NETFLIX INC 10-K

Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Our management, with the participation of our co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Netflix have been detected. (b) Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework). Based on our assessment under the framework in Internal Control—Integrated Framework (2013 framework), our management concluded that our internal control over financial reporting was effective as of December 31, 2024. The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report that is included herein. (c) Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 29 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Netflix, Inc. Opinion on Internal Control Over Financial Reporting We have audited Netflix, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Netflix, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated January 27, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California January 27, 2025 30 Table of Contents Item 9B. Other Information Rule 10b5-1 Trading Plans The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for the three months ended December 31, 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), were as follows: Name Title Action Date Adopted Expiration Date Aggregate # of Securities to be Purchased/Sold Greg Peters (1) Co-CEO and Director Termination 10/30/2024 N/A 187,913 Greg Peters (2) Co-CEO and Director Adoption 10/30/2024 11/1/2027 158,583 David Hyman (3) Chief Legal Officer Adoption 10/29/2024 1/30/2026 104,154 Ted Sarandos (4) Co-CEO and Director Adoption 10/25/2024 2/27/2026 199,063 Spencer Neumann (5) Chief Financial Officer Adoption 10/29/2024 12/31/2025 33,406 Ann Mather (6) Director Adoption 10/31/2024 12/31/2025 2,682 Strive Masiyiwa (7) Director Adoption 11/7/2024 12/31/2025 2,813 Jeffrey Karbowski (8) Chief Accounting Officer Adoption 10/29/2024 1/31/2026 3,820 (1) On October 30, 2024, Greg Peters, Co-CEO and a member of the Board of Directors, terminated a pre-arranged stock trading plan pursuant to Rule 10b5-1, which was adopted on July 26, 2023 and provided for the potential exercise of vested stock options and the associated sale of up to 187,913 shares of Netflix common stock until November 1, 2027 or the earlier completion of all authorized transactions under the plan. (2) Upon termination of Mr. Peters' prior plan (described in footnote 1), on October 30, 2024, Mr. Peters entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 that provides for the potential exercise of vested stock options and the associated sale of up to 158,583 shares of Netflix common stock. This figure includes a grant of 31,112 Performance Share Units (PSUs) that are expected to vest during the term of the 10b5-1 plan, which are assumed to vest at 100% of the target award amount. The actual number of PSUs that may vest can vary between 0% - 200% of the target award of PSUs, subject to the achievement of certain performance conditions as set forth in the PSU award agreement, less shares to be withheld for tax withholding obligations. The plan expires on November 1, 2027, or upon the earlier completion of all authorized transactions under the plan. (3) David Hyman, Chief Legal Officer, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on October 29, 2024. Mr. Hyman's plan provides for the potential exercise of vested stock options and the associated sale of up to 104,154 shares of Netflix common stock. This figure includes 2,174 PSUs that are expected to vest during the term of the 10b5-1 plan, which are assumed to vest at 100% of the target award amount. The actual number of PSUs that may vest can vary between 0% - 200% of the target award of PSUs, subject to the achievement of certain performance conditions as set forth in the PSU award agreement, less shares to be withheld for tax withholding obligations. The plan expires on January 30, 2026, or upon the earlier completion of all authorized transactions under the plan. (4) Ted Sarandos, co-CEO and a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on October 25, 2024. Mr. Sarandos' plan provides for the potential exercise of vested stock options and the associated sale of up to 199,063 shares of Netflix common stock. The plan expires on February 27, 2026, or upon the earlier completion of all authorized transactions under the plan. (5) Spencer Neumann, Chief Financial Officer, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on October 29, 2024. Mr. Neumann's plan provides for the potential exercise of vested stock options and the associated sale of up to 33,406 shares of Netflix common stock. The plan expires on December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. (6) Ann Mather, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on October 31, 2024. Ms. Mather's plan provides for the potential exercise of vested stock options and the associated sale of up to 2,682 shares of Netflix common stock. The plan expires on December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. (7) Strive Masiyiwa, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on November 7, 2024. Mr. Masiyiwa's plan provides for the potential exercise of vested stock options and the associated sale of up to 2,813 shares of Netflix common stock. The plan expires on December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. (8) Jeffrey Karbowski, Chief Accounting Officer, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on October 29, 2024. Mr. Karbowski's plan provides for the potential exercise of vested stock options and the associated sale of up to 3,820 shares of Netflix common stock. The plan expires on January 31, 2026, or upon the earlier completion of all authorized transactions under the plan. Other than those disclosed above, none of our directors or officers adopted or terminated a "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 31 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Information regarding our directors and executive officers is incorporated by reference from the information contained under the sections “Proposal One: Election of Directors,” and “Code of Ethics” in our Proxy Statement for the Annual Meeting of Stockholders. The Company has adopted an insider trading policy which governs transactions in our securities by the Company and its directors, officers, employees, consultants, and contractors and is designed to promote compliance with insider trading laws, rules and regulations applicable to the Company. A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.1. Item 11. Executive Compensation Information required by this item is incorporated by reference from information contained under the sections “Compensation Discussion and Analysis” and “Compensation of Named Executive Officers and Other Matters” in our Proxy Statement for the Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item is incorporated by reference from information contained under the sections “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our Proxy Statement for the Annual Meeting of Stockholders. Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this item is incorporated by reference from information contained under the section “Certain Relationships and Related Transactions” and “Director Independence” in our Proxy Statement for the Annual Meeting of Stockholders. Item 14. Principal Accountant Fees and Services Information with respect to principal independent registered public accounting firm fees and services is incorporated by reference from the information under the caption “Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm” in our Proxy Statement for the Annual Meeting of Stockholders. 32 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements: The financial statements are filed as part of this Annual Report on Form 10-K under “Item 8. Financial Statements and Supplementary Data.” (2) Financial Statement Schedules: The financial statement schedules are omitted as they are either not applicable or the information required is presented in the financial statements and notes thereto under “Item 8. Financial Statements and Supplementary Data.” (3) Exhibits: See Exhibit Index immediately following the signature page of this Annual Report on Form 10-K. Item 16. Form 10–K Summary None. 33 Table of Contents NETFLIX, INC. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 35 Consolidated Statements of Operations 37 Consolidated Statements of Comprehensive Income 38 Consolidated Statements of Cash Flows 39 Consolidated Balance Sheets 40 Consolidated Statements of Stockholders’ Equity 41 Notes to Consolidated Financial Statements 42 34 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Netflix, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Netflix, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated January 27, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 35 Table of Contents Content Amortization Description of the Matter As disclosed in Note 1 to the consolidated financial statements “Organization and Summary of Significant Accounting Policies”, the Company acquires, licenses and produces content, including original programming (“Content”). The Company amortizes Content based on factors including historical and estimated viewing patterns. Auditing the amortization of the Company’s Content is complex and subjective due to the judgmental nature of amortization which is based on an estimate of future viewing patterns. Estimated viewing patterns are based on historical and forecasted viewing. If actual viewing patterns differ from these estimates, the pattern and/or period of amortization would be changed and could affect the timing of recognition of content amortization. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the content amortization process. For example, we tested controls over management’s review of the content amortization method and the significant assumptions, including the historical and forecasted viewing hour consumption, used to develop estimated viewing patterns. We also tested management’s controls to determine that the data used in the model was complete and accurate. To test content amortization, our audit procedures included, among others, evaluating the content amortization method, testing the significant assumptions used to develop the estimated viewing patterns and testing the completeness and accuracy of the underlying data. For example, we assessed management’s assumptions by comparing them to current viewing trends and current operating information including comparing previous estimates of viewing patterns to actual results. We also performed sensitivity analyses to evaluate the potential changes in the content amortization recorded that could result from changes in the assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2012. San Jose, California January 27, 2025 36 Table of Contents NETFLIX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year ended December 31, 2024 2023 2022 Revenues $ 39,000,966 $ 33,723,297 $ 31,615,550 Cost of revenues 21,038,464 19,715,368 19,168,285 Sales and marketing 2,917,554 2,657,883 2,530,502 Technology and development 2,925,295 2,675,758 2,711,041 General and administrative 1,702,039 1,720,285 1,572,891 Operating income 10,417,614 6,954,003 5,632,831 Other income (expense): Interest expense ( 718,733 ) ( 699,826 ) ( 706,212 ) Interest and other income (expense) 266,776 ( 48,772 ) 337,310 Income before income taxes 9,965,657 6,205,405 5,263,929 Provision for income taxes ( 1,254,026 ) ( 797,415 ) ( 772,005 ) Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 Earnings per share: Basic $ 20.28 $ 12.25 $ 10.10 Diluted $ 19.83 $ 12.03 $ 9.95 Weighted-average shares of common stock outstanding: Basic 429,519 441,571 444,698 Diluted 439,261 449,498 451,290 See accompanying notes to consolidated financial statements. 37 Table of Contents NETFLIX, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year ended December 31, 2024 2023 2022 Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 Other comprehensive income (loss): Foreign currency translation adjustments, net of income tax (expense) benefit of $( 7 ) million, $ 0 , and $ 0 , respectively ( 247,949 ) 113,384 ( 176,811 ) Change in unrealized gains on available-for-sale securities, net of income tax (expense) benefit of $( 1 ) million, $ 0 , and $ 0 , respectively 2,511 — — Cash flow hedges: Net unrealized gains (losses) 921,227 ( 120,023 ) — Reclassification of net gains included in net income ( 96,795 ) — — Net change, net of income tax (expense) benefit of $( 246 ) million, $ 36 million, and $ 0 , respectively 824,432 ( 120,023 ) — Fair value hedges: Net unrealized gains excluded from the assessment of effectiveness, net of income tax (expense) benefit of $( 2 ) million, $ 0 , and $ 0 , respectively 7,113 — — Total other comprehensive income (loss) 586,107 ( 6,639 ) ( 176,811 ) Comprehensive income $ 9,297,738 $ 5,401,351 $ 4,315,113 See accompanying notes to consolidated financial statements. 38 Table of Contents NETFLIX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 Adjustments to reconcile net income to net cash provided by operating activities: Additions to content assets ( 16,223,617 ) ( 12,554,703 ) ( 16,839,038 ) Change in content liabilities ( 779,135 ) ( 585,602 ) 179,310 Amortization of content assets 15,301,517 14,197,437 14,026,132 Depreciation and amortization of property, equipment and intangibles 328,914 356,947 336,682 Stock-based compensation expense 272,588 339,368 575,452 Foreign currency remeasurement loss (gain) on debt ( 121,539 ) 176,296 ( 353,111 ) Other non-cash items 494,778 512,075 533,543 Deferred income taxes ( 590,698 ) ( 459,359 ) ( 166,550 ) Changes in operating assets and liabilities: Other current assets 22,180 ( 181,003 ) ( 353,834 ) Accounts payable 121,353 93,502 ( 158,543 ) Accrued expenses and other liabilities 191,899 103,565 ( 55,513 ) Deferred revenue 77,844 178,708 27,356 Other non-current assets and liabilities ( 446,351 ) ( 310,920 ) ( 217,553 ) Net cash provided by operating activities 7,361,364 7,274,301 2,026,257 Cash flows from investing activities: Purchases of property and equipment ( 439,538 ) ( 348,552 ) ( 407,729 ) Acquisitions — — ( 757,387 ) Purchases of investments ( 1,742,246 ) ( 504,862 ) ( 911,276 ) Proceeds from maturities of investments — 1,395,165 — Net cash provided by (used in) investing activities ( 2,181,784 ) 541,751 ( 2,076,392 ) Cash flows from financing activities: Proceeds from issuance of debt 1,794,460 — — Repayments of debt ( 400,000 ) — ( 700,000 ) Proceeds from issuance of common stock 832,887 169,990 35,746 Repurchases of common stock ( 6,263,746 ) ( 6,045,347 ) — Taxes paid related to net share settlement of equity awards ( 8,285 ) — — Other financing activities ( 29,743 ) ( 75,446 ) — Net cash used in financing activities ( 4,074,427 ) ( 5,950,803 ) ( 664,254 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 416,331 ) 82,684 ( 170,140 ) Net increase (decrease) in cash, cash equivalents and restricted cash 688,822 1,947,933 ( 884,529 ) Cash, cash equivalents and restricted cash, beginning of year 7,118,515 5,170,582 6,055,111 Cash, cash equivalents and restricted cash, end of year $ 7,807,337 $ 7,118,515 $ 5,170,582 Supplemental disclosure: Income taxes paid $ 1,641,530 $ 1,154,973 $ 811,720 Interest paid 674,502 684,504 701,693 See accompanying notes to consolidated financial statements. 39 Table of Contents NETFLIX, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) As of December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 7,804,733 $ 7,116,913 Short-term investments 1,779,006 20,973 Other current assets 3,516,640 2,780,247 Total current assets 13,100,379 9,918,133 Content assets, net 32,452,462 31,658,056 Property and equipment, net 1,593,756 1,491,444 Other non-current assets 6,483,777 5,664,359 Total assets $ 53,630,374 $ 48,731,992 Liabilities and Stockholders’ Equity Current liabilities: Current content liabilities $ 4,393,681 $ 4,466,470 Accounts payable 899,909 747,412 Accrued expenses and other liabilities 2,156,544 1,803,960 Deferred revenue 1,520,813 1,442,969 Short-term debt 1,784,453 399,844 Total current liabilities 10,755,400 8,860,655 Non-current content liabilities 1,780,806 2,578,173 Long-term debt 13,798,351 14,143,417 Other non-current liabilities 2,552,250 2,561,434 Total liabilities 28,886,807 28,143,679 Commitments and contingencies (Note 8) Stockholders’ equity: Preferred stock, $ 0.001 par value; 10,000,000 shares authorized at December 31, 2024 and December 31, 2023; no shares issued and outstanding at December 31, 2024 and December 31, 2023 — — Common stock, $ 0.001 par value; 4,990,000,000 shares authorized at December 31, 2024 and December 31, 2023; 427,757,100 and 432,759,584 issued and outstanding at December 31, 2024 and December 31, 2023, respectively 6,252,126 5,145,172 Treasury stock at cost ( 25,953,460 and 16,078,268 shares at December 31, 2024 and December 31, 2023) ( 13,171,638 ) ( 6,922,200 ) Accumulated other comprehensive income (loss) 362,162 ( 223,945 ) Retained earnings 31,300,917 22,589,286 Total stockholders’ equity 24,743,567 20,588,313 Total liabilities and stockholders’ equity $ 53,630,374 $ 48,731,992 See accompanying notes to consolidated financial statements. 40 Table of Contents NETFLIX, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) Common Stock and Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balances as of December 31, 2021 443,963,107 $ 4,024,561 $ ( 824,190 ) $ ( 40,495 ) $ 12,689,372 $ 15,849,248 Net income — — — — 4,491,924 4,491,924 Other comprehensive loss — — — ( 176,811 ) — ( 176,811 ) Issuance of common stock 1,383,669 37,588 — — — 37,588 Stock-based compensation expense — 575,452 — — — 575,452 Balances as of December 31, 2022 445,346,776 $ 4,637,601 $ ( 824,190 ) $ ( 217,306 ) $ 17,181,296 $ 20,777,401 Net income — — — — 5,407,990 5,407,990 Other comprehensive loss — — — ( 6,639 ) — ( 6,639 ) Issuance of common stock 1,926,598 168,203 — — — 168,203 Repurchases of common stock ( 14,513,790 ) — ( 6,098,010 ) — — ( 6,098,010 ) Stock-based compensation expense — 339,368 — — — 339,368 Balances as of December 31, 2023 432,759,584 $ 5,145,172 $ ( 6,922,200 ) $ ( 223,945 ) $ 22,589,286 $ 20,588,313 Net income — — — — 8,711,631 8,711,631 Other comprehensive income — — — 586,107 — 586,107 Issuance of common stock 4,872,708 834,366 — — — 834,366 Repurchases of common stock ( 9,861,935 ) — ( 6,241,153 ) — — ( 6,241,153 ) Shares withheld related to net share settlement of equity awards ( 13,257 ) — ( 8,285 ) — — ( 8,285 ) Stock-based compensation expense — 272,588 — — — 272,588 Balances as of December 31, 2024 427,757,100 $ 6,252,126 $ ( 13,171,638 ) $ 362,162 $ 31,300,917 $ 24,743,567 See accompanying notes to consolidated financial statements. 41 Table of Contents NETFLIX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Summary of Significant Accounting Policies Description of Business Netflix, Inc. (the “Company”) was incorporated on August 29, 1997 and began operations on April 14, 1998. The Company is one of the world’s leading entertainment services with approximately 302 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages. Members can play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the content asset amortization policy and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results may differ from these estimates. Recently issued accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. Recently adopted accounting pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The Company adopted ASU 2023-07 during the year ended December 31, 2024. See Note 12 Segment and Geographic Information in the accompanying notes to the consolidated financial statements for further detail. Cash Equivalents and Short-term Investments The Company considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions that it expects to settle within several days as cash equivalents. The Company classifies short-term investments, which consist of marketable securities with original maturities in excess of 90 days as available-for-sale. Short-term investments are reported at fair value, with allowances for credit losses included in “Interest and other income (expense)” in the Consolidated Statements of Operations and unrealized gains and losses included in “Accumulated other comprehensive income (loss)” within Stockholders’ equity in the Consolidated Balance Sheets. The Company uses the specific identification method to determine cost in calculating realized gains and losses upon the sale of short-term investments. 42 Table of Contents Short-term investments are reviewed periodically for allowances for credit losses and impairment. When evaluating the investments, the Company reviews factors such as the extent to which the fair value of the security is less than the amortized cost basis, adverse conditions specifically related to the security, the financial condition of the issuer, the Company’s intent to sell, and whether it would be more likely than not that the Company would be required to sell the investments before the recovery of their amortized cost basis. Content The Company acquires, licenses and produces content, including original programming, in order to offer members unlimited viewing of video entertainment. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to content assets and the changes in related liabilities, are classified within "Net cash provided by operating activities" on the Consolidated Statements of Cash Flows. The Company recognizes content assets (licensed and produced) as “Content assets, net” on the Consolidated Balance Sheets. For licensed content, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. For produced content, the Company capitalizes costs associated with the production, including development costs, direct costs and production overhead. Based on factors including historical and estimated viewing patterns, the Company amortizes the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use over ten years , beginning with the month of first availability. The amortization is on an accelerated basis, as the Company typically expects more upfront viewing, and film amortization is more accelerated than TV series amortization. On average, over 90 % of a licensed or produced content asset is expected to be amortized within four years after its month of first availability. The Company reviews factors impacting the amortization of the content assets on a regular basis. The Company's estimates related to these factors require considerable management judgment. In the normal course of business, the Company, or a third-party producing content on the Company's behalf, may qualify for tax incentives through eligible spend on productions. The accounting for tax incentives is dependent on the particular type of incentive, including the nature of the benefit and the location the incentive is earned. In general, tax incentives are realized as cash receipts and may be received prior to or after a title launches on the Company’s service. Upon a title’s launch, any amounts the Company is eligible for through qualified production spend but has not received, are recognized in “Other current assets” or “Other non-current assets” on the Company’s Consolidated Balance Sheets as receivables. Tax incentives are generally accounted for as a reduction to the cost basis of the Company’s content assets (presented in “Content assets, net”) and reduce content amortization over the life of the title (as presented in “Cost of revenues”) on the Consolidated Statements of Operations. The Company's business model is subscription based as opposed to a model generating revenues at a specific title level. Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed in aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. To date, the Company has not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. Acquisitions The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. In addition, uncertain tax positions, tax-related valuation allowances and pre-acquisition contingencies are initially recorded in connection with a business combination as of the acquisition date. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the expected lease term for leasehold improvements, if applicable. Trade Receivables Trade receivables primarily consist of membership and advertising fees due to the Company. The Company evaluates the need for an allowance for credit losses based on historical collection trends, the financial condition of its payment partners, and external market factors. Revenue Recognition The Company's primary source of revenues is from monthly membership fees. Members are billed in advance of the start of their monthly membership and revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that 43 Table of Contents are collected from members and remitted to governmental authorities. The Company is the principal in all its relationships where partners, including consumer electronics ("CE") manufacturers, multichannel video programming distributors ("MVPDs"), mobile operators and internet service providers ("ISPs"), provide access to the service as the Company retains control over service delivery to its members. In circumstances in which the price that the member pays is established by a partner and there is no standalone price for the Netflix service (for instance, in a bundle), the net amount collected from the partner is recognized as revenue. The Company also earns revenue from advertisements presented on its streaming service, consumer products, live events and various other sources. Revenues earned from sources other than monthly membership fees were not a material component of revenues for the years ended December 31, 2024, 2023, and 2022. See Note 2 Revenue Recognition to the consolidated financial statements for further information regarding revenues. Sales and Marketing Sales and marketing expenses consist primarily of advertising expenses and certain payments made to marketing and advertising sales partners, including CE manufacturers, MVPDs, mobile operators and ISPs. Sales and marketing expenses also include payroll, stock-based compensation, facilities, and other related expenses for personnel that support the Company's advertising sales and marketing activities. Marketing expenses are expensed as incurred and include promotional activities such as digital and television advertising. Advertising expenses were $ 1,779 million, $ 1,732 million and $ 1,586 million for the years ended December 31, 2024, 2023 and 2022, respectively. Income Taxes The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. The Company accounts for the tax effects of global intangible low tax income as a current period expense. The Company does not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. The Company may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. See Note 10 Income Taxes to the consolidated financial statements for further information regarding income taxes. Foreign Currency The functional currency for the Company's subsidiaries is determined based on the primary economic environment in which the subsidiary operates. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in cumulative translation adjustment included in "Accumulated other comprehensive income" in Stockholders’ equity on the Consolidated Balance Sheets. The Company remeasures monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized in "Interest and other income (expense)" in the Consolidated Statements of Operations. Foreign exchange gains (losses) were $( 18 ) million, $( 293 ) million, and $ 282 million for the years ended December 31, 2024, 2023, and 2022, respectively. These gains and losses were primarily due to the non-cash remeasurement of our Senior Notes denominated in euros and the remeasurement of cash and content liability positions denominated in currencies other than functional currencies. Foreign exchange gains (losses) for the year ended December 31, 2024 were net of hedging impacts. No hedging gains or losses were recognized in the Consolidated Statements of Operations in the years ended December 31, 2023 and 2022. See Note 7 Derivative Financial Instruments and Hedging Activities for further information. Derivative Financial Instruments and Hedging Activities The Company uses derivative and non-derivative instruments to manage foreign exchange risk related to its ongoing business operations with the primary objective of reducing earnings and cash flow volatility associated with fluctuations in foreign exchange rates. The Company recognizes derivative instruments at fair value as either assets (presented in “Other current assets” and “Other non-current assets”) or liabilities (presented in “Accrued expenses and other liabilities” and “Other non-current liabilities”) on the Company’s Consolidated Balance Sheets. The Company classifies derivative instruments in the Level 2 category within the fair value hierarchy. Cash flow hedges 44 Table of Contents The Company enters into forward contracts to manage the foreign exchange risk on forecasted revenue transactions denominated in currencies other than the U.S. dollar, as well as the foreign exchange risk on forecasted transactions and firm commitments related to the licensing and production of foreign currency-denominated content assets. These forward contracts are designated as cash flow hedges of foreign currency firm commitments and forecasted transactions and generally have maturities of 36 months or less. The hedging contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange movements, and the Company may choose not to hedge certain exposures. The gain or loss on derivative instruments designated as cash flow hedges of forecasted foreign currency revenue is initially reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into “Revenues” on the Consolidated Statements of Operations in the same period the forecasted transaction affects earnings. The gain or loss on derivative instruments designated as cash flow hedges of firmly committed or forecasted transactions related to the licensing and production of content assets is initially reported as a component of AOCI and reclassified into “Cost of Revenues” on the Consolidated Statements of Operations in the same period the hedged transaction affects earnings, which occurs as the underlying hedged content assets are amortized. Cash flows from hedging activities are classified in the same category as the cash flows for the underlying item being hedged within "Net cash provided by operating activities" on the Consolidated Statements of Cash Flows. In the event that the likelihood of occurrence of the underlying forecasted transactions is determined to be probable not to occur, the gains or losses on the related cash flow hedges are reclassified from AOCI to “Interest and other income (expense)” in the Consolidated Statements of Operations in the period of dedesignation. Fair value hedges The Company designates forward contracts as fair value hedges to manage the foreign exchange risk on its foreign-currency denominated debt. These hedges may reduce, but do not entirely eliminate, the effect of foreign currency exchange movements, and the Company may choose not to hedge the full amount of its exposure. The gain or loss on derivative instruments designated as fair value hedges included in the assessment of hedge effectiveness is recognized in “Interest and other income (expense),” net with the offsetting foreign currency remeasurement gains and losses on the hedged items. The Company excludes forward points from the assessment of hedge effectiveness and recognizes the initial value of the excluded component over the life of the hedging instrument in “Interest and other income (expense)” on the Consolidated Statements of Operations. The difference between changes in fair value of the excluded component and the amount recognized in earnings is recognized as a component in AOCI. Cash flows from hedging activities are classified in the same category as the cash flows for the underlying item being hedged within "Net cash provided by (used in) financing activities" on the Consolidated Statements of Cash Flows. Net investment hedges The Company designates a portion of its foreign currency-denominated debt as net investment hedges to manage the foreign exchange risk on its investment in certain foreign subsidiaries. These hedges may reduce, but do not entirely eliminate, the effect of foreign currency exchange movements, and the Company may choose not to hedge certain exposures. The gains or losses on these non-derivative instruments are reported as a component of AOCI as part of the cumulative translation adjustment on the Company’s Consolidated Balance Sheets. The accumulated gains and losses remain in AOCI until the hedged net investment is sold or liquidated, at which point the amounts recognized in AOCI are reclassified into earnings. Derivative instruments not designated as hedging instruments The Company enters into forward contracts to manage the foreign exchange risk on intercompany transactions and monetary assets and liabilities that are not denominated in the functional currencies of the Company and its subsidiaries. These derivative instruments are not designated as hedging instruments and may reduce, but do not entirely eliminate, the effect of foreign currency exchange movements. The gains or losses on derivative instruments not designated as hedging instruments are recorded in “Interest and other income (expense)” in the Consolidated Statements of Operations. Cash flows related to these derivative instruments are classified within "Net cash provided by operating activities" on the Consolidated Statements of Cash Flows. See Note 7 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Company’s derivative and non-derivative financial instruments. Stock-Based Compensation The Company grants non-qualified stock options to its employees on a monthly basis. For certain executive officers, the Company grants restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs"). Stock-based compensation expense is based on the fair value of the stock awards at the grant date and is recognized, net of forfeitures, over the requisite service period. See Note 9 Stockholders' Equity to the consolidated financial statements for further information regarding stock-based compensation. 2. Revenue Recognition The following tables summarize streaming revenues, paid net membership additions (losses), and ending paid memberships by region for the years ended December 31, 2024, 2023 and 2022, respectively. Hedging gains of $ 124 million are included in “Streaming revenues” for the 45 Table of Contents year ended December 31, 2024. No hedging gains and losses were recognized as “Streaming revenues” in the comparative prior year periods. See Note 7 Derivative Financial Instruments and Hedging Activities for further information. United States and Canada (UCAN) As of/Year Ended December 31, 2024 2023 2022 (in thousands) Streaming revenues $ 17,359,369 $ 14,873,783 $ 14,084,643 Paid net membership additions (losses) 9,497 5,832 ( 919 ) Paid memberships at end of period (1) 89,625 80,128 74,296 Europe, Middle East, and Africa (EMEA) As of/Year Ended December 31, 2024 2023 2022 (in thousands) Streaming revenues $ 12,387,035 $ 10,556,487 $ 9,745,015 Paid net membership additions 12,320 12,084 2,693 Paid memberships at end of period (1) 101,133 88,813 76,729 Latin America (LATAM) As of/Year Ended December 31, 2024 2023 2022 (in thousands) Streaming revenues $ 4,839,816 $ 4,446,461 $ 4,069,973 Paid net membership additions 7,330 4,298 1,738 Paid memberships at end of period (1) 53,327 45,997 41,699 Asia-Pacific (APAC) As of/Year Ended December 31, 2024 2023 2022 (in thousands) Streaming revenues $ 4,414,746 $ 3,763,727 $ 3,570,221 Paid net membership additions 12,203 7,315 5,391 Paid memberships at end of period (1) 57,541 45,338 38,023 (1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members. Certain members have the option to add extra member sub accounts. These extra member sub accounts are not included in paid memberships. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellations, as a result of a failed method of payment, become effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology. 46 Table of Contents Deferred revenue primarily consists of membership fees billed that have not been recognized, as well as gift and other prepaid memberships that have not been fully redeemed. As of December 31, 2024, total deferred revenue was $ 1,521 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. The $ 78 million increase in deferred revenue as compared to the balance of $ 1,443 million for the year ended December 31, 2023, is a result of the increase in membership fees billed due to increased memberships and price increases. 3. Earnings per Share Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the period. Potential outstanding shares of common stock are calculated using the treasury-stock method and consist of incremental shares issuable upon the assumed exercise of stock options and vesting of time-based and performance-based restricted stock units. The computation of earnings per share is as follows: Year Ended December 31, 2024 2023 2022 (in thousands, except per share data) Basic earnings per share: Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 Shares used in computation: Weighted-average shares of common stock outstanding 429,519 441,571 444,698 Basic earnings per share $ 20.28 $ 12.25 $ 10.10 Diluted earnings per share: Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 Shares used in computation: Weighted-average shares of common stock outstanding 429,519 441,571 444,698 Effect of dilutive stock-based awards 9,742 7,927 6,592 Weighted-average number of shares 439,261 449,498 451,290 Diluted earnings per share $ 19.83 $ 12.03 $ 9.95 The following table summarizes the potential shares of common stock excluded from the diluted calculation as their inclusion would have been anti-dilutive: Year Ended December 31, 2024 2023 2022 (in thousands) Stock-based awards 243 4,109 6,790 47 Table of Contents 4. Cash, Cash Equivalents, Restricted Cash, and Short-term Investments The Company classifies short-term investments, which consist of marketable securities with original maturities in excess of 90 days as available-for-sale (“AFS”). The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. The following tables summarize the Company's cash, cash equivalents, restricted cash and short-term investments as of December 31, 2024 and 2023: As of December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term investments Other Current Assets Non-current Assets (in thousands) Cash $ 4,866,753 $ — $ — $ 4,866,753 $ 4,864,207 $ — $ 2,472 $ 74 Level 1 securities: Money market funds 2,676,314 — — 2,676,314 2,676,256 — — 58 Level 2 securities: Time Deposits (1) 301,374 — — 301,374 264,270 37,104 — — Government securities (2) 1,738,642 3,260 — 1,741,902 — 1,741,902 — — $ 9,583,083 $ 3,260 $ — $ 9,586,343 $ 7,804,733 $ 1,779,006 $ 2,472 $ 132 As of December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term investments Other Current Assets Non-current Assets (in thousands) Cash $ 5,988,176 $ — $ — $ 5,988,176 $ 5,986,629 $ — $ 1,466 $ 81 Level 1 securities: Money market funds 925,707 — — 925,707 925,652 — — 55 Level 2 securities: Time Deposits (1) 225,605 — — 225,605 204,632 20,973 — — $ 7,139,488 $ — $ — $ 7,139,488 $ 7,116,913 $ 20,973 $ 1,466 $ 136 (1) The majority of the Company's time deposits are international deposits, which mature within one year. (2) The Company's government securities mature within one year. Other current assets include restricted cash for deposits related to self-insurance. Non-current assets include restricted cash related to letter of credit agreements. The fair value of AFS securities, cash equivalents and short-term investments included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. See Note 6 Debt and Note 7 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes and derivative financial instruments. 48 Table of Contents 5. Balance Sheet Components Content Assets, Net Content assets consisted of the following: As of December 31, 2024 2023 (in thousands) Licensed content, net $ 12,422,309 $ 12,722,701 Produced content, net Released, less amortization 10,151,543 9,843,150 In production 9,317,367 8,247,578 In development and pre-production 561,243 844,627 20,030,153 18,935,355 Content assets, net $ 32,452,462 $ 31,658,056 As of December 31, 2024, approximately $ 6,409 million, $ 2,465 million, and $ 1,431 million of the $ 12,422 million unamortized cost of the licensed content is expected to be amortized in each of the next three years. As of December 31, 2024, approximately $ 3,954 million, $ 2,767 million, and $ 1,718 million of the $ 10,152 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years. The following table summarizes the amortization of content assets: Year Ended December 31, 2024 2023 2022 (in thousands) Licensed content $ 7,689,014 $ 7,145,446 $ 7,681,978 Produced content (1) 7,612,503 7,051,991 6,344,154 Total $ 15,301,517 $ 14,197,437 $ 14,026,132 (1) Tax incentives earned on qualified production spend generally reduce the cost-basis of content assets and result in lower content amortization over the life of the title. For the years ended December 31, 2024, 2023 and 2022, tax incentives resulted in lower content amortization on produced content of approximately $ 899 million, $ 835 million and $ 719 million, respectively. Property and Equipment, Net Property and equipment and accumulated depreciation consisted of the following: As of December 31, Estimated Useful Lives (in Years) 2024 2023 (in thousands) Land $ 85,000 $ 85,000 Buildings and improvements 475,684 154,165 30 years Leasehold improvements 1,026,593 1,032,492 Over life of lease Furniture and fixtures 134,987 144,737 3 years Information technology 446,419 414,092 3 years Corporate aircraft 99,175 99,175 8 - 10 years Machinery and equipment 15,135 10,334 3 - 5 years Capital work-in-progress 228,300 406,492 Property and equipment, gross 2,511,293 2,346,487 Less: Accumulated depreciation ( 917,537 ) ( 855,043 ) Property and equipment, net $ 1,593,756 $ 1,491,444 49 Table of Contents Leases The Company has entered into operating leases primarily for real estate. These leases generally have terms which range from 1 year to 15 years, and often include one or more options to renew. These renewal terms can extend the lease term from 1 year to 20 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. These operating leases are included in "Other non-current assets" on the Company's Consolidated Balance Sheets, and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to make lease payments are included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Company's Consolidated Balance Sheets. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company has certain contracts for real estate which may contain lease and non-lease components which it has elected to treat as a single lease component. The components of lease costs for the years ended December 31, 2024, 2023 and 2022 were as follows: Year ended December 31, 2024 2023 2022 (in thousands) Operating lease cost $ 468,282 $ 430,856 $ 413,664 Short-term lease cost 197,691 207,822 194,764 Total lease cost $ 665,973 $ 638,678 $ 608,428 Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows: Year ended December 31, 2024 2023 2022 (in thousands) Cash paid for operating lease liabilities $ 509,296 $ 451,525 $ 413,034 Right-of-use assets obtained in exchange for new operating lease obligations 442,391 196,639 252,393 As of December 31, 2024 2023 (in thousands, except lease term and discount rate) Operating lease right-of-use assets, net $ 2,102,310 $ 2,076,899 Current operating lease liabilities $ 428,482 $ 383,312 Non-current operating lease liabilities 1,983,688 2,046,801 Total operating lease liabilities $ 2,412,170 $ 2,430,113 Weighted-average remaining lease term 6.9 years 7.5 years Weighted-average discount rate 3.5 % 3.3 % Maturities of operating lease liabilities as of December 31, 2024 were as follows (in thousands): 50 Table of Contents Due in 12 month period ended December 31, 2025 $ 505,201 2026 477,256 2027 415,983 2028 345,912 2029 276,109 Thereafter 696,367 2,716,828 Less imputed interest ( 304,658 ) Total operating lease liabilities $ 2,412,170 The Company has additional operating leases for real estate of $ 38 million which have not commenced as of December 31, 2024, and as such, have not been recognized on the Company's Consolidated Balance Sheets. These operating leases are expected to commence in 2025 with lease terms between 3 and 7 years. Other Current Assets Other current assets consisted of the following: As of December 31, 2024 December 31, 2023 (in thousands) Trade receivables $ 1,335,304 $ 1,287,054 Prepaid expenses 431,924 408,936 Other (1) 1,749,412 1,084,257 Total other current assets $ 3,516,640 $ 2,780,247 (1) $ 653 million and $ 555 million of receivables related to tax incentives earned on production spend are included in Other as of December 31, 2024 and 2023, respectively . 51 Table of Contents 6. Debt As of December 31, 2024, the Company had aggregate outstanding notes of $ 15,583 million, net of $ 70 million of issuance costs and discounts, with varying maturities (the "Notes"). Of the outstanding balance, $ 1,784 million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, 2023, the Company had aggregate outstanding notes of $ 14,543 million, net of $ 65 million of issuance costs. Each of the Notes are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates. A portion of the outstanding Notes is denominated in foreign currency (comprised of € 5,170 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement gain, net of hedging impacts, totaling $ 122 million for the year ended December 31, 2024). See Note 7 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Company’s derivative and non-derivative financial instruments. The following table provides a summary of the Company's outstanding debt and the fair values based on quoted market prices in less active markets as of December 31, 2024 and December 31, 2023: Principal Amount at Par Level 2 Fair Value as of December 31, 2024 December 31, 2023 Issuance Date Maturity December 31, 2024 December 31, 2023 (in millions) (in millions) 5.750 % Senior Notes $ — $ 400 February 2014 March 2024 $ — $ 400 5.875 % Senior Notes 800 800 February 2015 February 2025 801 807 3.000 % Senior Notes (1) 487 519 April 2020 June 2025 487 516 3.625 % Senior Notes 500 500 April 2020 June 2025 497 491 4.375 % Senior Notes 1,000 1,000 October 2016 November 2026 998 996 3.625 % Senior Notes (1) 1,346 1,434 May 2017 May 2027 1,375 1,454 4.875 % Senior Notes 1,600 1,600 October 2017 April 2028 1,607 1,621 5.875 % Senior Notes 1,900 1,900 April 2018 November 2028 1,970 2,009 4.625 % Senior Notes (1) 1,139 1,215 October 2018 May 2029 1,220 1,300 6.375 % Senior Notes 800 800 October 2018 May 2029 848 872 3.875 % Senior Notes (1) 1,242 1,325 April 2019 November 2029 1,293 1,372 5.375 % Senior Notes 900 900 April 2019 November 2029 918 931 3.625 % Senior Notes (1) 1,139 1,215 October 2019 June 2030 1,174 1,237 4.875 % Senior Notes 1,000 1,000 October 2019 June 2030 996 1,012 4.900 % Senior Notes 1,000 — August 2024 August 2034 982 — 5.400 % Senior Notes 800 — August 2024 August 2054 782 — $ 15,653 $ 14,608 $ 15,948 $ 15,018 (1) The following Senior Notes have a principal amount denominated in euros: 3.000 % Senior Notes for € 470 million, 3.625 % Senior Notes for € 1,300 million, 4.625 % Senior Notes for € 1,100 million, 3.875 % Senior Notes for € 1,200 million, and 3.625 % Senior Notes for € 1,100 million. In the year ended December 31, 2024, the Company repaid upon maturity the $ 400 million aggregate principal amount of its 5.750 % Senior Notes. Each of the Notes are repayable in whole or in part upon the occurrence of a change of control, at the option of the holders, at a purchase price in cash equal to 101 % of the principal plus accrued interest. The Company may redeem the Notes prior to maturity in whole or in part at an amount equal to the principal amount thereof plus accrued and unpaid interest and an applicable premium. The Notes include, among other terms and conditions, limitations on the Company's ability to create, incur or allow certain liens, and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company's and its subsidiaries assets, to another person. Certain of the Notes additionally limit the ability to enter into sale and lease-back transactions and create, assume, incur or guarantee additional indebtedness of certain of the Company's subsidiaries. As of December 31, 2024 and December 31, 2023, the Company was in compliance with all related covenants. Revolving Credit Facility 52 Table of Contents On April 12, 2024, the Company entered into a five-year , $ 3 billion unsecured revolving credit facility that matures on April 12, 2029 (the “Revolving Credit Agreement”), to replace its previous $ 1 billion unsecured revolving credit facility. As of December 31, 2024, no amounts have been borrowed under the Revolving Credit Agreement. The borrowings under the Revolving Credit Agreement bear interest, at the Company’s option, of either (i) a floating rate per annum equal to a base rate (the “Alternate Base Rate”) plus an applicable margin or (ii) a per annum rate equal to an adjusted term SOFR rate (the “Adjusted Term SOFR Rate”) plus an applicable margin. The applicable margin for Alternate Base Rate loans will range from 0.00 % to 0.25 %, and the applicable margin for Adjusted Term SOFR Rate loans will range from 0.75 % to 1.25 %, each based on the Company’s credit ratings. The Revolving Credit Agreement contains customary affirmative covenants and negative covenants (and customary baskets and exceptions with respect thereto) for a credit facility of this size and type and requires the Company to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 as of the last day of each fiscal quarter. As of December 31, 2024 and December 31, 2023, the Company was in compliance with all related covenants and ratios. 7. Derivative Financial Instruments and Hedging Activities The Company uses derivative and non-derivative instruments to manage foreign exchange risk related to its ongoing business operations with the primary objective of reducing earnings and cash flow volatility associated with fluctuations in foreign exchange rates. The Company did not use any derivative instruments prior to the fiscal year ended December 31, 2023. Notional Amount of Derivative Contracts The net notional amounts of the Company’s outstanding derivative instruments were as follows: As of December 31, 2024 2023 (in thousands) Derivatives designated as hedging instruments: Foreign exchange contracts Cash flow hedges $ 18,508,390 $ 8,783,273 Fair value hedges 3,819,817 — Derivatives not designated as hedging instruments: Foreign exchange contracts 1,432,136 — Total $ 23,760,343 $ 8,783,273 As of December 31, 2024, approximately $ 1.0 billion of the Company’s euro–denominated Senior Notes was designated as a hedge of the foreign exchange risk of the Company’s net investment in certain foreign subsidiaries. No amounts were designated as net investment hedges as of December 31, 2023. As of December 31, 2024, the carrying amount of the Company's euro-denominated Senior Notes (included in "Long-term debt" on the Company's Consolidated Balance Sheets) which were designated as the hedged items in fair value hedges was approximately $ 3.6 billion. No amounts were designated as fair value hedges as of December 31, 2023. See Note 6 Debt for further information on the Company’s debt obligations. Fair Value of Derivative Contracts The fair value of the Company’s outstanding derivative instruments was as follows: 53 Table of Contents As of December 31, 2024 Derivative Assets Derivative Liabilities Other current assets Other non-current assets Accrued expenses and other liabilities Other non-current liabilities (in thousands) Derivatives designated as hedging instruments: Foreign exchange contracts $ 580,065 $ 406,677 $ 303,425 $ 83 Derivatives not designated as hedging instruments: Foreign exchange contracts 16,211 — 14,492 — Total $ 596,276 $ 406,677 $ 317,917 $ 83 As of December 31, 2023 Derivative Assets Derivative Liabilities Other current assets Other non-current assets Accrued expenses and other liabilities Other non-current liabilities (in thousands) Derivatives designated as hedging instruments: Foreign exchange contracts $ 26,416 $ 4,518 $ 140,089 $ 46,575 Derivatives not designated as hedging instruments: Foreign exchange contracts — — — — Total $ 26,416 $ 4,518 $ 140,089 $ 46,575 The Company classifies derivative instruments in the Level 2 category within the fair value hierarchy. These instruments are valued using industry standard valuation models that use observable inputs such as interest rate yield curves, and forward and spot prices for currencies. As of December 31, 2024, the pre-tax net accumulated gain on our foreign currency cash flow hedges included in AOCI on the Consolidated Balance Sheets expected to be recognized in earnings within the next 12 months is $ 564 million. Master Netting Agreements In order to mitigate counterparty credit risk, the Company enters into master netting agreements with its counterparties for its foreign currency exchange contracts which permit the parties to settle amounts on a net basis under certain conditions. The Company has elected to present its derivative assets and liabilities on a gross basis on its Consolidated Balance Sheets. The Company also enters into collateral security arrangements with its counterparties that require the parties to post cash collateral when certain contractual thresholds are met. Cash collateral received is presented in “Accrued expenses and other liabilities” representing the Company’s obligation to return counterparty cash collateral. Cash collateral posted is presented in “Other current assets” representing the Company’s right to reclaim the cash collateral. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted or received. The potential offsetting effect to the Company’s derivative assets and liabilities under its master netting agreements and collateral security agreements were as follows: As of December 31, 2024 Gross Amount Not Offset in the Consolidated Balance Sheets Gross Amount Recognized in the Consolidated Balance Sheets Gross Amount Offset in the Consolidated Balance Sheets Net Amount Presented in the Consolidated Balance Sheets Financial Instruments Collateral Received and Posted Net Amount (in thousands) Derivative assets $ 1,002,953 $ — $ 1,002,953 $ ( 316,320 ) $ ( 1,800 ) $ 684,833 Derivative liabilities 318,000 — 318,000 ( 316,320 ) — $ 1,680 54 Table of Contents As of December 31, 2023 Gross Amount Not Offset in the Consolidated Balance Sheets Gross Amount Recognized in the Consolidated Balance Sheets Gross Amount Offset in the Consolidated Balance Sheets Net Amount Presented in the Consolidated Balance Sheets Financial Instruments Collateral Received and Posted Net Amount (in thousands) Derivative assets $ 30,934 $ — $ 30,934 $ ( 27,246 ) $ — $ 3,688 Derivative liabilities 186,664 — 186,664 ( 27,246 ) — 159,418 Effect of Derivative and Non-Derivative Instruments on Consolidated Financial Statements The pre-tax gains (losses) on the Company’s cash flow hedges, fair value hedges, and net investment hedges recognized in AOCI were as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cash flow hedges: Foreign exchange contracts Amount included in the assessment of effectiveness $ 1,195,738 $ ( 155,730 ) $ — Fair value hedges: Foreign exchange contracts Amount excluded from the assessment of effectiveness ( 14,334 ) — — Net investment hedges: Foreign currency-denominated debt Amount included in the assessment of effectiveness 32,400 — — Total $ 1,213,804 $ ( 155,730 ) $ — The gains (losses) on hedged items and derivative instruments recognized in the Consolidated Statement of Operations were as follows: Year Ended December 31, 2024 Revenues Cost of Revenues Interest and other income (expense) (in thousands) Total amounts presented in the Consolidated Statements of Operations $ 39,000,966 $ 21,038,464 $ 266,776 Gains on derivatives in cash flow hedging relationship Foreign exchange contracts Amount of gains reclassified from AOCI 124,010 1,629 — Gains (losses) on derivatives in fair value hedging relationship Foreign exchange contracts Hedged items — — 196,660 Derivatives designated as hedging instruments — — ( 201,239 ) Amount excluded from assessment of effectiveness and recognized in earnings based on amortization approach — — ( 23,567 ) Gains on derivatives not designated as hedging instruments Foreign exchange contracts — — 63,291 55 Table of Contents No gains or losses on derivative instruments were reclassified from AOCI into the Consolidated Statements of Operations in the years ended December 31, 2023 and December 31, 2022. 8. Commitments and Contingencies Content At December 31, 2024, the Company had $ 23.2 billion of obligations comprised of $ 4.4 billion included in "Current content liabilities" and $ 1.8 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $ 17.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition. At December 31, 2023, the Company had $ 21.7 billion of obligations comprised of $ 4.5 billion included in "Current content liabilities" and $ 2.6 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $ 14.6 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition. The expected timing of payments for these content obligations is as follows: As of December 31, 2024 2023 (in thousands) Less than one year $ 11,424,696 $ 10,328,923 Due after one year and through three years 8,113,910 8,784,302 Due after three years and through five years 2,809,834 2,016,358 Due after five years 900,491 583,766 Total content obligations $ 23,248,931 $ 21,713,349 Content obligations include amounts related to the acquisition, licensing and production of content. Obligations that are in non-U.S. dollar currencies are translated to the U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements as well as other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant. Legal Proceedings From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company's view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position, liquidity or results of operations. The Company is involved in litigation matters not listed herein but does not consider the matters to be material either individually or in the aggregate at this time. The Company's view of the matters not listed may change in the future as the litigation and events related thereto unfold. Non-Income Taxes The Company is routinely under audit by various tax authorities with regard to non-income tax matters. The subject matter of non-income tax audits primarily arises from disputes on the tax treatment and tax rate applied to our revenue in certain jurisdictions. We accrue non-income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. Similar to other U.S. companies doing business in Brazil, the Company is involved in a number of matters with Brazilian tax authorities regarding non-income tax assessments. Although the Company believes it has meritorious defenses to these matters, there is inherent complexity and uncertainty with respect to these matters, and the final outcome may be materially different from our expectations. The current potential exposure with respect to the various issues with Brazilian tax authorities regarding non-income tax assessments is estimated to be approximately $ 400 million, which is expected to increase over time. 56 Table of Contents Guarantees—Indemnification Obligations In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. The Company’s obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary. It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees. 57 Table of Contents 9. Stockholders’ Equity Voting Rights The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted upon by the Company’s stockholders. Stock Option Plan The Netflix, Inc. 2020 Stock Plan is a stockholder-approved plan that provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants. Restricted Stock Unit Awards The Company grants time-based restricted stock unit (“RSU”) awards and performance-based restricted stock unit (“PSU”) awards to certain executive officers. RSU awards vest quarterly over a three-year period subject to the executive’s continued employment or service with the Company through the vesting date. PSU awards have performance periods ranging from one to three years and vest depending on the Company’s achievement of predetermined market-based performance targets. Stock Option Activity The following table summarizes the activities related to the Company’s stock options: Options Outstanding Number of Shares Weighted- Average Exercise Price (per share) Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balances as of December 31, 2021 17,595,851 $ 219.83 Granted 3,691,257 267.94 Exercised ( 1,383,669 ) 27.19 Expired ( 6,578 ) 11.10 Balances as of December 31, 2022 19,896,861 $ 242.22 Granted 1,729,218 372.49 Exercised ( 1,926,598 ) 87.30 Expired ( 4,372 ) 36.39 Balances as of December 31, 2023 19,695,109 $ 268.86 Granted 575,856 620.92 Exercised ( 4,846,048 ) 172.17 Expired ( 5,915 ) 56.05 Balances as of December 31, 2024 15,419,002 $ 312.48 5.16 $ 8,925,315 Vested and expected to vest as of December 31, 2024 15,419,002 $ 312.48 5.16 $ 8,925,315 Exercisable as of December 31, 2024 15,401,292 $ 312.30 5.16 $ 8,917,827 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of 2024. This amount changes based on the fair market value of the Company’s common stock. A summary of the amounts related to option exercises, is as follows: 58 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands) Total intrinsic value of options exercised $ 2,352,829 $ 610,594 $ 345,839 Cash received from options exercised 832,887 169,990 35,746 The total fair value of stock options that vested during the years ended December 31, 2024 and 2023 was $ 242 million and $ 311 million, respectively. The Company did not grant any stock options subject to vesting conditions in the year ended December 31, 2022. Restricted Stock Unit Activity The following table summarizes the activities related to the Company’s unvested RSUs and PSUs: Unvested Restricted Stock Units Number of Shares Weighted- Average Grant-Date Fair Value (per share) Balances as of December 31, 2023 — $ — Granted (1) 159,978 686.36 Vested (1) ( 26,660 ) 562.00 Forfeited — — Balances as of December 31, 2024 133,318 $ 711.23 (1) Amounts exclude 26,660 incremental PSU awards that will be granted and 53,320 incremental PSU awards that will vest based on the achievement of market-based performance targets during the period presented, but have not been settled as of December 31, 2024. The total fair value of RSUs that vested during the year ended December 31, 2024 was $ 15 million. No RSUs or PSUs were granted in the years ended December 31, 2023 and December 31, 2022. Stock-Based Compensation The following table summarizes total stock-based compensation expense and the related income tax impact: Year Ended December 31, 2024 2023 2022 (in thousands) Total stock-based compensation expense $ 272,588 $ 339,368 $ 575,452 Total income tax impact on provision 43,876 61,588 127,289 As of December 31, 2024, $ 46 million of total unrecognized compensation cost related to unvested stock options and RSUs is expected to be recognized over a weighted-average period of 1.4 years. Stock Repurchases In September 2023, the Board of Directors authorized the repurchase of up to $ 10 billion, with no expiration date, and in December 2024, the Board of Directors increased the share repurchase authorization by an additional $ 15 billion, also with no expiration date. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. The Company is not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, general economic, business and market conditions, and alternative investment opportunities. The Company may discontinue any repurchases of its common stock at any time without prior notice. During the year ended December 31, 2024, the Company repurchased 9,861,935 shares for an aggregate amount of $ 6,211 million (excluding the 1% excise tax on stock repurchases as a result of the Inflation Reduction Act of 2022). As of December 31, 2024, $ 17.1 billion remains available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of December 31, 2024, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares. 59 Table of Contents Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated balances of other comprehensive income (loss): Foreign Currency Translation Adjustments Net Investment Hedge Gains (Losses) Change in Unrealized Gains (Losses) on Cash Flow Hedges Change in Unrealized Gains (Losses) on Excluded Component of Fair Value Hedges Change in Unrealized Gains (Losses) on AFS Securities Tax (Expense) Benefit Total (in thousands) Balances as of December 31, 2021 $ ( 40,495 ) $ — $ — $ — $ — $ — $ ( 40,495 ) Other comprehensive income (loss) before reclassifications ( 176,811 ) — — — — — ( 176,811 ) Amounts reclassified from accumulated other comprehensive income (loss) — — — — — — — Net change in accumulated other comprehensive income (loss) ( 176,811 ) — — — — — ( 176,811 ) Balances as of December 31, 2022 ( 217,306 ) — — — — — ( 217,306 ) Other comprehensive income (loss) before reclassifications 113,384 — ( 155,730 ) — — 35,707 ( 6,639 ) Amounts reclassified from accumulated other comprehensive income (loss) — — — — — — — Net change in accumulated other comprehensive income (loss) 113,384 — ( 155,730 ) — — 35,707 ( 6,639 ) Balances as of December 31, 2023 ( 103,922 ) — ( 155,730 ) — — 35,707 ( 223,945 ) Other comprehensive income (loss) before reclassifications ( 272,911 ) 32,400 1,195,738 ( 14,334 ) 3,260 ( 279,408 ) 664,745 Amounts reclassified from accumulated other comprehensive income (loss) — — ( 125,639 ) 23,567 — 23,434 ( 78,638 ) Net change in accumulated other comprehensive income (loss) ( 272,911 ) 32,400 1,070,099 9,233 3,260 ( 255,974 ) 586,107 Balances as of December 31, 2024 $ ( 376,833 ) $ 32,400 $ 914,369 $ 9,233 $ 3,260 $ ( 220,267 ) $ 362,162 The following table summarizes the amounts reclassified from AOCI to the Consolidated Statement of Operations: Year Ended December 31, 2024 Revenues Cost of Revenues Interest and other income (expense) Provision for Income Taxes Total Reclassifications (in thousands) Gains (losses) on derivatives in cash flow hedging relationship Foreign exchange contracts Amount of gains (losses) reclassified from AOCI $ 124,010 $ 1,629 $ — $ ( 28,844 ) $ 96,795 Gains (losses) on derivatives in fair value hedging relationship Foreign exchange contracts Amount excluded from assessment of effectiveness and recognized in earnings based on amortization approach — — ( 23,567 ) 5,410 ( 18,157 ) Total $ 124,010 $ 1,629 $ ( 23,567 ) $ ( 23,434 ) $ 78,638 No amounts were reclassified from AOCI into the Consolidated Statements of Operations in the years ended December 31, 2023 and 2022. 60 Table of Contents 10. Income Taxes Income before provision for income taxes was as follows: Year Ended December 31, 2024 2023 2022 (in thousands) United States $ 9,101,391 $ 5,602,762 $ 4,623,218 Foreign 864,266 602,643 640,711 Income before income taxes $ 9,965,657 $ 6,205,405 $ 5,263,929 The components of provision for income taxes for all periods presented were as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Current tax provision: Federal $ 1,093,667 $ 854,170 $ 109,910 State 214,814 181,684 119,795 Foreign 536,915 304,539 676,827 Total current 1,845,396 1,340,393 906,532 Deferred tax provision: Federal ( 520,510 ) ( 412,760 ) ( 52,434 ) State ( 41,700 ) ( 55,475 ) ( 30,691 ) Foreign ( 29,160 ) ( 74,743 ) ( 51,402 ) Total deferred ( 591,370 ) ( 542,978 ) ( 134,527 ) Provision for income taxes $ 1,254,026 $ 797,415 $ 772,005 A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory Federal income tax rate to income before income taxes is as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Expected tax expense at U.S. Federal statutory tax rate $ 2,092,710 $ 1,303,123 $ 1,105,428 State income taxes, net of Federal income tax effect 166,311 104,717 92,084 Foreign earnings at other than U.S. rates 13,909 ( 32,292 ) 104,665 Research and development tax credit ( 185,312 ) ( 87,036 ) ( 146,615 ) Excess tax benefits on stock-based compensation ( 435,909 ) ( 119,043 ) ( 75,211 ) Foreign-derived intangible income deduction ( 502,968 ) ( 426,597 ) ( 361,013 ) Nontaxable and nondeductible items 70,386 41,782 44,046 Other 34,899 12,761 8,621 Provision for income taxes $ 1,254,026 $ 797,415 $ 772,005 Effective Tax Rate 13 % 13 % 15 % 61 Table of Contents The components of deferred tax assets and liabilities were as follows: As of December 31, 2024 2023 (in thousands) Deferred tax assets: Stock-based compensation $ 440,889 $ 486,876 Tax credits and net operating loss carryforwards 834,402 544,431 Capitalized research expenses 1,075,474 593,439 Accruals and reserves 152,142 137,251 Operating lease liabilities 522,489 516,574 OCI hedging losses — 35,707 Unrealized losses 12,157 26,506 Other 18,197 11,615 Total deferred tax assets 3,055,750 2,352,399 Valuation allowance ( 540,272 ) ( 442,293 ) Net deferred tax assets 2,515,478 1,910,106 Deferred tax liabilities: Depreciation & amortization ( 370,709 ) ( 357,477 ) Operating right-of-use lease assets ( 449,661 ) ( 435,216 ) OCI hedging gains ( 220,009 ) — Acquired intangibles ( 282,187 ) ( 233,433 ) Other ( 15,354 ) ( 9,430 ) Total deferred tax liabilities ( 1,337,920 ) ( 1,035,556 ) Net deferred tax assets $ 1,177,558 $ 874,550 The following table shows the deferred tax assets and liabilities within our Consolidated Balance Sheets: As of December 31, 2024 2023 (in thousands) Total deferred tax assets: Other non-current assets $ 1,290,160 $ 1,000,760 Total deferred tax liabilities: Other non-current liabilities ( 112,602 ) ( 126,210 ) Net deferred tax assets $ 1,177,558 $ 874,550 As of December 31, 2024, for tax return purposes, the Company had $ 694 million of California R&D tax credit carryforwards which can be carried forward indefinitely, $ 943 million of state net operating loss carryforwards which will begin to expire in 2026, $ 41 million of foreign tax credit carryforwards which will begin to expire in 2033, and $ 420 million of foreign net operating loss carryforwards which will begin to expire in 2025. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of December 31, 2024, the valuation allowance of $ 540 million was primarily related to California R&D tax credits, state net operating loss carryforwards, and foreign tax credits that the Company does not expect to realize. At December 31, 2024, we have not provided for applicable U.S. income and foreign withholding taxes on an immaterial amount of undistributed foreign earnings that we intend to indefinitely reinvest. For the balance of undistributed earnings for which we are not indefinitely reinvested, we have provided the appropriate taxes. The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “Other non-current liabilities” and a reduction of deferred tax assets which is classified as "Other non-current assets" in the Consolidated Balance Sheets. As of December 31, 2024 and 2023, the total amount of gross unrecognized tax benefits was $ 432 million and $ 327 million, respectively, of 62 Table of Contents which $ 251 million and $ 188 million, respectively, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows: As of December 31, 2024 2023 2022 (in thousands) Balance at the beginning of the year $ 327,105 $ 226,977 $ 202,557 Increases related to tax positions taken during the current period 93,325 65,630 26,865 Increases related to tax positions taken during prior periods 15,751 76,794 — Decreases related to tax positions taken during prior periods ( 3,901 ) ( 10,117 ) ( 2,445 ) Decreases related to settlements with taxing authorities — ( 32,179 ) — Decreases related to expiration of statute of limitations — — — Balance at the end of the year $ 432,280 $ 327,105 $ 226,977 The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes and in “Other non-current liabilities” in the Consolidated Balance Sheets. During the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 16 million, $ 25 million, and $ 2 million, respectively, net of interest and penalties in the provision for income taxes. The amount of interest and penalties accrued at December 31, 2024 and 2023 was $ 44 million and $ 28 million, respectively. The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for years 2016 through 2018 and is subject to examination for 2019 through 2023. The Company is also generally subject to examination by various state and foreign jurisdictions for years 2017 through 2023. While the Company is in various stages of inquiry and examination with certain taxing authorities and believes that its tax positions will more likely than not be sustained, it is nonetheless possible that future obligations related to these matters could arise. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from an examination. Given the potential outcome of current examinations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, an estimate of the range of reasonably possible adjustments cannot be made at this time. 11. Employee Benefit Plan The Company maintains a 401(k) savings plan covering substantially all of its employees. Eligible employees may contribute up to 80 % of their annual salary through payroll deductions, but not more than the statutory limits set by the Internal Revenue Service. The Company matches employee contributions at the discretion of the Board. During the years ended December 31, 2024, 2023 and 2022, the Company’s matching contributions totaled $ 128 million, $ 114 million and $ 102 million, respectively. Multiemployer Benefit Plans The Company contributes to various multiemployer defined pension plans under the terms of collective bargaining agreements that cover our union-represented employees. The risks of participating in multiemployer pension plans are different from single-employer plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in the multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan; and (iii) if a company stops contributing to the multiemployer pension plan, the unfunded obligations of the plan may become the obligation of the remaining participating employers. The Company also contributes to various other multiemployer benefit plans that provide health and welfare benefits to both active and retired participants. The Company does not participate in any multiemployer benefit plans that are individually significant to the Company. The following table summarizes the Company's contributions to multiemployer pension and health plans for the years ended December 31, 2024, 2023 and 2022, respectively: 63 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands) Pension benefits $ 89,707 $ 57,285 $ 127,885 Health benefits 134,079 85,157 96,285 Total contributions $ 223,786 $ 142,442 $ 224,170 12. Segment and Geographic Information The Company operates as one operating segment. The Company's chief operating decision maker ("CODM") is its co-chief executive officers, who review financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow global operating margin and the allocation of budget between cost of revenues, sales and marketing, technology and development, and general and administrative expenses. The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Revenues $ 39,000,966 $ 33,723,297 $ 31,615,550 Less: Content amortization 15,301,517 14,197,437 14,026,132 Other cost of revenues 5,736,947 5,517,931 5,142,153 Sales and marketing 2,917,554 2,657,883 2,530,502 Technology and development 2,925,295 2,675,758 2,711,041 General and administrative 1,702,039 1,720,285 1,572,891 Operating income 10,417,614 6,954,003 5,632,831 Operating margin 27 % 21 % 18 % Other income (expense) Interest expense ( 718,733 ) ( 699,826 ) ( 706,212 ) Interest and other income (expense) (1) 266,776 ( 48,772 ) 337,310 Income before income taxes 9,965,657 6,205,405 5,263,929 Provision for income taxes ( 1,254,026 ) ( 797,415 ) ( 772,005 ) Net income $ 8,711,631 $ 5,407,990 $ 4,491,924 (1) Includes interest income of $ 294 million, $ 281 million and $ 60 million for the years ended December 31, 2024, 2023 and 2022, respectively. See the consolidated financial statements for other financial information regarding the Company’s operating segment. Total U.S. revenues were $ 16.1 billion, $ 13.8 billion and $ 13.0 billion for the years ended December 31, 2024, 2023 and 2022, respectively. See Note 2 Revenue Recognition for additional information about streaming revenue by region. The Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the Consolidated Balance Sheets were located as follows: 64 Table of Contents As of December 31, 2024 2023 (in thousands) United States $ 2,769,828 $ 2,724,710 International 926,238 843,633 65 Table of Contents EXHIBIT INDEX Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form File No. Exhibit Filing Date 3.1 Restated Certificate of Incorporation 8-K 001-35727 3.1 June 8, 2022 3.2 Amended and Restated Bylaws 8-K 001-35727 3.2 February 24, 2023 4.1 Form of Common Stock Certificate S-1/A 333-83878 4.1 April 16, 2002 4.2 Indenture, dated as of February 5, 2015, by and between the Company and Wells Fargo Bank, National Association, as Trustee. 8-K 001-35727 4.2 February 5, 2015 4.3 Indenture, dated as of October 27, 2016, by and between the Company and Wells Fargo Bank, National Association, as Trustee. 8-K 001-35727 4.1 October 27, 2016 4.4 Indenture, dated as of May 2, 2017, by and between the Company and Wells Fargo Bank, National Association, as Trustee. 8-K 001-35727 4.1 May 3, 2017 4.5 Indenture, dated as of October 26, 2017, by and between the Company and Wells Fargo Bank National Association, as Trustee 8-K 001-35727 4.1 October 26, 2017 4.6 Indenture, dated as of April 26, 2018, by and between the Company and Wells Fargo Bank National Association, as Trustee 8-K 001-35727 4.1 April 26, 2018 4.7 Indenture, dated as of October 26, 2018, by and between the Company and Wells Fargo Bank National Association, as Trustee (6.375% Senior Notes due 2029) 8-K 001-35727 4.1 October 26, 2018 4.8 Indenture, dated as of October 26, 2018, by and between the Company and Wells Fargo Bank National Association, as Trustee (4.625% Senior Notes due 2029) 8-K 001-35727 4.3 October 26, 2018 4.9 Indenture, dated as of April 29, 2019, by and between the Company and Wells Fargo Bank National Association, as Trustee (5.375% Senior Notes due 2029) 8-K 001-35727 4.1 April 29, 2019 4.10 Indenture, dated as of April 29, 2019, by and between the Company and Wells Fargo Bank National Association, as Trustee (3.875% Senior Notes due 2029) 8-K 001-35727 4.3 April 29, 2019 4.11 Indenture, dated as of October 25, 2019, by and between the Company and Wells Fargo Bank National Association, as Trustee (4.875% Senior Notes due 2030) 8-K 001-35727 4.1 October 25, 2019 4.12 Indenture, dated as of October 25, 2019, by and between the Company and Wells Fargo Bank National Association, as Trustee (3.625% Senior Notes due 2030) 8-K 001-35727 4.3 October 25, 2019 4.13 Indenture, dated as of April 28, 2020, by and between the Company and Wells Fargo Bank National Association, as Trustee (3.625% Senior Notes due 2025) 8-K 001-35727 4.1 April 28, 2020 4.14 Indenture, dated as of April 28, 2020, by and between the Company and Wells Fargo Bank National Association, as Trustee (3.000% Senior Notes due 2025) 8-K 001-35727 4.3 April 28, 2020 4.15 Indenture, dated as of July 29, 2024, by and between the Company and Computershare Trust Company, National Association, as Trustee. S-3 333-281071 4.1 July 29, 2024 4.16 Supplemental Indenture, dated as of August 1, 2024, by and between the Company and Computershare Trust Company, National Association, as Trustee. 8-K 001-35727 4.2 August 1, 2024 4.17 Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 10-K 001-35727 4.18 January 26, 2023 10.1† Form of Indemnification Agreement entered into by the registrant with each of its executive officers and directors S-1/A 333-83878 10.1 March 20, 2002 10.2† 2011 Stock Plan Def 14A 000-49802 A April 20, 2011 10.3† 2020 Stock Plan Def 14A 001-35727 A April 22, 2020 10.4† Description of Director Equity Compensation Plan 8-K 001-35727 Item 5.02 January 24, 2018 66 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form File No. Exhibit Filing Date 10.5† Amended and Restated Performance Bonus Plan 8-K 001-35727 10.1 December 9, 2022 10.6† Form of Stock Option Agreement under the 2011 Stock Plan 10-K 001-35727 10.11 January 27, 2022 10.7† Form of Stock Option Agreement under the 2020 Stock Plan 10-K 001-35727 10.11 January 26, 2023 10.8† Form of Stock Option Agreement under the 2020 Stock Plan (Options Subject to Vesting) 8-K 001-35727 10.1 December 23, 2022 10.9† Netflix, Inc. 2020 Stock Plan Form of Restricted Stock Unit Award Agreement 8-K 001-35727 10.1 December 8, 2023 10.10† Netflix, Inc. 2020 Stock Plan Form of Performance-Based Restricted Stock Unit Award Agreement 8-K 001-35727 10.2 December 8, 2023 10.11† Netflix, Inc. Executive Officer Severance Plan 8-K 001-35727 10.3 December 8, 2023 19.1 Netflix, Inc. Insider Trading Policy X 21.1 List of Significant Subsidiaries X 23.1 Consent of Ernst & Young LLP X 24 Power of Attorney (see signature page) 31.1 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.3 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certifications of Co-Chief Executive Officers and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 97.1 Netflix, Inc. Clawback Policy 10-K 001-35727 97.1 January 26, 2024 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags X 104 The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL X * These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings. † Indicates a management contract or compensatory plan 67 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Netflix, Inc. Dated: January 27, 2025 By: / S / T ED S ARANDOS Ted Sarandos Co-Chief Executive Officer (principal executive officer) Dated: January 27, 2025 By: / S / G REG P ETERS Greg Peters Co-Chief Executive Officer (principal executive officer) 68 Table of Contents POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ted Sarandos, Greg Peters, and Spencer Neumann, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his substitute or substituted, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date / S / T ED S ARANDOS Co-Chief Executive Officer and Director (principal executive officer) January 27, 2025 Ted Sarandos /S/ G REG P ETERS Co-Chief Executive Officer and Director (principal executive officer) January 27, 2025 Greg Peters / S / S PENCER N EUMANN Chief Financial Officer (principal financial officer) January 27, 2025 Spencer Neumann / S / J EFFREY K ARBOWSKI Chief Accounting Officer (principal accounting officer) January 27, 2025 Jeffrey Karbowski / S / R EED H ASTINGS Executive Chairman and Director January 27, 2025 Reed Hastings / S / R ICHARD B ARTON Director January 27, 2025 Richard Barton / S / M ATHIAS D ÖPFNER Director January 27, 2025 Mathias Döpfner / S / T IMOTHY M. H ALEY Director January 27, 2025 Timothy M. Haley / S / J AY C. H OAG Director January 27, 2025 Jay C. Hoag / S / L ESLIE J. K ILGORE Director January 27, 2025 Leslie J. Kilgore / S / S TRIVE M ASIYIWA Director January 27, 2025 Strive Masiyiwa / S / A NN M ATHER Director January 27, 2025 Ann Mather 69 Table of Contents / S / S USAN R ICE Director January 27, 2025 Susan Rice / S / B RAD S MITH Director January 27, 2025 Brad Smith /S/ A NNE S WEENEY Director January 27, 2025 Anne Sweeney 70