Netflix (NFLX) 20 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Spencer Wang	Vice President, Investor Relations & Corporate Development
Reed Hastings	Co-Chief Executive Officer
Ted Sarandos	Co-Chief Executive Officer & Chief Content Officer
Greg Peters	Chief Operating Officer & Chief Product Officer
Spence Neumann	Chief Financial Officer
Doug Anmuth	JPMorgan

Call transcript

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Spencer Wang

Good afternoon, and welcome to the Netflix Q2 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. it Doug turn first for I'll question. that, over now to his With

Doug Anmuth

Great of see for Thanks to Great. Spencer. all host today. having again you, me thanks and

and to So, a trends. with talk new recent initiatives, about talking there's about but lot on clearly start let's advertising

and a better-than-expected expected you loss What the slightly quarter, of in about a the little subscribers in X $XXX,XXX. So, did million bit results quarter? lose the to you better at drove

Reed Hastings

well again, all the on single titles, losing around content X of -- we're quarter, service, and Ozark, Doug, Things, of the X a at solely million instead viewing. there the the really thing, of pays Stranger executing Looking Obviously, merchandising, the we're improving say marketing, improving off. do losing side. lots might was lots But talking everything If of we we million. about that Things. Stranger We're

streaming. the working in. looking tempered But less XX is results. how excitement bullish the definitely drivers the later It's Everyone our so course, everywhere. the TV talk are next monetization And end of then, five, by So, And to on then of we'll our over bad very in linear is is about call just that's years, streaming improving. forward, pouring continuing and core improve.

set very for the well So, tough in But some ways, losing X up success. really, next million and calling we're a year.

Spencer Neumann

mean -- as the I'd generally is see is Reed played really quarter I Doug, I to as what business it that. expected, mean you the And said. in just add resilient. remains basically, out

revenue, better the And in world, our minus flow, versus million growth. million the in dollar, with operating it was around terms on I'm multinationals strengthening which we'll US income, line member of than sure talk cash affects X slightly revenue is other then guidance. minus the about So, X

restructuring that If in you income our above guidance. costs, operating for our adjust was

remains cash above Our strong. our EPS guidance and flow was

as expected. generally overall, So, delivering

Doug Anmuth

the going terms base you pricing maybe change of in the How perhaps subscriber all past a has in and a of just over maybe So, in even almost that think churn? and perhaps in do year. perhaps factor you UK about seen the think in XQ Ireland of or adds gross US. some forward tail I rollout and XQ still just the in have terms

Greg Peters

right. That's

Spencer Neumann

ahead. Go ahead, Greg, Go and I'll-- then

Greg Peters

mentioned, And like those what value able the be certainly levels. seeing where more metrics. for that we entertainment seen returned you I deliver Yes, that return far post seen we'll if great we've job which And big we conversation price period experiences Then it five standard slightly pretty price and we over do the seen what typically in the But Okay. response there's at our seen magnifying higher investing have then the kick countries I'll countries. and which into taking those marketing most and we're and churn, the could when United or would last those the the example, content know we'll we've US, historically years and for done we've the to seeing then so, that's positive in around basically net certainly change of But expense. this product you we've change. that the changes, Ireland, significantly take in say more those adjustment are that you a off, so that much UK, is revenue churn to year, we've those mentioned, we ones example, titles. good where States, this what pre-price are that's

So largely, is we've would that expect. and performance historically we as what seen

Spence Neumann

price revenue further part of kind said, see performance is QX increases, always after of of of away -- at and it's expect end Greg churn the we're slight in see elevated the those price terms highly the getting that some the as it positive. So Greg, to We you hit you changes. guide from QX what some on in

markets had net-adds US, big in Ireland, in positive of we price some big some of so increases then why QX had because both QX. early QX. elevated past get that's And parts that UK, rolling churn further we some that, in other the like through you But guidance EMEA, changes, as price we part quarter early see and had paid

Doug Anmuth

Okay.

of So these back as get distance Spence, some you from improve some just them, but half, when the and just think you perhaps factors pull the about you greater mentioned of forward. seemingly of pandemic some

from distance greater pricing, seasonality. mentioned better You

the in XQ? through entire subscriber slate is, the you million half I how think do question why the builds back growth only year? think the X the for for And year. I overall guess adds content and net about

Spence Neumann

whether connected Well, the little some in that of TV that. we of It's around near-term in bit the combination growth like and you least hit invasion inflation talked kind about some the and other world. EMEA well the these the were of factors sharing. as of competition the out, as headwinds growth it's as and the paid at effects knock-on homes the the of business, of subscriber It's parts around of kind and higher a world, macroeconomic -- things it's of as growth well revenue our to numbers Ukraine

to we're get further that. we away and get So things. kind we price these But slate, seasonal working strength stronger as working to we're get to address exactly increases, through of all period, you a still say, from of we

you'll address. And more some but action the to of take to further talked I'm a about we to take little address bit sure we about Some which these actually what have that, of sharing, like to with in paid them talk get time letter. we'll

Doug Anmuth

But in streaming you hold a was different, up? in and more and tougher in and clearly would do business very The XXXX XXXX. broadly Okay. how macro think Netflix recession just general,

Spence Neumann

you want else? somebody it you to me take want Do or

Ted Sarandos

Just to real add quick.

tremendous value. Netflix particularly a I that has important that think consumers it's really tough times economic in see

that value in budget -- and tremendous iceberg add of season content form Netflix. you and see Friday, great the do Gray an of we drumbeat Man, what is coming days, they next we've to that's a take they're it the from that value that Wahlberg this action consumer, movie, just they new the I we're like that's Kevin Things more -- a that an embrace Stranger going -- new but enormous with XXX new have see. of to think adding Obviously, And Cobra wait this tougher the Hart like big So XXX to even Mark bringing they this premiering big for season can't from love people impact would This in on franchise, the go to quarter, going normally to to steady then spend economic saw money premiering and Netflix. got go on be of the enormous And consumer and out amount to Me film Time movies up can't addition Kai. a a times. so will the and the at tip for that

Greg Peters

service entertainment world provide price extend touch. great is sort current especially points consumer, sure accessible bit, is our but great an try of range say, I pro to that around ad-supported to to will just the get years the I I that the little of come. And in offering environment. a would to the we'll think of extension of to prices increase I'm in service, that sure accessibility a wide to entertainment make a it Netflix even think value. mean this a in a we that that range is Great We is that want of sure to keep that, value. consumers make We and

Doug Anmuth

ahead. go And -- just to build just at lastly, on, Spencer, risk the of

it. You'll hit Go on for it.

Spence Neumann

cycle, to much. little it a because I a go forms at as also be been cycle folks zoom at bit you Also, perhaps There's recession economic resilient tends escapism, of business think, more bit every the that entertainment well, the have economic if it is going don't stickier. in-home TV Doug, fairly entertainment bit out to just increases out cycles, -- just business, was most downturns. add, tends if least And different. past level provides. Pay don't resilient to of at Sorry, US, a to subscription be as and in you the as I entertainment a value look and of a I look as obviously, over

pretty you. want for that and don't take we for hopefully granted, that's monitoring but a context to closely, we're So of helpful bit little

Doug Anmuth

helpful. That's

like? on talk around early your update today. the gears, to shift think experience what's about what talked everybody's let's look advertising, then, will And early -- which a products -- clearly add about on Can minds. available more also thoughts XXXX. us said, you about you've So, I ad TV Reed, there? the Some Netflix you timing, an give on than better making

Reed Hastings

That's question for here. a Greg great

Greg Peters

Yes.

be taking an is then just the extension experience an we of innovation-oriented the historically as looking think we quality and about and discovery consumer-centric very choosing sort we we're and great that we've it's about and which also things think of the think at of think to we've side. started in innovations And experience. done, think I I this two that one streaming view, in to whether how led how customer

a have So years -- in to period we real we of opportunity that think iteratively. through here a

want Run what an take I approach, we're model. to call Walk, iterative set the say, the I’d is at to Crawl, going expectations So this we onset

we but to, addressability over opportunity there's look, that to familiar around them. experience characteristics think beginning, like and So DNA and with advertisers things ad-supported that with, make that consumers, and of provide offering, as a an enabling will who leverage for tremendous the what of to bunch have sure measurability one, experience incredible for provide as looks a well sort we're the to brands incredible at innovation it choose that what you're time, a who for good we of like elevating job take also us but to want an doing that those work

that the got couple of which that at pretty that our you linear a all experience and after lines lines an innovation when years, over of DNA, we'll on deliver stakeholders. think But into there's all experience a the offering, of of way we of partners the technical go. that the I the we we're scale fundamentally up, ad I'm that of we've sort different support is lined a I inquiry, of can that of iteratively that So as from look think get optimistic supports piece, bunch going in

Doug Anmuth

Microsoft taking that you have Maybe partners the interest. say talk a you here as are at key you more this well? They're looks when lot referring stage. that mean, to lined I advertisers a up, you obviously what early could Greg, And of like about one, already

Greg Peters

what a -- on think lot is titles, I to team wanted great for consumers in our them, think and companies that the they've holding excitement with advertisers. incredible also because been holding of agencies, Yes. the with early -- experience We've a brands content seen agency for Ted's a I discussions And for connect there. out we perspective and putting share was it's

a you when advertising think frequency what's we're degree about high So see a of the great noticing experience, ad of we alignment kind there. caps,

So it's because I I've there, that basically a optimism is my and for enthusiasm, alignment sort increasing of to parties get got involved. the to all excitement out that this win-win-win that think going be

Doug Anmuth

So you we'll do how be on your time? -- sold will build early And to in terms exclusively the over Microsoft more own deal, sales desire ads think of your force about of out by Microsoft?

Greg Peters

Yes.

offering So all of will that ad-supported our are on Microsoft. come the through ads served

mentioned is them. But which exclusive complementary a bunch the go-to-market partnering what was, technical innovation leverage, capacity, flexibility there's this that ours, component we in very partnership that So we fundamentals. reasons be orientation liked a was got to They've of it But with of, need for key before. a we're important there about us. arrangement to sort I an of Microsoft, capacity, a with that's which one and that that will of

and much, the opportunity both so as go-to-market experience is. to is what and technical capacity approaching collaborate together the to And and to they think, approach the also very this are what I work evolve an

lots got flexibility and work to time. over that So we've evolve of together there

Doug Anmuth

Okay.

down range view, of, you to plans the a long-term on percentage happen across anticipate kind And terms of of ad-supported the what switching tiers tier? perhaps of But you be have do members trading do will what and a subscribers ad-supported tier? in might have already prices. You

Greg Peters

ever there's that some Yes. consumers. know that up never that Netflix. And actually folks those signed are have sensitivity consumers -- I would for we around say, in general, of price

variety of for Some period time cancel decided are members and of of for that were to a a folks they them for us reasons.

ad-supported Some offering, range those a be a currently for but of credentials, the that of wider through using think, price broader to paying members account to are members. bringing we're they're a are set folks prices of another all, right? us those because facing Netflix, watching represent I lower So opportunities consumer attract able

that's subscription of optimistic It's and look think there. better And run on quite Microsoft, to of the our when obviously. advertisers brands, is consistent part monetization side at ad-supported that that's for the pricing even for models So goals make we with see kind the to economics our than comparable general work the talking wide and that the and us, unit we to would to range for plans. consumers. that We complement good very great the the we maybe we're or of what offering, non-ad, subscription-only equal monetization that

economics also monetization. reach that and a think from is, we the So unit to perspective, but member this on again, expansive neutral positive

great for -- that's us business obviously So from a perspective. for

Doug Anmuth

basic a this about thinking single And tier plan? should essentially below the be we as

Greg Peters

that ultimately get a one I the choose over generally, more had to offering offering period inform that inform plan going discrimination model structure. that best that features would to. dimensions we've say, consumers of to the better, will what we time, this of would our making going think more say, from been because that of into our that good, And have we're core is would complicated our thinking has I slightly

consumer as can want we're keep a be model. adds, we right model there'll want perspective. thinking one we a But be as from of there dimensions. more no So about to will And little we pricing complexity facing bit while those obviously, that there, also into work and the it to simple ads

terms in flows overwhelming an we on-ramp, without happen, into the those to the planned how selection, work iteratively build complexity over we upsells time, of So so want that for making consumers.

Doug Anmuth

Sure.

take about about How essentially with tier? that long advertising to or the think -- you perhaps how gap And levels it timing? do current level. close you how long And get perhaps on monetization to arm could getting talked helping Okay. ad ARM current the above

Greg Peters

sort of roll the this and those I out subscribers about as more how timing on of think we sort more how offerings. we build ad-supported

countries. this component is a of So,

explore over So of more sort we in markets and obviously, more monetization, confident the we'll in the of we're next first then that launching sort feel mature tiers ad countries have time. ad the countries of

perspective dimension But say quite that's we're a from strong. is initial getting the would and response So of growth. that I brand advertiser a

on that confident more unit have sort of the So, at are grow to this these least into good. we that are plans, we be feel going economics initially quite we as and quite subscribers overtime --

the building much we're So, we so substantial we to is don't that, start think it sort of see side volume this then total as total CPM total call can is relative that amount and this we those plans of small period again, but a our actually the sort in of be on And revenue. to to more going revenue of over mix, grow of building it, time. amount

Spence Neumann

of on ad-free not a are build like all going key, to Netflix. think this I all It's sudden, Netflix that's is is to advertising going join Doug, that overtime. folks

both think, supply/demand, in our opening up as favor works probably as between to members. geography I our aperture so, well the And

Doug Anmuth

Okay.

takes potential there in of having letter product talked to it maybe You for and But some overall overall what likelihood and the business? you versus margins certainly ad about the certainly a is puts could bit current and member talk and the little about means growth the profitability. drive then the Spence,

Spence Neumann

profit this is both better about accretive we as our said, Greg our And across as as as way. I'd we -- in ways do as can say, advertising as it do as revenue-accretive Doug, as monetize well members, a sharing these we've example, overall, are an grow a way -- initiatives paid this advertising, these talked believe and well viewing can is, focus both. to

incremental we to to economic out As obviously -- pretty and think pretty advertising works, a But to believe, costs we -- a we have side, can as of paid the to near-term impact incremental lot get at the roll business. a -- we revenue, that not once a level, soon has solution unit there's Greg probably on income that incremental solution more a neutral And some of we that. out for sharing that and then that some operating against that so positive manage gate. said, the there's go we expense

business. a a years more build trajectory it's have our the to accelerated impact on for but build But -- of So slower kind to and material return multiple to 'XX the over a business. is revenue across XXXX to focus out

Doug Anmuth

Okay. a to some Along viewing through you can help incremental about been lot perhaps original side discussion your also, a Maybe what to clearly us those think Netflix to content licensing with providers to done that of advertising. lot renegotiate needs there's of content. how and around through of the lines, monetize But be on deals understand costs? comes those -- needs

Spence Neumann

wanted Ted, you to?

Ted Sarandos

Yes. people include in tier can we Today, the watch vast what the majority of today. ad-supported on Netflix,

experience. additional are of the that holdback the the all if there too, things If I material have some we -- the not members a And But we looking we're we're some we on. -- the business. think would that so don't studios today, So, great in in content, clear certainly conversation to product it's launch but will it. with don't ad, a but

Spence Neumann

nice Doug, must-have. a it's but a not have, to certainly It's

clearance As can we launch Ted says, be And today content hopefully, any can rights. we without do. what disciplined in that, we'll supplement we additional but

Doug Anmuth

it. Got

did choose other Microsoft potential Why you partners? over Okay. ad

Greg Peters

those to They've to a in fundamental, ads. made components before, care and we the we basically around really mentioned the characterize of for data privacy, alignment and would premium to things, basic they've is TV, fundamental as, to next stakes, we of I some over lot bunch us their is They market things TV the we it commitment were at got table what new sort about try in interest pieces, levels, technical which high I got working really You ecosystem I But a with degree need. say -- ads innovating the a what a connected that of strategic space beyond us. saw go-to a and was would create in know, years components several strong need. protection which that

advertising quality important, let's And seen both of perspective sort that's of very the of I part consumer the so the we've towards make really think because long arc from advertising and of the it pro-consumer, to on of a they there. well their brand as really kind experience and focus strong rather do having than advertiser detracting from what from as goals support need

we them so as of being that saw to we're work and lot alignment with iteratively that excited happen. sort a And just on making of out that, of

Doug Anmuth

And that is to here it years? think significant commitments some revenue fair next are the guaranteed few there over

Greg Peters

I specifics of the -- to would not terms into go we're the any the say of going of deal the deal.

Doug Anmuth

where look, be sure what gaming, But strategic a this try I'll elements time? I'll it Can can is can get. other broader? -- advertising? perhaps more. over not -- involve the of one beyond more Okay. And things deal I'm be cloud, Microsoft, partnership it

Greg Peters

Yes.

there. a of couple So things

all, we as ad Microsoft as picked partner. an think First great to of because they're our be ad going partner we

We're So that was on, Amazon and the about criteria how to that thought relationship. choice partnership mentioned, and was inform with them, our we cloud. that used we really the excited haven't changed about super you

partner as AWS our changed there. infrastructure our on essentially cloud haven't focus We

Microsoft. we've done with -- have also stuff we other So

things that. We opportunities for Microsoft look like work with well. with sort go-to-market We'll other continue to as as do those exist of with partnerships, they and on companies them

think the ads of But on say like doesn't at So about great this end deal this should day. a foreclose I that. about partnership would you was anything the

Doug Anmuth

Great. Okay.

a So little about shift bit. talk gears, sharing let's account

yesterday in a efforts put across out than to countries your slightly that announced monetize five in expanding March. but first markets kind account new of the sharing post LatAm different you implementation in three a You blog

on Just different you're few here implementations these months forward. curious and over about just what early going last you've thinking learned how these

Greg Peters

Yes.

technical to put is -- of to capabilities something see they sort and this stuff years We've rubber now And how of building of it's to get the been almost front and all, out, actually the excited behind the the to in I'm rolled where excited in scenes the to of we road. this First consumers for sort react. working get get stage. two meets

it stop Essentially, more little forms that So we've two ask but as little pay that of a different similar additional was the bit more first member add they to for much share a bit not with those got expressed. so sharing them just a you to model models, of in both sharing. and pay the deployed consumers members. And to are we

is we're model the additional little add second additional an more with pay a trying the and homes. to share The bit home account

we're as going that. to next plan getting what more. that deployed. consumers. we call point, we'll in approach, this we'll would are year it, the I So can to planning. am what while quite these we a really, That's learn daily reason for tracking were every day time confident learning that more seeing, a we're the we'll just we learn sort increasingly see approaches, that And on works we've this in had place. on at say obviously, we're have that something of we the based of lot what I on based at sort deploy And basis second so say early well We're trying from obviously point on would it's to different is I

Doug Anmuth

legitimately Okay. members you're that's And for whether from who addresses here of can the ensure limiting technology home, or using that some paying device perhaps ID other not talk you or or are access things? you're about that just traveling to IP away

Greg Peters

the reasons this working we've one some on we were And quite is in time the been those Yes. because building capacities of background.

a lens signals model. of through But consumer-facing is stuff, what of of sort we're happening. then understand that the it the and putting implementations technical mostly variety are these and -- So network through

legitimate that. to example use as personal phone different And two generally, a around we're the things device approaches your using so you use model go is your cases. in And world, a into mobile these that slightly travel supports of trying like PC, good But of have each that, characteristics. lean consumer-friendly

legitimate So, entertainment supporting paid we're where at those cases, for getting doing when asking home way delivering as folks that or household job also business reasonable outside good a that smooth little as and for of of very model trying extra to sort happen, we are can bit with we that transition users balance really business. consumer a the that monetization but in consumer considerations a making use what it to a make choice to pro-consumer, make we're that sure is we're that think of a practical of --

are we're So, better managing obviously figure and different different which things of those to approaches going that's sort why out that trying to in point. these is work balance

Doug Anmuth

and Okay. of in And need there benefits -- Or are think also not timing with I some here, tier the do Does have sharing doing said, it that? is kind advertising up you to to of is strategically important account rollout? lining you XXXX. kind Or you?

Greg Peters

a on value with both We're of range frankly, consumers, ads especially the because pursuing and that independently value to business plan we to the there's wide prices. think

through who folks value them great quite get that There's that they But a from and motivate of the are that ads to we own that being is able what's about borrowing sort able folks of Part to and bit Netflix think now. value, much plan. give part entertainment to segment. and as to viewing segment, be be we the them ad happens encourage obviously, to up we're point. sharing the of them, of Part price of pay just about part when that and their is offer great nudge That's getting because little this independently of seeing see a more that to didn't So, of range pursuing to sign them convince less may we to them have get sharing. lower a synergy push plan. on as to a --

Doug Anmuth

Ted, promise. going we're I talk right. to All about content, Okay.

So, and time a how back how obviously, into a with of series maybe bit thinking all-time all half. Things, about little debut your Go English best in content you're for talk you the XQ bit. can about Stranger ahead. things it performed

Ted Sarandos

really Yes, that back and heads like that that job and look belongs titles to this hits a do we do is delivering still and the been fantastic hit with think at of Stranger world. new on keep the I TV content hits we doing able these group, which I phenomenal continue be heights, back think to have Bejar, could to top who Bill to surpassing such really around teams to records and Bridgeton biggest hits months, a phenomenal is XX I our to kind out. Man, really of really killing in of an team Scott I'm come Again, going Friday kind call what, have and Game. back release film Things And to and proof all Squid team, last which films Gray that progress. out his the Stuber it. at of, it's this because think put unbelievable of point can sign

a back, Adam will Project again, where Notice year, and think of back Man join the most Gray the And I and creators work but to teams this great I lives. Look Netflix, of not them a just for is Up period. working on with Don't to around platform as back and think to their best do and this teams the testimony really -- think to world, to these movies the create the popular of kind is that I that is among Red

are among watched happened really the shows which performance. on about original be for most coming our been nominated Emmy's year, this we've including the lot drama Netflix that's a been pleased three nominees, our says pleased best output. the out, work to So We've ever. shows of with XX with which

that So pretty and gratifying they pleasing could the and combination. tough crowd award fact be winning is pretty a

Spence Neumann

for later week, delivering. be again share engagement drive they're of quality because time an is ever the team Star we've letter US it. the and driving North using viewing monetization around to as of, kind horn team's the to, engagement, reporting Netflix, And which which driving and the X.X% as been, is really and which Ted in referenced growth example, the the the highest market we member we to and going what this is Nielsen And then can screen is testament to

Doug Anmuth

that All Hopefully, mind a early. that little gave they you won't right. number

let's for title back Okay. you've the for perhaps past? go approaching Ted, how Gray minute. are this the movies the On to other differently some that had Man of versus big you a -- marketing in

Ted Sarandos

I lot there. Well, a seen it out of think you've

one on of projects because marketing I is focus -- attract marketability based mean think Gray we've that world. conversation the why audience. a spend and This very the that Man to lumpy, lot the broad a our created and excitement lot really certainly are of titles of is they a members our on to done going bit themselves. trying is a to that's the those around movies

campaign; think the hit one of I've date, pretty ground So marketing -- there marketing straight She new point the running the the that -- she's And doing Man. came from Marian I phenomenal in with is of Things would you'll remarkable to actually Lee, to She with out, our was US. strongest campaigns spend inside back Gray ever the aggressively. job. want Netflix. best Stranger I seen. I a running see our She to campaign out up CMO,

doing So these around conversation a ton bolster I think these campaigns to projects. are world really around the

your you, just but to friends enough to with watch not too. it's get to So also watch,

along folks So the it bring helps in conversation.

Doug Anmuth

ways that can best for Things with breaking franchise there additional viewing Stranger all we shows you engagement leverage record can Are that content? time, series build other your to talked which and take about. drive with debut you of out So to learnings that

Ted Sarandos

of important in that spent is because time And think the spent well. made -- everything Netflix we're I engagement on as in to such did put be Look, Netflix, the else when thing something matching metric you and the to exposed phenomenal time mean come team such and come is relevant and you're the to most you an such -- a job to doing bound of you're audience exposed you're to that front you Greg product Yes. to love. going

You in mechanism. kind of the it that post-play also targeted see

to to next going the got that I Netflix. So you. use choices that watch watch find And anxiety once on what you of you've you're the folks great thing time and am of in of getting one to second front couple a episode get through tool that last great all next, of

pretty more you'll when rewarded So more great audience watch, you it's in where a that the find think great the things. I it's

we We we is Gray that think a got but to Man The constantly, only that do that, pays expect it deliver I Things back off. So Stranger a should on pays not people off. Doug. really really back. that get can just get idea We that to

Doug Anmuth

do in scale? content Ted, Because forward? significant you're how around on And anything basis. you an Does content the out driving a that clearly of content going and high-quality lot your change releasing balance annual process both

Ted Sarandos

it's competition is intensified quality Look, I been has focus think the intensified. always as and there, on

in picking the I and great to I great content great that win and and with It for to the teams really episodes for working important audience great. So feel decisions. working span through -- to working And go result think the with we've people is movies sequels think on with and one and tightly creator the the you're can focus seasons X,XXX is, most want multiple life of really people our or comes got great lives to generally great who content output just makes that create shows. of the or that its on great TV

from making enables that doing or teams, today done is way ground, behind beginning we're wouldn't California, the the And has scale. think do for on If decision-making always in I've this that teams the that that decision-makers to truly on all in I in yet. ever today original one one we sure. it to that thing the do distributed three quality, that the kind and is the Scale our what thing going what able we're to it of doing we're be So two is no is to bottleneck said scale. the among focus else the or -- decision-making for content country thing do

Doug Anmuth

Okay.

of want that and probably then reined come and spending as So we be the to about $XX it investors, billion find continue the talk half of grow about there's more to kind past and to them bit. of to And about other little this of go in to content, you down And the for kind in support thinking half more globally. billion for Spence, year. a actually you've maybe you're to update $XX that XXXX. to that can content some talked kind spending hits how wants

Spence Neumann

lot life. a Have have have more, less, We walking lot into Doug. a one our more

Doug Anmuth

think hear spending about that do content How going forward? you I you.

Spence Neumann

I maybe, in. Well, it. you sure. And can Ted, take chime

year, to billion said, about you this spend spend expecting we're content $XX cash As on Doug.

As we look few say, ZIP forward, of about XXXX, the code. years, right next couple we're probably the in

most sheet X, portion Netflix moved years over that content the assets producing about predominantly content XX% So through of for own the It's we where cash-intensive pretty business last largely. content. and cash balance to transition and originals transition -- XX produced original our -- big a on come we've our of are the us

that's that. cash transition. choppy. a come bit is been little a through And So also content We've then spend pretty big

So as that talent could including into out wave. some bit through available. quickly COVID COVID. of as went things, of we production we We've in We were could, we coming was got when a when

pulled XXXX that cash So and forward in XXXX. some spend content

when probably couple generally, few that years, growth in in also, we a said, were And we expense. in right as work look we content place. ZIP us we'll code, just trying next our be moderating around say I'd of good through So which out to the puts

and we direct to adjusted members. or in the our business over expense originals content our more we've decade highest moderated continue satisfaction And for for it's revenue. of being spend our in gotten smarter can grow, will our we impact, to where the a think but lot growth as So highest last most impact we the for as so

roughly know of either if that's one we're I the how way. about happy. about them makes So it it. don't happy, thinking makes That by

Ted Sarandos

look, right distortion today, in get would But murky. code, general, we I COVID about it like Just right of that are think in ZIP kind that said, kind we little spend Spence of we're as that half I make ZIP the the years in two last And a agree. where think the are to and say, I spend we way in code. them. to that we're of the we

Spencer Wang

give to just Doug, two you you think to a Reed, I for more sense, But we want something. time have questions. add about

Reed Hastings

view? about COVID your the Ted, Stranger did much maybe costs production X just Things an in how as example, inflate talk

Ted Sarandos

in. particular as and the size scope the affected and young and cast probably any shot that multiple of much of the as the show Well, was production locations because we

a was sure to expensive show deliver on make that burden it we So could it. the very

the cast that to being careful the restarting catalysts on shutdown of early One the long with extremely of it season production a stalled of splitting the of produce lot and and of And in show was show? that of in half the was, early production because took how COVID.

it's at out So get impacted more it were. it episodes But it financially a even might of again, I -- our of again, was lot it. if top, got than a did and off the couple you all, extra other projects of think

Spence Neumann

it's more think that. at X% to to was down lower, about efficiency of spend it that that's so maybe of of now, kind is the worked And higher, way started broadly, COVID, overall various our kind numbers these were, overall times, on throughout that a was obviously smaller COVID-related on it significant. XX% of of costs kind spend we And our big but much drag

Ted Sarandos

that across X% overall all And an production. wasn't

than Some of lot them others. more impacted a

Doug Anmuth

sure course, margins flow. make talk about cash to want of I and, free operating we Okay.

year, I this So changes those first XX% were operating think for margins, and January I provided. from also think about FX the numbers but talking you're ex-restructuring to XX% when then Spence,

there? a So context maybe little more you can just provide

Spence Neumann

Yes.

our we basically guidance. are to we So, our had margin call, when holding

the the 'XX calls. year So at the on QX beginning of

start in as holding what and we manage impact started to. said So, kind XX% FX, we're to the growth. swings operating said And before we saw already margin slowing -- given to of a revenue XX% to still year, revenue maintain slowing growth, we that's major to we're we going this of going we're any launched and

the moves, the we restructuring We're throughout year, we've and expecting this of mentioned restructuring. $XXX the also year. not So FX more million got costs

So and it what's and our 'XX. into to for baked we're holding that's margin guide holding it, to similarly

So to basically, guide. reignite we're revenue that saying we're growth, margin flat holding until we

healthy very overall, you when -- growth. look side, it -- was we're at So revenue underlying mean tracking the operating currency XX% it's revenue constant I metrics.

guiding we're XX%. to quarter This

obviously, XX% the in US a major kind and full -- on what can control we work year Next operating best in of the to can that margins operate read-throughs a year strengthening of you can to is this But range the a just and our we quarter, next. the of see XX% for we the to kind as through as outlier, dollar need and meantime. for similar and

Doug Anmuth

XXXX, flow. free strong free so cash kind really first of your cash flow, of And year Okay. on sustainable

some puts talking that? are for or the 'XX? billion You're what about the about around year. you takes substantial $X in key thinking does so How and of And mean growth

Spence Neumann

the roughly Well, than $X it more will be billion.

the we numbers swings big again, no provided in major assuming again, kind FX. So of are additional

next that this spend through more We're substantially business. also the minus We $X that kind the roughly few So We're of of our million cash-intensive hopefully, you to XX. three plus we've the a kind positive a XX will as we've year. to operating continue hundred as guiding next of of flow year. year, levels what in last or last in grow extraordinary in free of seen think most billion, months, given before. It's seen to said moves content combination similar transition cash we of that six than say, of we're But years. about cash

little In of fact, XXXX, we spend as XXXX. bit cash we said, into a pulled forward

are those of working So our we things scale the to kind favor as in business. continue

these specific little want up as to then through kind flow to assume So number in it start meaningfully various I don't put kind those be work And revenue down of expect and out ramping terms things of reversion but then operating cash accelerate bit there's road. we will All generation we our global on margins do again. a accelerating growth currencies. of hopefully, And the there, more. a what of obviously,

Doug Anmuth

but close maybe with Okay. content And half. And the are about know sure or what Man each for other lot good there's a we if out you back of in everybody to of things. then I'm want excited don't Gray it's I just not, most

Ted Sarandos

it's has mind-blowing. Gray Friday, recent coming advantage sure and this Man a Well, it on for is because

Spence Neumann

our from great Ozark super content on for things I've Doug, executives that excited heard I'm For X. one. me,

for that anticipating me. definitely So one

Greg Peters

beat what current there. which I'll is punch season. me Umbrella to going go to currently the you I'm great watching, flip which X. Academy, a to Ozark Spencer, I'm is But back

Spence Neumann

out. it soon. I it hearing really let I'll just I I've throughout that, just Reed and I'm am everyone looking hallways, to the catch Woo. great -- Stranger going I I'm to through and finished watch Extraordinary jump been in and Attorney Things from excited to forward things close up.

Reed Hastings

great going documentary I'm and Paulin we because Michael in series. be to about a Halucigenics trouble watched just

Spence Neumann

your Changing mind.

Ted Sarandos

million TV a lot, Thanks hundred Thanks. Doug. serve we film, only and around people Billions and streaming them. few the of of love a world

enormous. for growth is here opportunity the So

through headwinds and have last through a formats lot and company We this navigated of the entertainment Remember, them. this right team are has through years. in some navigating we now, XX-plus We've models seen have of of We've change entertainment economic business go. grow competition. through kinds to come through come and levels of go, we all conditions all managed and them all seen and and

love, the going and make we to and people films the Doug. young this as long industry. as that to confident super a that and we're continue TV So lot, the Thanks series exciting we're games lead

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