted But a -- a we flow a as spend our free in that XX% content spend in content content were in and this of as expense cash cash productions, X:X the at you ratio. margin. in same

our up, do business we and flow to XXXX more we business. in flow positive. expect but expect our when are production bigger much negative we path turn to And still cash profitable forward, ramps being we're flow Going and a multiyear to cash positive, again and that sustaining cash as on be

the start. So hopefully, that is just margin XX% cash flow

Kannan Venkateshwar

great. That's

video the since lot world time think the we are been gaming guess your coming we be franchises shows longer in world side. you I to of of that side. been forward, maybe of games going And So in question, from created from a some one for from have, getting very which about successful, your have just that have have have some that A lot could instances. today's the shows become last video seem Reed, perspective, term. obviously,

video think of you when your So even interactivity of the like some games. makes about -- and them feel the shows

as these sides terms experiences. to of evolving, content as kind it think the world like you starting both in the when about X the of of is So the seems the way world converge some extent, just to well are

not as Netflix extension games If help today? an that us framework how about why is think you could video and forward. through think consider going just you of So where that

Reed Hastings

Sure.

then comic our then be and Old of and franchises If you'll that Potter Marvel out then a coming own, come games full-length think of there The a come about there's that's Guard, like enormous that of of and out these Harry might but small. few book out franchise pretty books, IP hundreds development and world, video

big the books and out books. comic think as franchises really, of So come have it of

terms great PC-based multiplayer interesting e-sports number are changing, that games, are it's Now and a aspects of changing, video in of gaming. that a got area,

got So our in big Ted's movies, it area. in billions animation. interesting But plans spend to remains a in series, very future

on wrap money, maybe, And we've franchises. definitely final got we're And comments of building put Co-CEO creating franchises. and the focused maybe up in about role, so your can to us Ted, with you and lots here places

Theodore Sarandos

executed. so how just of quarter, by were time -- I but of Papel, things to like do encouraged be more the for games think de has look books this got world-building. of which really some IP, a world to graphic well La so to to other Casa told And I Old world-building de franchise successful come. novels going them, watched that's kind season its and keep and Look, is the successfully in to storytelling we're not an think on it of world keep that most English. comic the have which stop, fourth books I Netflix, new of that that And and non-English, on stories were Guard, hard become season, incredible television and building at The and La on. And building that this so in original obviously first Yes. Papel it's aspect do is do original new does Casa flavor was video active, so is IP. kind with it's really, a matter attempt We a here unbelievably and

start, So don't well, in it's world, to you do more. And but it's want IP if place to people you everything the is execution-dependent. come for it disappoint great hugely like -- And else a them. back

can You doing keep it.

sources. of thrilled variety we're doing So it it and thrilled from about really a about

Kannan Venkateshwar

you all. Thank Thank That's great. you.

Spencer Wang

Kannan. Thanks,

Kannan Venkateshwar

you. Thank

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