Netflix (NFLX) 21 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

Spencer Wang	VP, IR and Corporate Development
Reed Hastings	Co-CEO
Ted Sarandos	Co-CEO and Chief Content Officer
Greg Peters	COO and Chief Product Officer
Spence Neumann	CFO
Nidhi Gupta	Fidelity

Call transcript

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Spencer Wang

Good afternoon and welcome to the Netflix Q2 2021 Earnings Interview. I’m Spencer Wang, VP of IR and Corporate Development.

Joining me today are Co-CEO, Reed Hastings; Co-CEO and Chief Content Officer, Ted Sarandos; COO and Chief Product Officer, Greg Peters, and CFO, Spencer Neumann.

Our interviewer this quarter is Nidhi Gupta from Fidelity.

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

to for over first it turn Nidhi her now question. Let’s

Nidhi Gupta

with Spencer. stuff again, Great you, you to to about. exciting Thank of be all Lots this talk quarter.

dive let’s in. So,

adds than your Help quarter, to the with to what expectations. a starting better see us Just net bit little coming contributed nice that. understand in

Spence Neumann

can much and saw, others I kind of as quarter the played jump in. Nidhi. Sure, pretty can take that out expected. you But as

of adds we been And had X of in X.X We last the growth. guide of paid that to So, bit adds. what talking of still to and there’s forward the million. XXXX subscriber net we’re sort relative kind is delivered for seeing couple of what quarters our pull choppiness a a million we’ve about big

push kind overall, We new tentpole, the is until some production in returning key also titles year. as had business of of part big of the well. But the latter releases performing the our

is to churn down relative of before COVID. comparable XXXX, in the QX actually two-year period ‘XX, Our ago more

choppiness does our through. that we’re it Our in talked bit. feel but in where engagement reopen, COVID we down tail our we What a acquisition what on letter, as we and of things XX% about bit period. we markets up sure, end see hope can’t viewing a kind we nearly this be is little of of we’ve -- working the hope is the is slow side little the over of still as it terms that and acquisition -- growth But drag

Ted Sarandos

COVID our little in that steady say by little. up to just for nice it’d members, progression And back terms our of getting slate a delayed Yes. it’s

the steady both projects, films our of which a board back-weighted this this Who around But We’re English for quarter, our The excitement the even past in Fatherhood the for progress the was we vs. and language quarter. content this Lupin nice the of in Mitchells saw and Dead year. local still with the animated language the world, our that like and programming hit out series And Army and quality very Sara? came of nice Machines in a like and there’s Killed heavily across

think but still back-weighted in reminder progress, nice we So, steady we’re slate. pretty that that

Nidhi Gupta

What in are and or the last up? of business have really of fact as the to markets in guidance more also for have seeing you lot balanced Olympics, half? that, open the over the coming second with a month the that your content so in What’s started some kind your you

Spence Neumann

is Well, reflects QX, we’ve the actually in a what lot Sure. guide QX frankly. of -- seen kind of

in business saw with the the But see very I early as we pandemic. underlying COVID the thing The the big engagement terms margin, one that impacted. see of saw is acquisition or metrics days spikes on of acquisition mentioned So, or trend that we is really healthy. the that don’t we we do are in

And similarly, acquisition. on a in QX in Brazil acquisition. of tightened we And as that’s did a of have as for increase some markets EMEA particularly in bit and So, reflected see a reopened, little region India, most or the that well. up our bit, when basically headwind in example, QX, UCAN things did in say guide

reopenings. of get see kind as better then and so the into market a even fundamentals, starting seasonality. change, those fundamental of peak well more get we reacceleration big you away little some business the growth, incremental a market moving our seasonal schedule strong bit as we move hopefully as a into heart kind release as year to of to the of from those as kind But really not end why reopenings, which bit of away as well period, is similar So, further hopefully from

Nidhi Gupta

as I minds big levels question into get investors’ net your back to think adds, about you pre-COVID get ability of to just a do how we is feel on XXXX?

Spence Neumann

we others of emphasize guide QX into deliver with the that is And long then steady. QX growth you our talked -- and Yes. will should the long is pattern guide, be even chime and kind consistent we want I to -- in. about QX, in if the over -- know in on it and But the what’s business our just is a over trends letter, term remarkably

on with our XXXX. line years that period XX growth added deliver new So, is few have if of right year, we’ll or in which million two-year members means million our average a guide, past over and we on in it XX XXXX

we on as growth to is QX, choppiness, a get expect kind of again, We’d of trajectory. that get hopefully trajectory. expect what kind we that growth to have the a we that And we we for strong the us. to would COVID into we once on end So, slate, remain through seasonal into we tail strength there. period get get normalized much more kind of But, high of year of end get

Reed Hastings

risk And unlikely. decompose Internet has been streaming into does seems One internet amazingly consistent, that you is, two streaming pretty the long-term things. Nidhi, prolific. And, can slow down?

or new broadband. As you get get to reasons validation, get you in, a TV more limited competition smart

they’re that not a have have And in we’re That country, years, the impact other countries you’ve detail does a HBO story, others. And the growth that past? So, whole because next compared and of we per us Disney not the least think, got as entry in then, in differential the some seeing competition story secular I intact. is for the or launched to comfort. gives very at streaming several or

the seeing We’re the measures. like that Nielsen total viewing, in not

of is say stages. And want couple next XX%, leading we streaming linear story, again, and then that years, of And competing mostly, that still till be XX%, And viewing. in to a and is so, think will early to of shakeout true But be XX% from there’s is TV. be growth going we streaming all that. the prepared streaming the

Nidhi Gupta

my super helpful, answered actually That’s next Thank question. That Reed. you.

makes So, of might you to gears get longer us capital great shifting cash have the five over should on be that, free future. on? what for algorithm been in There’s your core excited the some we that term of kind return flow in outlook. focus next investment revenue the to think the maybe additional years? growth, But shareholders plus that we help Netflix’s business a you What’s understand before market recently gets just sources that you focused

Reed Hastings

Go ahead, Spence.

Spence Neumann

it of throw to going you was if I one you first, like. to Well,

it’s So, okay.

Reed Hastings

And underestimated get much XXXX us in picture investors impact big as is The our to applied is consumer being for And do. Amazon around could internet that is and has this the and potentially was of entertainment secular as enormous the It strong all internet the play. us of collectively competitors. And potential all what market. great internet entertainment. world a XXXX, the

And, revenue so, basis And grow by that not XX%, we’re margin. excited. is points XXX growing that people it’s hard big gets when again what thesis to

As to the but into we’ll a that. tougher, continue revenue growth slows, little it’ll lean get bit

would flows on got fundamentally revenue to this growing story I big quarter. growth, cash secular and which it’s a cash returning buybacks, say, so, of profits those big Spence management then flows through start this And and team committed

So, over to Spence. say, you

Spence Neumann

homes in you you over more would XX% still roughly metrics earnings there some clearly, at that our we -- UCAN tenured to much around at least viewing doing like hit broadband overall, days, can’t guess, just be Yes. streaming market penetrated letter, I in according homes. pretty it’s days No, job. early And consumption. go early about just alluded those add on we’re Nielsen see penetrated, the Reed so every the call from points. roughly I time, as And where if of to the don’t key in the this APAC in only if all XX% I XXX PayTV we is, more, that our million, around we outside to we’re most the an And of and only where you service, our the then, of put our, the of in there’s talked markets, we million of it’s region and XX% with arguably if either last continue to to XXX all the And households accessibility even or range why we’re improve look in or world broadband China. we world. service

plus XX% we’re then, only -- the still linear only of within streaming, we’re share X% is total consumption. at So, X And TV.

So, we’re that only X% of XX%.

terms overall from that tailwinds streaming of then, linear that trend there’s financials. So, And there in out in the entertainment. to big plays

as So again, margins have operating Xx, billion our scaled years. income profit from has five past the have to quarter, last business our years the profit $X five grown that over million absolute XXx, $XXX grown of per over dollars the

to anywhere of market big will to scale everywhere, because scales large that think very It’s well. way, this continue pools. nature content healthy so with in creating from And a our business in these profit addressable the we

we return a growth, profitability the to runway long have So, of and shareholders. value

Ted Sarandos

about only of is talked slow total the content. only internet XX to ago small consumers award-winning to we how got fraction the about, terms think and only quality their this no entire point, the to X fundamentally And years we’re we’re watch, watched, out television on highest one And enormous And the and was back about most of a I business of all changed the how Spencer’s services. addressable most the has streaming in a for percentage you quickly audience, or most looking streaming today, you’ve way go marketplace to the think changes and to the viewing. streaming coming them getting

we’re position after still enormous So, an it’s a prize. best it. the to in run still And

not of it’s shows you it’s kind love. expanded As films you just you might we’ve Netflix show is but is members, to the a which what like like, the

Nidhi Gupta

ARPU you a are shouldn’t appeal. I not reason think you all equal. And the consumer I over in debate global of you’ve good there’s every do same a be internet as no with point, time, your subs make mean, household you said, you job, And quarter, lot product created kick kind as and time. if this thirds of you adds without starting At created there’s of region. to lower in can revenue Asia continue some came the digit And market even how revenue the of net in these PAC to long two your really contribution. meaningful grow terms to in, of markets, from double

you debate? that light on shed a can of can bit So, little you

Spence Neumann

-- just growth Greg, those that do take little want of in some regions of our a the in and to you pricing? terms bit it too,

Greg Peters

without telling that us find feature world’s parts in much set while service in increasing we’re the there, that the ability sort really the participate iterative the also to, from thinking accessibility is to the and offerings we about thrive we’re and to range populations that are sort really that what’s right say, how the other talking that allow we And we to this, sure that value stories price and And of making would joy And I and based to don’t consumer to speaks needs measure net puzzle, course, And the feature to population about range ways wide find as we’re cannibalizing we’re trick of a do set have this means of hard markets. to to to more trying seeing. layers. more try this them revenue working we approach, Yes. find affluent of on really where about sort solutions that more the points broaden you’re more then of that add of think pay. of different that we’re take sort there the the of and and

plan that as countries And progress average XX we that price expanding launches so, puzzle and did member, the that that reach. of definitely And much revenue. is, example that seeing we’re delivers in plan way in trying we’re bring this we’re in thinking in from broaden very about do per that we also decrease a of make incremental the us total the lower what of calculus to that funnel positive revenue quarter, net to offerings trying an against sort mobile

Nidhi Gupta

affecting world? That’s very term the competition as your is power just particularly competition, helpful. thinking the pricing around How longer consolidates, on

Greg Peters

at ask a mostly, of do more a And And with tons we stories, hard-earned calculus provide appeals pay back there, wider more we the of of how ultimately, consumers then more consumers around those diversity a of ability members little occasionally virtuous job we we’re and some value, their already do content can in have looking to the to that and we think, spend specific bit that then to world? those going. to if of and we good go incredible and this is, money that competing a on I deliver places how what keep more high-quality appeals a cycle do ultimately, consumers entertainment. range forms to are of

the side, would a speak to really, side, on, sort second, and job are narrow supply at I members? to I’ll of if focus just will, say demand Ted value side, that deliver let adding but the our so, good on And a doing on you the very more in maybe demand continuing it’s to we

Ted Sarandos

think cable I -- the all general, do you all the for is, see in all I And in the of are these Yes. consolidated think dynamics through access companies basically different with of it we’ve players same consolidation bundles these into competing And to themselves have channels. years. from the just been beginning, across

as to access the platform. in connect loading has So of in terms terms doesn’t help size terms that think general, a well our big Netflix, our platform big is. in creators audience that what because in of distribution I a And ability offering and of of change to of the content with our been to offering,

Reed Hastings

on And Nidhi, or But for become Disney then, general Time don’t from Discovery, cooperate, back U.S., our said, how else unclear. the service for significant, and of members? entertainment Instagram the the Nielsen Fox conversation, family. not competition remaining helps and there’s taking but as it’s choosing that would they I data the grow do so helps Disney-Fox. how rather the and Disney And three, buying if combine improve Warner, through and a plenty just focus we And combine for and away without the room as a that Greg TikTok some, day-to-day, of Olympics sports much and there say like just or it than more that to that everything to from other certainly, we kids again, streamers. service is goes it’s content

Ted Sarandos

four all and one are which and look them when most they of and versus would one or those two. one equals is these, one equals do tend to equals consolidations, I three, at one which of when one be,

Nidhi Gupta

how of Yes. you, the No, have lot just of a couple profit is to potential business. much that quarters Spence, Switching gears sense. makes this us last in shown

Going back scale XX% have they at and have. business networks, the traditional networks that EBIT direct-to-consumer profitable TV plus didn’t margins and peak most the in model to you

kind are seen? and margin the takes, you your long-term XX% what that we’ve against So, potential history at puts as that look of plus

Spence Neumann

long-term Well, to definitely the going guidance not provide I’m Nidhi, relative to XX%.

to very are know what it, out to appreciate benchmarks are I But, that while ambition. nice So, but is model. have it’s we our there, those that has about those as there out a that comparables scalable talked before, we love business

most And what that increasing of aggressively, I business, able our healthy. before. so, us invest for strategically And about is to the that’s what’s grow to while important our growth mean I being And in talked by profit.

to so along. We have far continue feel been well and our pretty will doing way

easy, year so percentage wouldn’t when or per to-date, we’re say that revenue accomplishable, but So, period. been growing any I something few points that’s over we sure, been in growing growth And X XX% have year at year. Reed per said, that’s as reasonably, for for

last of But, can’t we a we forever, percentage points of long have think year. growth. that in obviously, X Now, runway terms a

world. that market, global travel have countries platform, work markets their it’s stories just our in and of the to well, We nature around of the ability to advantage anywhere, the but they in some our and terms -- things across not create

nice a that’s So, model for us.

and of things the lot competitive us. kind a a We of on growth on smaller of course, scales margin, that established, of dynamics, that’s to And revenue that’s great in bit of a emerging And have impact relative going well. business content, those ahead also margin model the and subscription markets. evolves, larger healthy but as as cost and well depend

Nidhi Gupta

something in points the year if bit margin. new or lower of on a have forward? cadence XXX average been the because little Reed, sort Ted’s five that good businesses reined instilled to look would that And per And we probably average, know, content but in forces business, that an in margin back basis and the amount or found has of what’s else? you years, on a why right competitive than invest is But I discipline the of was of going the budget

Reed Hastings

XXX think I XXX, of on If But the XXX the magic same don’t we long-term, in be think today. we there ton we’d basis in decided to the marginally different a or was had points. I get place.

a So, up Greg stream and it’s our that been we a faster providing that growth driving allocation that sets our framework and how into investors. Ted guess for for think about profit have

keeping So, XX%. we’re big to on comfortable growth And the that is price balance. revenue

and the our fuels do, have we’re of and ignore, the the get most those can’t revenue that’s we you everybody’s learning. like, And do how surges. more okay, just it’s go growth more the about, time do big how we we content, talking So, is what

of film how push So, the progress of we’re making show consumer a show, by ton by film satisfaction. to really

So, that’s see what very you’ll showing That’s up next year beyond. promising. and that

Nidhi Gupta

Reed, a saying on minute. maybe you for Great. just

call, streaming the supporting profit over the earnings being On talked pool video sort and of last about you potentially profit pools. smaller time main

last potential entertainment. adjacent key you these hires in deal believe sort Shonda Rhimes the you’ve include you made and to months, store. actually meaningful to with I future? gaming Can some which just business be an podcasting, in of you’ve the expanded through areas of few us profit talk a online Over live launched the pool has your

Reed Hastings

will service; distinction. be of Shonda consumers of; things those Rhimes gaming, so unscripted, that -- pushing and but that all our a designed our we’re that video none There’s that, our say, service, work, not they’re part -- future Because so confident be. would is draw I’ll I Well, that on things. very two them we’re to of in love

core that a making of pattern. So, service as think

profit And to number have. service each tool. brands we consumer the becomes around must a we’re enhancing big there’s to the various title trying that that of products, up lots of service then, Netflix elements, separate our to where the get investment, so have. those So, really of supporting It’s but the not support titles, grow a shopping conversations

and profit any service they’re material is but their the important the not in pool of a we’re to So, lives. more them reason size on grow helping help subscription doing own, are people’s they be

for and a for say, bunch elements incredible a supporting I that one monetizing So, a really, engine of product we’re consumers give company that help would product with satisfaction investors.

Nidhi Gupta

Great. That’s helpful.

Just take hire that as to you, last bigger in There key letter picture, in you to to just a the follow-up it more gaming shareholder gaming. week. will very it’s on great brings play exciting see to matter I’ll Greg, Netflix to Netflix? on was well. play detail how excited achieve games gamers table, things of the whether to network But of with? most to why sort unique ease-of-play, people What will are the the content, that be gamers, a assets and

Greg Peters

programming, more will seen value that’s happen to that And what on to games. through genre, you’ve picking an up core similar games our add left when continuously adding just in of XX the been where and and an years, of new we right? genres, offering Reed as focused offering by new entertainment we We deliver the expect of with for on, this expanded to our language offering that sort a So, Yes. what think on members opportunity really last the as added Well, extension we’ve nature we it trajectory have we’ve entertainment off. animation film, we’ve local see that to unscripted, that.

So, going this multiyear a -- to is it’s be effort.

is investment to our based focus we’ll just and But are we on improve what out can our working that the about a I an we’ll telling on see continuously We’re of what’s start we about is already. I’m that create. is based we where first bunch that grow small, us differentiated the And ways working. relatively members different offering excited learn, we’ll what provide here is that think of there really we those from IP going really

space. actually and where where engage what’s exciting you timeline? those explore. making of do is, the and a what a their incredible storylines engage a go that provide just fans the significant business parts they of amazing They direct want the of to do of all, lot think in provide, of deeper, bit things And time these we to what really they and explore, characters. further, to of amount we world, energy to characters, there’s can great can want little intentionality, great of people can are And stories worlds the in universes goes. interactive also they of that bit want what little about that first So, We provide know I that want parts can in

other model doing most We about experiences in don’t can ads, movie to is and monetization, subscription game purchases. a also per feel on delivering underserved laser of games. we sort do about title that or think that of stay monetization our just to in-game think think dominant the the don’t we on focused currently yields we been some on about purchases what that which that can. we entertaining Really, by to opportunities focus We are set game don’t we’ve have have side, models experiences series

developers worry considerations just trade finding making about, that able energy that being many that that to not focus creative and they there’s to have we’re and really gameplay of off idea great games. having to other just like this compelling with their of all had into and concept typically put So, game

world are us those games. things the the and that some even effort think make So, can of special, of excited in that about we’re for core this

Nidhi Gupta

and helpful. you. while take things, the long-term management things on a Thank also play out. That’s team will super incrementalist having known thesis how approach well-informed this an always I’ve to these on

with the platform into? long-term see TV And point? could of coming the Do to this starting is that that you sort So, do is of a if and see time? of starting you strategy, you articulate what gamers content what yourself an gaming? thesis thesis sort over And vertical evolve or sort of can on it, of a a mobile as sort long-term your is is to play, point, ending is what

Greg Peters

a got experiences, sort the maybe our take of checks for boxes. which mobile Yes. make of that enabling of great technology, the tools, Clearly, platform games. vast sort capable it developer a But first great majority from I’ll and -- members view. have of platform phones mature; angle that very I’ll widen is great we just those community. think all it’s gameplay great And are it’s of

A velocity this is learning. of to in would And is mentioned rich lot lot the maximize have of what and that you to experimental and and can And game but exist so, we we’ll the TV kind experiences it’ll -- be be like deliver devices. going those But incrementalist this some all And connected lot we devices experiences range a currently a that experience. say. sort technical can want candidates for the you of advance try that learning We’ve of some approach. ultimately, interactive opportunity us delivering do to devices feel all we time. very serve continue focus primary now for them in to those game keep actually of been they space. the see innovating can to or deliver call a just experiences. is there’s we we across really on And deliver quality a games as on trying And focus of for capability right And you then, TVs call we we phase. obviously, interactive things we’re to lighter to sort improve experiences, A of on weight, of of spectrum.

of of that’s a working to going what’s We space. IP. of games think a try really games will see we’re that rich, Part really mechanisms bunch to our different members. extend rich that different variety a for our through So, be

a licensing from and volume see and long-term then, on rich do thesis. really -- way production we’ll at be in different we interplay We’ll amazing just game great of to, series we spawns And fundamentally, because a different Maybe or place get more where other standalone a would that’s of very the regard. feel -- the about that offering of is games, come variety done those learning internal games. of so things sort also, focus initiative a someday, our this film ultimately, expansion, of an to we’ll to forms success see of great like, So, genre sources. to what the We try these part our that entertainment. between of increase can much But the the in do sort sort scales, as we’re that learn of also that quickly. can the we’ve we it’s start, we have, that this energy

service. of results improvement followed value, done feel that big So broadly, big, as is job approach, sort the iterate us focused think, our the you here. that is that that’s of maximizes be going expansions price said, we’ve really continuous we And big kind yielded deliberate around the there to we’re for of a genre we and after what we as that very really and sort technique about all learning and

Nidhi Gupta

of or time, if of as long of a over the think over is financial successful? period you there Netflix And about that success is sort here the think, success higher very service, ARPU this should for standalone we time, you’re a financial

Greg Peters

it to part But, core of going not subscription very to, really our term. we’re this as long I’m very, a guess about offering. thinking

people those very -- like talk value colleagues, there to there retention, out lots that their is delivering movies see for We if more about source compelling of that’s series, being then a And incremental is see in incremental acquisition us are stay than so, well. well, a their to us of do We for obviously we’d engaged because and it, success longer. ultimately, measure members it with the there that when like there. those of that’s that, as conversation adding part of which about be as acquisition or talking their social having members, those are the is having game benefits much them about great we values around family, friends, in adding

Nidhi Gupta

sports see you. rights, had escalation lot. seen related, there the sort over call, the FX to you Do to what which content have another you Maybe been Michael switching you related But, series. sort haven’t or success been without vertical, lot may cost key the the Ted, comes is rights? up and can like even do and on have of becoming thinking there. destination sports Thank time? sports, given Netflix right Great. super I’m Jordan with content historically you And the of buying have a helpful. we That’s news a analysis, gears limit Documentary, underlying keen that for of a sports a

Ted Sarandos

viewed be that success it the FX the sales, merchandise great. in ratings to live our as on U, enormous the all to expanded is Formula Doc, could Look, racing what out, Michael like you and dramatically, certainly and Drive is as ticket and and the to that Deaf adjacent X for are but can of I Survive audience think, an think Drive: those what -- sports of enthusiasm pretty already all it And I do storytelling examples, properties, with applied Jordan the the platform build and things. business. think pointed both I sales TV those we’ve Survive, long be

And new behind fans behind same the to us good those happens more, of kind apply into about see but not bring to that what’s sports, sports, excellence creative can personalities we those camera. the the for deep only those folks is sport. also the drama off this could storytelling compelled that So, -- are fans

think -- it’s to it’s it. we’ll continue we exciting. pretty We explore So, think

the Osaka exciting of broaden week. this another going example out this this that particularly We really just period came the That’s that’s can tennis of on Naomi world, have fandom this Olympics. into the for documentary incredible

Nidhi Gupta

cost where of of we there like or a markets already there have and Outside international niche sports might Are a lot big owning escalation. more you live the football actually seen feel sports ROI good sports rights? the air in on American basketball, be the

Ted Sarandos

don’t I those under-distributed. from know sports that being suffer

never I only that has saying clear, much And big sports. since think sports. not It’s cost that what best it’s use a up but $XX know started would pricing And just on invest lot, I this about gone And saying billion? the them. don’t going what I’ve meaningfully bring in of reiterated just So say to that’s that. I league be is to to we I’m that to to never

So, are bring a think that it’s they’re because we to because and under don’t But hold. to I that’s other lot sports that those I likely them. niche, believe could again, distributed

on-demand is be to And with and and tends sports packed advertising. product live fundamental Our advertising-free.

lot So, except of that there’s not a natural way, it television. happens in on synergies for

of So, it. use definitely tranche next that we when would it be of to the becomes open best investment,

Nidhi Gupta

Do is doing, see what Amazon sports? in merit you in any

Ted Sarandos

But same I -- I’m know as know don’t not a they’re they’re what are. they’re thing mean, -- we I I I contents exactly from know for doing. looking don’t watcher, particularly sure I spend what the what -- their that

Nidhi Gupta

switching to Reed, gears you.

organization which inside your for wrote What book. interesting on decisions, biggest say today to a dissent of the relates strategic the of as chapter thought really would book Netflix you about strategy? You some in it the farming I was debates are inside

Reed Hastings

Fox-Disney, the amazing how because I’m so we a do to speak, entertainment. to careful little them about deliver on relative out of that and most competition,

very skill for that film, franchises. long you these we the So, the like have if in that can do we cons ID, has for video wise up positive hindsight, and That you of timing it. of industry kind But structure be can several pros about talked years, if the master writing games properties, of we would entry. us set. And and can own it, the

came so sense to And other content us thinking it down games relative fund money that the incremental investments. made really, to our to

through. we process go So, that that would be the kind of

Ted Sarandos

turned at way should look hearty been shouldn’t came hindsight, or almost also expansion why debate opposing And it, we I on which very think the well, Reed, it. that a positions say people be, good period true with do has in everything I’d healthy that’s every with with very done, on. to taken we’ve out we’ve might of

Spencer Wang

Maybe please. we for questions, have two time last

Nidhi Gupta

turn of I’ll It’s it we’re Spence, free capital Great. flow. exciting on that achieving the positive cash very allocation. cusp to

on So, a couple questions of that.

billion free rationale few range First, grows over while debt cash flow to $XX $XX at what’s years? -- sort the for keeping gross the next debt billion of

Spence Neumann

to There’s because the not the Yes. it, marketplace level pure over to maintain of capital capital we but access to guess, need in familiarity should to like with science profit the as They’re our leverage is, we margin some want we similar -- what our I markets, viewed a we growth. want it time.

talk there’s of not why that’s But So perfect we leverage. a billion about that $XX again, billion science. to $XX

is most terms allocation So, in strategy, us the our what’s again, business. in strategically important of to invest capital to

a quarter. And share or from over our That’s shares we billion repurchased have after the we of first that to have that in is in the objective it X.X television, excess in take but other terms last and That’s X into of there’s return repurchase billion It’s mission occasionally. time as of kind So, there, this it not will we’ve hearing of priority. extension share to those other games every program. then, that we’re world. video really of hopefully That’s started all we objectives. hopefully into entertain what QX. repurchase why that shareholders kind satisfied to we a you’re fixed But, amount content quarter We our going strategic investment into categories we’ll repurchase cash, authorization. in film,

the will delevered. significantly some but in markets, debt We we’ve maintain capital

I to this invest think responsible kind in I don’t while into Spencer, know, we about capital think add and lot growth you not have the our prudent too X.Xx our talk about bit above ago. topic. a balance down with leverage would flexibility being Xx, but it, is allocation. to important And maybe to was which sheet long we it’s debt-to-EBITDA, our a to of

Spencer Wang

No.

nailed you it, I Spence. think

Nidhi Gupta

the for areas. gaming historically other perhaps your as And or to has In all for wondering haven’t been you your in that M&A at assets like good appetite that, that market, some are you just related seemed changes core MGM, as pretty explore have the you? low. business, for interested make I been mean acquisition of the What example. in that a characteristics if I’m traditional

Spence Neumann

that I’ll runs answer. can Spencer chime us. I let Spencer in. group Well, And for

Spencer Wang

it’s question. Nidhi, Thanks, Spence. a And, good

any many we at company, say, our couple look would speaking as a a in business, guess, growth accelerate towards M&A. including opportunities. the without I specific I of So, things different ways help to

should assume can develop help to our the we’re things. we that that into can past accelerate So, that the series assets content many different property many, and we’ve like we movies. original said growth, things And you at look intellectual open in

well. and being We’ll see film said, on of mindful TV addition, In side. a could interesting the we gaming things. couple That libraries of are as be

First core and heavily priority to of since all, of our encumbrances, business. for grow is limited assets example, our ability Netflix, they which value use encumbered to top us if our content on limit them Netflix some the of are to then are these

Secondly, our trade-offs. costs and opportunity

which for So, think we evaluate alternative we what’s Y and as company. asset bought X M&A, the always we or Y dollars, the X about dollars if is best company for of use

about framework hopefully, gives bit you think little M&A. how that So, for a of a we

Spence Neumann

has to strategy is cost. with key distraction The Yes. low our it accelerate

And picky. pretty we’re so,

Ted Sarandos

be right of the we’re the It’s going strategic of core doing. to in something in middle that’s what -- the

Nidhi Gupta

I mean, any there I flow, the guess cash free the backdrop, majority it buybacks with for I reason future? is in of that be think to mean, would used

Spence Neumann

guided breakeven $X look be We’ve that’s we that the a billion something flow we’ve -- Well, a that problem. we’re year. little at authorization. ourselves have this ahead cash kind as of contemplated roughly for why of certainly but But to it’s will getting I high-class bit,

tracking and and kind we’re world, do nearly get be excess two-year of normalized through really then and a hopefully, how with can hopefully let’s of what will our getting global I’m full about to what for kind content we and past this this almost a cash. next look year. slate worry at So, then more excited a year pandemic

Nidhi Gupta

problem good a have. to It’s

Ted Sarandos

Here the Well, this Nidhi. you quarter. say really again with you I us. to for happy we’re so thanks, just want Thank with go. much doing

with happy the We’re programming.

when know is about to things. and together businesses things, that, conversation our continued subscribers a happy driving enormous in everybody mostly favorite I businesses us our which on team And This the and And business film, while the both plates, of that how trying in to the story and to really spending be and restructure is drive focused to it’s X,XXX our is the and world. it favorite unwind content, to on this three the And likely scratching figure in before. for really put about is in ever out streaming show, happening streaming. watching but than the potential We’re our just else populations success. how to comes big the employees, we’re focused we’re love to time revenue. and we’re continue on with very world to still complicated confident more drive your to your surface And three business. world in be growing it’s as we’re with choosing around

thank So, you.

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