Top Investor Questions

Our financial goals are to sustain healthy revenue growth, expand our operating margin and grow free cash flow.

We have plans based on concurrent streams, picture quality, and other features, and in some markets, ad-supported and mobile-only plans. See our Plans and Pricing page for further details on our current offering.

The Company does business in over 190 countries and has exposure to over 45 currencies in the normal course of our business operations. Currency movements will impact both the value of our revenues as well as the value of our operating and content costs. Our FX exposure is disclosed in our 10-Q and 10-K filings. In 2023, we commenced an FX risk management program. Our F/X risk management program will allow us to better balance delivering on our near term financial objectives without having to over-react to short term swings in F/X rates (by either immediately reducing expenses and/or raising prices should the US dollar appreciate vs. other currencies). Over the medium term, we’ll continue to adjust our pricing and cost structure as appropriate given fluctuations in F/X. 

In terms of our approach, we’re using standard forward contracts with the goal of reducing volatility in our operating profit. We won’t hedge all of our currencies and are focusing on the currencies where we have the largest exposure and greatest risk/volatility, among other factors. Therefore, we’ll still have exposure to foreign currency movements, but to a lesser extent than without hedges.

In setting financial guidance, we use the prevailing FX rates at that time, adjusted for the impact of hedged currency positions. For example, in April, when we provide guidance for Q2, we use the (1) effective average hedge rates for all hedged currency positions and (2) FX rates at the time in April for all unhedged currencies. We also slowly adjust pricing over time to mitigate foreign exchange moves over the longer term. However, when unhedged currency movements are rapid, they may affect our near term operating margin. We’ll tend to outperform our near term operating margin targets on dollar weakness and underperform on dollar strength.

We care about membership growth, but primarily focus on long-term revenue maximization. We seek to grow revenue because it allows us to invest in more and better content, improve our service, and deliver profits for our shareholders.

We offer several different price points so that consumers can select a plan that best fits their circumstances and needs. Additionally, we periodically adjust pricing as this allows us to invest in the service to better serve our members. We also test different approaches to pricing (including different plans and price points) to better understand consumer demand.

As of 2026, we offer ads plans in 12 markets including Australia, Brazil, Canada, France, Germany, Italy, Japan, Mexico, South Korea, Spain, U.K., and U.S. We have also announced plans to launch ads plans in 15 new markets in 2027 including Austria, Belgium, Colombia, Denmark, Indonesia, Ireland, Netherlands, New Zealand, Norway, Peru, the Philippines, Poland, Sweden, Switzerland, and Thailand.

For an overall view of our original content slate and upcoming premiere dates, please click here.

We’re currently serving an audience approaching a billion people across the globe, and we know our members have a diverse set of tastes and mood states. So, we seek to provide a variety of quality series, films, live programming, podcasts and games - which we acquire through a combination of first-run commissions (both owned and licensed, with a studio production model) and second-run licensing. We continually curate a well-rounded catalog of branded and non-branded content in all key content categories in each country, both in English and local language. We invest in “local for local,” developing shows and films that deeply connect with audiences in their home countries. To achieve this, we have creative teams around the world collaborating with local talent to produce stories that reflect their cultures and interests.

We evaluate the performance of our originals several ways. We look at the impact on acquisition and how many of our members watched each title, which is correlated with retention. We also seek reasonable economics relative to other exclusive content on a cost per hour viewed. We also take into account critical acclaim and awards for our originals and the impact originals may have on enhancing our brand and attractiveness of our service which helps with member growth.

We utilize detailed statistical models to determine the expected value of each title over its licensed period (including hours of viewing, quality of engagement and acquisition impact). We compare cost per hour viewed against other "like" content deals (i.e., exclusive versus non-exclusive, TV versus movies, etc.). We look for high engagement and cost efficiency. For renewals, we look to renew content that performs well (based on hours generated relative to the cost, how much a title was loved, and how acquisitive the title was) and do not renew content where the price doesn't make sense relative to the value generated. We have a good breadth of content so no specific title or set of titles is must-renew.

Given the success we've had with our original series and films, we have increased our investment in this area over time and originals represent the majority of our content spend. We will also continue to license titles to complement our original programming and invest in other content areas, such as gaming. Over the long term, we expect our total content investment to increase.

 We believe great stories transcend borders. There are amazing creators of content from all parts of the world and our global footprint allows us to showcase these storytellers to members across the globe.

Our live events strategy focuses on big, breakthrough events that our audiences will love. While live programming still makes up a relatively small portion of our content spend and view hours, these events typically have outsized positive impacts around conversation, acquisition and viewing value for our members.

Sports is one piece of our live events strategy which also includes a variety of other big breakthrough events such as concerts (BTS The Comeback Live), comedy (The Roast of Tom Brady) and other original events (Skyscraper Live). Any live events we pursue, including sports, have to make economic sense.

We already invest significantly in local content around the world because we believe great stories can come from anywhere and can be enjoyed everywhere. The majority of our members are outside the U.S. and we offer more and more great, authentic, local stories to further satisfy them and grow engagement in these regions. We are now producing or co-producing in over 50 countries and languages with the goal of delighting local audiences. It is well known that Hollywood content travels very well abroad, but we also see that our biggest local language titles also find audiences in many other countries, including the U.S., and can go global as we saw with Squid Game (Korea), Money Heist (Spain) and Lupin (France).

We announced our entry into games in late 2021. We started with mobile games and have expanded to cloud TV-based games, all of which are included in the Netflix subscription. We’re currently focusing on four categories: narrative, party & puzzle, mainstream and kids games. While it’s still early, we’ve seen signs that games can help improve retention.

We use two accounting standards for our content costs: we follow the guidance of ASC 920, Entertainment - Broadcasters, which provides the accounting framework for licensees of films and TV shows as applicable to our business. We also follow the guidance in ASC 926, Entertainment - Films for the costs associated with the production of original content.

We generally license content for a fixed fee and a defined time period with payment terms varying by agreement. The signing of a license agreement to obtain future titles creates a streaming content obligation which we include in our Commitments and Contingencies footnote disclosure in our 10Qs and 10Ks. If the minimum obligations are determinable, the amounts are included in the tabular disclosure. For deals with unknown future output, the obligation is added to the table when the title and its cost become known. Once a title is made available for us to use on our service, a content liability (current for the portion due within one year and non-current for the portion beyond one year) and a content asset are recorded on the Balance Sheet. We also produce content. For productions, we capitalize the costs, including development cost and direct costs. Amounts for both licensed content and produced content are included in "Content assets, net" in our balance sheet. The amortization of content assets is on an accelerated basis, as we typically expect more upfront viewing, and film amortization is more accelerated than TV series amortization. For more details on our content accounting, please refer to this overview.

Our streaming contractual obligations represent content that we have committed to license in the future that will eventually be recognized in our income statement as content costs. This provides us with access to an ample amount of content over the next several years. Other TV networks that enter into multi-year programming commitments (such as for sports rights) have similar obligations.

Yes. We have entered into certain license agreements that include an unspecified or a maximum number of titles that we may or may not receive in the future and/or that include pricing contingent upon certain variables, such as theatrical box office performance. As of each reporting date, it may be unknown whether we will receive access to these titles or what the ultimate price per title will be. Accordingly, such amounts are not reflected in the Contractual Obligations table but they are expected to be significant and the expected timing of payments could range from less than one year to more than five years. Traditional film output deals are an example of this type of license agreement. Once we know the title that we will receive and the license fees, we include the amount in the Contractual Obligations table.

Streaming content amortization is included in and comprises the majority of our Cost of Revenues.

Yes, other content costs outside of content amortization include expenses related to content personnel, physical production, post production, music rights, participations and residuals and overall deals. These are also included in cost of revenues.

Cash payments for licensed originals are weighted more upfront (relative to P&L) and for content that we produce, we fund the production cost during the content creation process prior to the completion and release of the title, when amortization begins. These timing differences can result in content cash payments being higher or lower than content amortization on our P&L in a given quarter or year.

Our cash payments for content can be derived from our cash flow statement. The sum of Additions to Streaming Content Assets and the Change in Streaming Content Liabilities equates to our cash spending on streaming content.

We fund our investments through operating profits and, historically, by raising debt. Given that we are now free cash flow positive, we no longer have a need to raise external financing to fund our day-to-day operations.

We first prioritize reinvestment in the business, both organically and through selective M&A, while maintaining liquidity and then returning excess cash to shareholders through share repurchases.

We expect to refinance upcoming debt maturities. We don’t currently have plans to increase leverage to buy back stock or issue a dividend, as we value balance sheet flexibility.

The guidance we provide is our actual internal forecast at the time we report and we strive for accuracy, not conservatism, in our forecast as under-estimating revenue growth would result in under-investing in content, marketing and other aspects of our business. This means in some quarters our results will be higher, and other quarters lower, relative to our guidance.

Since the early days of streaming, we have partnered with a wide array of companies to make it easier for consumers to discover, sign up, use and pay for the Netflix service. Our partners include consumer electronics device companies, game console manufacturers, pay TV and mobile operators, Internet service providers, mobile device and set top box manufacturers, and brick and mortar retailers (gift cards). Some partnerships include marketing arrangements to increase the general awareness of Netflix and to attract new members. In turn, our partners benefit through customer acquisition, the opportunity to upsell higher value packages of speed/data/content, lower churn and increases in brand affinity. For the majority of these partnerships, we recognize revenue from new members acquired via partners on a gross basis and payments made to the partner as marketing expenses. If a partner bills on our behalf, the associated payment processing fee is recorded in cost of revenue alongside our other payment processing costs. In cases where the price that the member pays for the service is established by the partners and there is no standalone price for the Netflix service (for instance, in a bundle), these payments are recognized as a reduction of revenues.

We have long stated that we compete against all activities people engage with during their leisure time, including, but not limited to, other streaming services, linear television, social media, open content platforms, and video gaming, to name just a few. As a result, the entertainment business has always been and remains fiercely competitive with strong players like the U.S. media conglomerates, large technology companies, and local broadcasters and media companies outside the U.S.

The Company does business in over 190 countries and has exposure to over 45 currencies in the normal course of our business operations. Currency movements will impact both the value of our revenues as well as the value of our operating and content costs. Our FX exposure is disclosed in our 10-Q and 10-K filings. In 2023, we commenced an FX risk management program. Our F/X risk management program allows us to better balance delivering on our near term financial objectives without having to over-react to short term swings in F/X rates (by either immediately reducing expenses and/or raising prices should the U.S. dollar appreciate vs. other currencies). Over the medium term, we’ll continue to adjust our pricing and cost structure as appropriate given fluctuations in F/X.

In terms of our approach, we’re using standard forward contracts with the goal of reducing volatility in our operating profit. We won’t hedge all of our currencies and are focusing on the currencies where we have the largest exposure and greatest risk/volatility, among other factors. Therefore, we’ll still have exposure to foreign currency movements, but to a lesser extent than without hedges.