Netflix (NFLX) 20 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Spencer Wang	VP, Finance, Corporate Development & 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 & Director
Douglas Anmuth	JPMorgan Chase & Co.

Call transcript

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Spencer Wang

Good afternoon, and welcome to the Netflix Q1 2022 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, Spence Neumann.

Our interviewer this quarter is Doug Anmuth from JPMorgan.

As a reminder, we'll be making forward-looking statements, and actual results may vary. going question. it I'm for to Doug, first the that, to over turn you With

Douglas Anmuth

Spencer. Thanks, Great.

So your it months. past the could how factors ago. tone your in was start is and competition, I changed walking very macro out maturity views by different us that have few than hoping was just months letter X you today through around the over

Reed Hastings

of a we a read our a was situation, forward, I logical Doug. mean If think made mostly that noise now, Yes, on we of which little in the what's on. lot we really different was are coming really our the hold. into put numbers in in consistent how boosted thoughtfully the tease our million the are I X.X lot going letter, kind acquisition XXXX, us because And pull little And views was that a different. us COVID guidance, thesis. then XXXX. had it I our doesn't think But to as said forced apart lower to conclusion. think I XXXX, And created with

is with of So competition, when up had, we then it, with account the the what getting pretty thing, acquisition driving realized, we're think always lower And together, pushing which combined sharing, is you penetration. we've that's all that, new into a and that not lower the but add market we growth. high really

But We over them. households were got fast, high work on that to paid monetize working We've parts, on. the the been service. these some two remember, already choosing to XXX we at get priority the thinking They on super about are we're And it. growing years. view Netflix. to degree now, just a for of million love And we're for that hard are sharing. wasn't to working how on it couple So when

out. know we've And you is They've it two, we to good what And for then objectives moment got up, I and shine. when that into But and it geared This it. part that's back is like films tell we're it's internally, it -- up great And really good all is sure. -- pretty we're competition. it's and do very got investors, getting I'll disappointing some this on we're focused all and graces. got of So notch. really And a take to those achieving shows for our our investors' is super matters.

Spencer Neumann

all add, elaborating put might just on near-term a we're kind we But terms growth COVID we sense of and penetrate these addressable limiters believe, growth. in terms is It's seeing point to a households. of I thing near-term market, clouded is Reed, terms only broadband slowing have that capture unchanged better growth that we slowing that The long-term and finer of that just Yes. on market. the what in in of that

still this into, there, just what the of still but reinforce that is core addressable want we things a the to one and letter, on growing that's point finer So I Doug. market put that that's we're

Douglas Anmuth

Okay.

terms in if about trends, more. bit of just maybe So a XQ the we little could talk recent

the mentioned. a be to a informs hoping how And ex us while then parse you gained of subscribers. at kind about little now, million XQ guide around of perhaps X talk those You that and like XXX,XXX you isolate you've that talked for could of factors lost little those sounds could might about the some of for your a factors. but list, loss It that you the or removal. of XXX,XXX top Russia subscribers out some Hoping bit acquisition

Spencer Neumann

Sure. in. fill can others that, I'll take and then

Russia. delivered We to said, paid we you you X.X Doug, X.X million adds. exclude net as million, guided So if

million slowdown X pretty consistent QX we We slight And really with a seeing actuals versus difference we is what did out reflected that growth acquisition small. really this expected. miss was were QX. And churn some when there's elevated it really guidance. throughout there in The expected. our the is what's So and as played guide, is

had So but talking through. in in big of saw to that point, but retention parts has the about one X.X of churn. member about on other X.X it factors was invasion a EMEA. countries. the some Russia's There letter, Ukraine like still percentage directly, talked were in a good, Central very effect interrelated combination very factors We pretty but that elevated big that there. some our flow Eastern European we're of We base, spillover and It's

little in also saw the strain some We of mentioned countries, Latin that America, business. a the the suspect those and a -- but elevated, in macro just last and bit seasonality world, little more little well. bit macro some as margin that on call, competition that mentioned parts of a like on We bit more the maybe was probably some we factors we of is some

same bit typically, in seasonal and through of -- is continued us just continue that's the little probably in what of what's that's It's elevated slightly essentially seasonality we're same seeing retention guide, this quarter. softer quarter trends reflected in is -- a sort really we saw QX. that's the and in the softer in trends. And sorry, acquisition So -- and it's that churn the for I'm really -- acquisition QX the a reflected and QX, to what's which a

Gregory Peters

boosted bit some on. really expanding we're by broadband and lockdown. that that's And could was pick factors market have in enabling of in, COVID we that a like we've detail like talk And this high the sort of factors, it great in penetration TVs. addressable have this time and the we a of countries at example, X really bunch every period then the first It's near-term operating longest, in. up beginning And is country viewers that over where maybe been of I U.S. we're growth about operating and potential. a smart And operating little want significant the market you into that more the

And is Now that a someone is do they're a watch. service which made us, know paying up they're is we is found credential. really the account of not there sharing they that Netflix. They penetration see that X They to great. is get second and group want well-qualified. tremendous have groups. need us, viewers to of paying One They group group what to clearly is. that And titles that's they opportunity then else's viewer a because everything are to

bit that our that into asking value got is And now, so after to folks the viewing better to those pay is with their that are the getting the consumers job And really members and outside service way share revenue. we've principal translate home. going more a our to of

revenue a to so different she So in to with with the to to that not if service, you've to the pay her get say, gets the great. we share share down more to you shut trying that's the that's able her, that and got be a Netflix but also with you bit and viewing. associated going value that city, benefit we're a want but of living ask sister, let's We're sharing,

Douglas Anmuth

do I come that to to more, a and Greg. and account think doing implementation So guess, way, testing of trends we the in this just bit early maybe the Chile what about think We'll curious when the bigger and about let's sharing, I the clear some a guess And Rica about up will follow little you when back it's look on moment. the now, Costa time how but you it's Peru, about right recent in pretty that why see more in that rolling think you're But like? out actually a to do U.S.?

Gregory Peters

supports us first, that great still note and balanced important members gets we it in the value And a we're importantly, basically a for entertainment and we're and everyone. got. sort with But all that to from find a service that into member better also, more everyone value up options invest great entertainment mean viewing that who then we're very it's model trying I for to customer-centric approach. It Yes. of choice, delivers charge, trying bring and that come of approach so puts supports in that here, we've to the we're then who's revenue doing a content allows can obviously, to offering. that

work a factors of bunch frankly, year we've ago, years. -- a That's X why a a bit the -- test this started we're over We there's working to launches almost it that out country deployed did test informed light we we us we've little about balance we're will have. the we that deploying on that helped the for that about big So some year and through. been And that working build our But thinking to and test. -- a right. now. take We while just mechanisms first get doing this

your belief United all that including my solution set is then to to we're like globally of just so expectations, deploying so that or through States. we of year that launched, and that go that, a of iterating so sort get markets And the going

Douglas Anmuth

on maybe ARM think it here. a do time? walk And little accounting through from over And helpful. from That's Okay. bit the how of you that maybe, would about Spence, more uplift, you whether point, the just subscribers if or just could come

Spencer Neumann

great, That's Doug. Yes.

Greg, we're of sharing which members meet of monetize kind heard they it, are. You our kind you nailed where from is, as looking and to

member that relevant or numbers it are up expect likely less ARM. over in subscriber should numbers show may of because you time very So -- these sort

obviously, to engagement and reinvestment optimize, positive think should average growth, important, to you that of and then drive revenue we're flywheel which and the both growth, So said member, about business. in always it per we've revenue near- trying probably long-term as increasingly revenue

Q. revenue to probably Q, So engagement ARM Yes. a P and important be overall. is isn't There's a there not that and times it's still but increasingly going

Douglas Anmuth

as So -- accounts just... will to subscribers, sub and there, count they not just will clarify

Spencer Neumann

That's that's right. That's right. right,

So individual household an distinctive of it's account. less

Douglas Anmuth

though, household addition. separately, in current the you'll of those pick Okay. And subscribers the do those of as outside some some become process not accounts, up in sub shares then

Spencer Neumann

Greg through ultimate still That's right. said, And working we're here. the as solution

going should viewing out, you but engagement, it's don't exactly know growth household so an So that engagement, that number, ARM there's kind therefore, account key individual and overall viewing that's is more on a of we assume how important less -- revenue as revenue what's play metric. importance and to

Douglas Anmuth

Okay.

for to minute. go Let's acquisition back a

ways beyond, not beyond has great pre-COVID returned creating are of we it talked acquisition can about, noted and you course, account sharing, the levels. you which to content? What that So just influence then

Spencer Neumann

take that? Ted, do to want you

Theodore Sarandos

is business It -- the shouldn't to to to we're films Honestly, that what grow got which core be continue love. Doug. make more think we've I TV focused -- now, than right, on. in. which any a improve compete series we that's that, That's service, really and And complicated making we've thing the on and and people I continue games think really that that to got

talked highly it's we've Now already means they're those being core harder users, Netflix join get about some to of to that markets if penetrated Netflix. them using which with in

So these we we're monetize doing out to that got viewing. different models effectively to more that figure now

As key. really earlier, the is Spence said engagement

we season them while not engagement top definitely happy been on Anna, of a very, very Nielsen expected in actually growth, the the and Project of Even bit all, The -- the Bridgerton, of engagement we than Adam -- in the with space. little share heightened But our with our super competition, new line market that subscriber actually as season the see Inventing been Ozark, were certainly, letter, you steady, fans. bigger data the quite new of the delivered biggest exactly holding As expected, we on our healthy. has top of that published levels with has saw the to quarter, our the in that, in this viewing

to expectation Now the we that we've Adam we have of service sure month do think to Bridgerton of every and to Project and constantly. the a and have course, make got an that, that's

definitely higher a of penetration definitely feeling markets we're sure. we're users, So in heightened for of the feeling levels level and those competition of

improve to do and each those we're continue to what And so things. doing just we've of got

the of first Now improve competitors this how Well, things improving years, things have big of years our that a doing it. you few we've XX been We've been at that's all at so over for less about I like all, look than time doing But do content? decade. we've it, movies. last been been

world. struggling releasing the movies the ago, we're Today, years most we market the little to few were art most on out-monetize and films. some popular watched of a in Just

content. Notice the that's like Look over Just Adam Don't Red of of last months, things improvement of on that. and Project, just and the few as line few examples in years one And Up

years original X Ultimatum, now growing and kind And big right Sunset, unscripted. X unscripted we unscripted ago. and universes, is Too growing brands world, large, didn't To Selling We universes. around made Handle like unscripted that's really Another the unscripted Hot about today, -- are popular creating these of these original

a are from about television. market. we've I Game. in Korea. Everybody producing the things world. thrilling in original Ultimate point about no content content slew And And and to Us It South Game, the Dead. All Korea. So in of like few And think come we probably years a the long my just knows new ago, of there's show was were D.P. our know we way And all fans and original of the Squid members Korea our contents while biggest Again, history about Beastmaster, around is. Squid are in pretty a

Bridgerton, something lead constantly a Squid a in those to or moments can to that continuing like Game we're So constantly. getting improve

Douglas Anmuth

it. Got

recent to still in How lot of place price I basically there's that was it's I I you early of Greg, here. was that churn know to in did more of a little mention the slightly this I But could this effect guess, -- want increase from just U.S. a you kind factor? elevated hoping being bit confluence Okay. a about But what mean I U.K. XQ. you talk are currently? pricing the much to I -- received have go -- trends price increases, in how guess taking is primarily the just

Gregory Peters

Yes.

are the price generally we've as over price last the last the several as changes So the seen we've done, top changes line performing several years. price that is changes,

sort no difference of there's performance. fundamental So in

First are price changes these of all, there -- significantly revenue-accretive.

an transitory. that's markets, sometimes impact heuristic. In top-level see in we see some a are important acquisition. effects So we And a marginal blip Often, also on churn. these

members, the effect we're us that we're But and takeaway move us vast more in them, of quality that our sort back back. amount value great bigger investing is pay through I what big those stories, pay recognize they variety more content our folks So the of higher to it say into a and them to it's asking change incremental majority we programming. more of the win would of to entertainment films, members and back

So for ensure we desires, on set that every of that different range in it's level. making plan while that continue people consumer different hard broad deliver across needs But that we say good we've very group accessibility to have and a we're serve consumer focused generally what I sure features country price retain be been and working would of of at we a to the doing. with we to sort of service -- points a doing also entry also plans

place. we're So keeping we've and of plan sort no major in the got there, that changes

Reed Hastings

And related...

Spencer Neumann

One thing, Reed. ahead, just go --

Sorry.

Reed Hastings

as who And consumers of advertising followed way fan have big has But of consumer with lower Greg the lower a bigger on that, is fan the of get they the been simplicity on that, would complexity spread. to like And a I'm great choice. of much who low-end of to advertising sense. to that those of I've advertising-tolerant what And fan prices the are price and lot and want a a and makes a I'm have allowing Related subscription. against advertising. spread have price know to done work one price plans increase Netflix

year you keep So of figure lower or open Spence, us that's choice. trying with going? something the to quite even we're X. looking to consumer advertising out as want at think a offering now. to as over We're do prices next But

Spencer Neumann

up really to on That just clear point, want slightly I about price due our perhaps sure QX Doug was not on elevated talked the relative going when but your performance and on expectations. be was increases. I'm to point My to want to point follow churn I is quite tactical. to our

So some reasons Europe, out, I the the we little the saw macro said, margin. other strain slight of expectations. bit played for competition of We mentioned, strain on increase Central as Eastern with our some price uptick in seasonality maybe and consistent the a and that just in saw some of Greg

Douglas Anmuth

advertising, on little list, pulled it Reed, on forward so there, to down further want last do the point, pricing. Okay. me but you a was just I one get to but

Given pricing change the about is a that written and on these about in power? letter, all factors long-term to view talked there you've your

Gregory Peters

I our And an more adding say way would our cycle that our I we're view to about virtuous Reed unchanged. again, that us in actually general And in have But that or why finding seeking how more. priority keeping whatever. think value, is in our sort that's of we a to no that. spread works opportunity wider, process in have spread target don't been even that explore want is ads the we shift or mentioned. going, take again, and We've that exciting for that potential big we through markets fundamental ways that thinking

Douglas Anmuth

Okay. All right.

So to let's ads... shift

Theodore Sarandos

Doug, would to related to that our continue people view unchanged. find do to valuable. be content just creating ability that long-term that directly And incredibly our is just the I add that's to And of

Gregory Peters

and there's we long history reach deliver TV for a that love of deliver content that continue as and also a if people pay those advertisers across there's being long to of and willing film audiences. engagement, right? that history And value, to entertainment Reed to people If can games and said, for decades, it trying

on monetize drive it believe can then so entertainment over we deliver as of long kind that value. we that value So we time and

Douglas Anmuth

Okay.

if past, of incremental the well lower are would the the But you as least potential has you I in on very kind a advertising, to pursue at way? So I of to ad-supported an how out? key perhaps not the terms there things the little that talked model lower-priced of important. get the bit think also Has that think, of ad-based product tier, you profit guess, do the been you've need kind simplicity to view on about, what tier. roll it take in were changed? And certainly, the And long seeing and Reed, along I preserving

Reed Hastings

Yes. It's And some installed once are. not you take an we've quite short-term a as that a got a happy with plan fix lower-priced base are option, they probably offering big consumers where it. because ads start

material it market years of that think of being over don't all definitely, it And have you volume. the of ad of potential, terms in online to as information So now, people phase to. a has advanced. And in about terms the the would in profit incorporate you used couple

So be and a other ad-matching data can of we all have about do publisher and the the straight people. people integrate fancy all

So of then a really monetized our way again, of great a stay we in experience and that that by range offer and focused companies on first-class service. different creating can out be members getting that who

Douglas Anmuth

be And a you it. it along? is that something few to kind test would Got to small it think out and start would markets fair then move in of

Reed Hastings

We're pretty a have not doing figured that I opposed test it just advanced, works, in probably don't get clear it. companies it's not out do Disney of we have all for working do or think is to that as it's maybe lot but think HBO sure it did it. I and that it Hulu. figure that out. I'm no, those we'll it. it it and doubt

But Hulu. like at plan we'll it it layer, I a be again, really is get in. So would think

have also. as So you to And lower consumer. that if and we're also the you'll you able a you're going want still would that's -- you if pay be a to rather cater price to option, ad-tolerant, ad-free

Douglas Anmuth

Okay.

you slate could And gears back Stranger slate the Ozark, How maybe series, includes Let's about thinking as bunch that returning XQ of half little XQ? a Things, Umbrella hit in Elite, content. more the also shift Academy. a are you talk about bit if like to Ted, well.

Theodore Sarandos

Yes.

some our in Frankie, longest-running back-stack final It's up home said before season the from Things that X our throughout a excited in and finale Gray excited are fan Gosling. about. start we Out Ozark, feature how later have month we're really because episode they story a and of excited build really about proven Things excited like And great The be XXXX the how is like is Season coming the for a Each super season QX us, delays movie we've And it. this Knives about, had Ryan ran had obviously coming season does up -- the brands We're not our in really think super-sized film. I with is show, going event that phenomenal. it that -- an we going of new the those Emmy of that's it's of fans we're and lot favorite, why incredible of builds way. which award-winning of half. feels course, the to landing that's Stranger the new -- really We're it and year, back-stacked, cut are the creatively through a in films XXXX. success set was big -- X, a also I'll up the it and as incredible for So Stranger with Man episodes X us action the that up up we of new who Season into the to with, brings killer, Grace big coming really but big quarter. fantastic brothers, Russo it later with always wrapping COVID quite

think 'XX, be will was the we confident, better 'XX in 'XX. better and So than slate upcoming and in is than more it 'XX. And impactful we're better impactful and more

-- So fantastic, it. the really and we're has we're been really content excited about flow

Douglas Anmuth

And you follow-up on, mentioned... just to

Theodore Sarandos

there. international obviously continues say, forget, run Elite for content, as our to you really not should season X, a great know, us I

Heist France; from of the as a on Cube, The excited great from international new of output film Western our A from that's the all All Sy, from Japan, Omar and a Heist: content front; of well. really Korea, about Quiet territories movie really called First great version Love, slate we're that from Money Korean new fantastic. a Money coming have up, Germany, We Takedown,

Douglas Anmuth

with Things as increasing content last Ted, that the number I -- proliferates, into streaming you've full into providing this all years. there's series around parts. the you And splitting of done guess once. like of different season feels Stranger debate value a stickiness at few over and of mentioned the a it

seeing how So of just has of given kind your two evolved these curious more are into parts broken about thinking series here, we that essentially.

Theodore Sarandos

Splitting But had led found practical is and the was Yes. some seasons to actually both. what a which seasons. delays those all that COVID of of the we of like reason projects kind the us before, splitting that fans kind

able in X So experience. a follow-up nearly for a that binge satisfying last X being or long to anyway. people new split Things being gives months really experience deliver able those years season coming who then more after Stranger the few really the of season than want binge them one is versus, it satisfying some in to cases, And a

for were well. we're high-quality like mini split batches deliver experiences really a in so or can our the of really also both in great And -- And case had additional really shows. the of unscripted of the Ozark, kind both being these binger the so of way, episodes, halves able in when success as satisfying we've viewer to one-at-a-time it you had season

than giving to binger time. also X true week great week episode the to by a X doing watch every at been X So and a more them episodes still has to

Douglas Anmuth

slower to of cash in more or manage lean You've further costs pull differentiate to a this spending likely talked In sub content are $XX to you of growth, about the back around to offering? period billion year.

Theodore Sarandos

and of continue to at relative to the in continue Look, though, to years in think, is we making the slate bang market. XX important I focused invest -- content. think years. the most We and there that the And content variety prior look ourselves our the the the be we've to we're grow of on to continues I the to spend in content, our now, done we've impact the general, sure should to in And for -- the impact the more what's able relative what grow. And quality and got get buck we slate. of will relative very to, both

Spencer Neumann

revenue how what slower be growth, this Yes. year. And margins, operating period of we're we to manage roughly to guided going We're business. in has line point, revenue slowed. to Doug, the in in during the obviously, to going that We this with about terms of we talked for growth protect letter, our responsible

'XX. but we're spend revenue of prudent the terms spend, our smart into for noncontent XX be growth does and reflect growing next but to to content roughly the our still both full of some still on on growth that -- and trying years, year operating pulling back spend holding business. of about of some for we're that and of our long-term spend investing of which next opportunity, for aggressively that months, pulling it in But we're to growth realities we're margin, the XX, it presumably, mean to the So guidance kind that call the operating back the X across

Douglas Anmuth

it you're period, of this see more to year couple until years just next get like basis only points it over clarify, multiyear many over So really growing in saying a been now, per sounds to thinking bigger subscribers years, of but not the way. year, the obviously, for were XXX going kind that you we because you've flattish a

Spencer Neumann

Well, we get subscribers We'll are get growth. revenue revenue kind be primary. going Again, to engagement going. of also

revenue we that. reaccelerating levers growth. that be we do have believe growth, So primarily there will But to multiple subscriber

improve service, confidence grow layer engagement, high about things to like continuing advertising an talked talked grow the adding have sharing We obviously in as perhaps and We about. revenue. we monetizing

So our reaccelerated, get confidence revenue gradually of our to that commitment revenue. first to margin we accelerate that high then our let's growth grow pace operating continue have will margins. When the have about we But talk we do, acceleration. also we let's and

Douglas Anmuth

And next does for the flow Spence, cash flow. XXXX is that as year mean kind near at couple looked free mean free over all certainly of term sustainable of sizable of the like and cash I then and years? kind what first of of

Spencer Neumann

Yes, continues. and that

cash into free that all going said, this business continue the with as our I years going prudently flow stakeholders. expectations managing our build we'll the we're for we're, and year, positive in be to of on the So year, consistent We'll forward.

expectation. planning still what maybe. Spencer, that's don't I So add you our that would if to That's know, towards. we're

Spencer Wang

No, I think you hit it head, right on Spence. the

Douglas Anmuth

Okay. India I wanted to little bit. a about talk

prices plans. December pointed cable a across India cut that $X is certainly month. in you've around You in But significantly out

Just as incremental subscribers? terms been And of those you seeing behavior has Do response from view like. changes some curious maybe you still in what are those what early the revenue-accretive? of

Gregory Peters

the added point, we've last Yes. the I to months. would your over similar say, subscribers the behaving last subscribers incremental to XX are largely

doing an team really that titles. titles fundamental of bunch not content, stimulated incredible bet audience level, is really, were revenue top it was things. saw to which we down and there we're And those specifically got about we think the of have And that opportunity terms And work how on coming difference. slate the about So of these there. Indian the long-term Ted's model by some fact was valuatory the a see a we this sort to was is the excited and thought a for maximization, in that broaden

that those titles content. and titles coworkers, subscribers that take have the of and sort flywheel And And to enthusiastically of in positive so we their their momentum will on friends, about they we've another that will folks their an talk where sign-ups. the to those to additional is will those lead family, that seen will now get hold bet enjoy definitely see that that bump effect

Douglas Anmuth

more market? about and And on the point little elaborate bit in guess, this Ted, I content just kind how just you fit thinking India at you're of the in product overall can a

Theodore Sarandos

as prices The Yes. product incorporates to and ability subscription well willingness pay. and fit

in in have we nice uptick engagement seen a India. So

taking in definitely the right it So we're direction.

Douglas Anmuth

I a little to about want talk bit. gaming Okay.

genre past I discussed TV it characterize think, in beyond how the of you Reed, next perhaps the beyond as film. I'm far. so you've your and curious progress content would

Reed Hastings

Greg successes, I'm nice has our team built, to really happy a and interactive about. provide with I'll some to gaming be with had which what We've members experiences. have big talk the capacity able

film. I entered frankly, than we when So faster building we think capacity, we're did

that's So encouraging. very

be able to great the you've creative been know-how these make the gains. and excited, really So build some and seen doing to acquisitions to up small chops we've

Gregory Peters

-- Yes. to... And do want just you to pick sorry, it Doug, up

Douglas Anmuth

ask I owning I forward. and sure versus M&A takes licensing appetite and you're for around it's the the IP what puts is going. what going was going just was kind just of where further are to

Gregory Peters

of on experience, interplay that now how we're and fans between around are those, road make form But with models. modes have physical don't have animated value game would card enthusiastic and initial a to we And able produce in a an both series is thinking building the of if of strategy with a to our animated capacity magnify say, Kittens we're organically build this to familiar sort and game. part a which both doing I as open film Sure. an very both key capacity. it's I from the these through that fun to We're our members acquisition, as we're game to from it the be internal games titles IP. of well But learning side trying think games this every around about interplay assembling series map that helpful. more IP. X did some recently of we card we're do unlock that's series our that where to long the you between are just really sort we we've super about we're but that with the an the step from early there's the both. of to and which and for you're more sort And going different licensed we'll And we the is got, day head members. then launch going sort an to Exploding of a But getting -- titles interactive know the of announcement glimmer the value for this both can -- with bring a game,

So X a situation. it's equals like then X X hopefully X and then plus X and

those sort folks very that's got we it. on be multiyear going that, really because we that we've have we the be capacity deliver specifically key on can focused there. opportunities So vision think And see development behind the obviously the of to that is internal to

Douglas Anmuth

perhaps there benchmarks in far? in that budget? And even you or are And the to terms provide around to you so that are any numbers can see of milestones what gaming metrics more or need lean content here

Gregory Peters

we're that we're and about it. the thinking top-level priority very focused provide certainly us, can for I it's it. And on framework a

that the to line, bottom both so back And games through reflecting we think delivering into business and members and acquisitions. value about

to so and drive and sign leading aiming retention primary people sort we're it. any sure out titles those that conversation both to film that Engagement well. delivered, that making then investment to of have very obviously, And that to very, and that title we're buzz, So we we're carefully. of on looking business value think it how the create that to indicator the is series more for in have about calibrated the service side, want sort land, and of that enthusiasm we make and value up retention is getting for similar obviously that we're that we in at as given of

work that's together understanding our good so the sure it for we can signs a that around out, and scale and And to go got those sort ramp value. and making building figured function that delivering the metrics we're So that of investment. us have the really want how work the of fitness we we've it's sort that of we're doing

Douglas Anmuth

but they're around shares Netflix to X pre-COVID back were also back they Ted, same years XXXX. of are level to, ago, nearly course, in the Okay. at levels,

continue could you the talk maybe So great ability about talent your just within to to company. hire

Theodore Sarandos

market. for and the they on culture from much join deliver and believe more Netflix of movie satisfying away that this because when near transactional move Look, and to move really they into business and kind in vision consumers Netflix, that deliver could think the the join I the of long-term audiences be into business big people a look television

One is, the things of example, do way what can I of say world. we the is by around would

much unrivaled ecosystem our and which unprecedented creative are executives, risk-tolerant for over more kind something creates that and than content like do Our Squid an that -- Game to or players the global and for enables is to teams like of collaborative. a this world, at much They Lupin more all ground, notoriety the are it the on or are our local La world, Casa counterparts empowered. bring point. pretty much exist, it's de are all our more ability executives, ground And the on to business their they're is Papel to over

users, as close going that something at In that the now. sales got to. through see including bunch of look very penetration, factors TV penetrated term, get working be long broadband a works to people Netflix. think we're right to slow the like who and down, short highly the the term, exciting and in things term, that be And long I long-term temporary, you've to that as There's those got And that we're term short long, long and houses. we So a that you've at all a smart story everyone to term. is, the that household macro

really than of does come everyone know on it. play. through that's to great I But And been yes, see up, feels and a side side other come think couple to of I and of going knowing in more the out the So great man, everyone that they come for the out And I've these. we'll been moment. other is on it long the XX And years feel here have don't it.

Spencer Wang

have we questions, two time last Doug, for please.

Douglas Anmuth

-- to for just wanted I content to back a minute. Okay.

attention lot to a with of X To Formula driven You've Survive. Drive

there, is How thinking Given and sports? shifting doing NFL, films. media sports topic, certainly things a more related frequent perhaps are to are at here obviously how you success intentions around all? about your There's the rumblings NFL

Theodore Sarandos

our So expand content look look, we we verticals constantly. --

look We're at game to as to I service, think it I something of us, enjoy. adding something a example because path members fits the really us games new great the brand-new for down For going our nicely.

we're world Survive value. an In culture, that we're We've path. about, stream we build worlds other games. profit of you taking adding our to by that sports-adjacent -- stories the big big existing can going very mentioned, We're coming revenue of Drive sport example keeps excited we Why think with consistent that have as and tremendously. folks tell can the and bet Formula as really we've this it, up. And quite business sports. in a that the profit to and we down -- by growing. of are sure ability Our incredibly adding Other and sports To incredible the you X: and programming stream also members that the trying grown meantime, and golf gone are tennis build and so skill not our kind an set others we're add and documentary

a see we to we stream I'm big sports, but So have would not to with a saying path big growing revenue do and a profit stream never would it.

Douglas Anmuth

content close from Reed, Has past this the the company very operational out. more anything some or just created XX-plus view, in cultural perspective, either very And then over functions? a unique, within to in just Okay. years. around changed culture your you've of acquisition successful the

Reed Hastings

Yes. at for the North going year, what's I look excellence. fixed excellence. culture look to hopefully, we at We drive as every thing. mean don't as getting Star it The changed is some better. We

we content-centric. original more expanded around of made bunch world. so And as adjustments adjustments we've a become the we've We've as made

is again, journey. we're tactic a the and excellence, goal then improving. culture And that So a is always in

Douglas Anmuth

all. Thank you Great. Okay.

Spencer Wang

close Ted, this you to Reed, out? did want

Spencer Neumann

negative our the growth. revenue our tactical one Hey. close not just out, reaccelerate, we revenue. will Can adds. earlier, going QX. that they be when a I down guidance, sure tactical there read-through but Doug, year not to guide adds growth be net sure but before Doug? full thing mentioned to have say make end we're And in expecting reaccelerate should expect. We're million not us full as a talk we one just will thing read-through a there's paid negative to didn't to make in thing, want there's add I that We QX before want I of to strip year, the X there's paid I net what of X steady about just how to we growth million and not net negative paid year from adds -- And providing a grow

price of stronger a As half we talked into seasonal back get slate. the the We away get to the further big year, of the about We period. from Ted increases. get stronger some

that's that sure not full about understood you though even full to think year, we're want make year just I guidance. the as So providing

just it. get to we Sorry, didn't

Reed Hastings

guidance. Always good to nonguidance provide that

Spencer Neumann

you. Thank

Reed Hastings

at one. great We're by a got out super We always a we've to world. streaming, and gone of the we've It's team. we grow around significant mentioned, last through is the going years, When look a Ted and margin out. in continuing exciting. like this one XX one by lot We lead figured figure them to changes, streaming

improve. really coming out So we'll Over side, we Ted. sure this in look But of foundational as a to have I'm our you, the opportunity at bunch journey. pretty other continued to

Theodore Sarandos

well migrating all about is we keep with we head-to-head that I businesses. -- that of us always folks streaming, today now be some us day players legacy really and while as through have remind been competing you and had That's reminder who said, our models, add competition, compete have they're of more head-to-head legacy struggling to they're with some competition. to the talking would since tough their to their that And business manage first only Yes. Reed. a players

at in the every I that just side of Netflix success, we of really we're to ago. business. metric years couple everyone in. all that I the I on we're to measure position competitive that revenue, that it the from just shares that competitive like other to a we're coming come out we relative the engagement, profit, I of that at ways this part think those the position that So everybody like excitement, love competitive position moving from. measuring, subscribers, And are want I But assure

you show, slate end 'XX. of of in the series with and incredible our encourage comedy coming and at that, an So final longest-running would episodes coming and just Thanks. our and I up up enjoy of the the month incredible show, films to Frankie, Grace Ozark,

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