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4.
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Level 1 securities: | | | | | | | | | | | | | | | |
| Money market funds | | | | | | | | | | | | | | | | | | | | | | | |
| Level 2 securities: | | | | | | | | | | | | | | | |
Time Deposits(1) | | | | | | | | | | | | | | | | | | | | | | | |
Government securities(2) | | | | | | | | | | | | | | | | | | | | | | | |
| $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
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| As of |
| March 31,
2025 | | December 31,
2024 |
| (in thousands) |
| Operating lease right-of-use assets, net | $ | | | | $ | | |
| | | |
| Current operating lease liabilities | | | | | |
| Non-current operating lease liabilities | | | | | |
| Total operating lease liabilities | $ | | | | $ | | |
Other Current Assets
| | $ | | |
Prepaid expenses | | | | | | |
Other | | | | | | |
Total other current assets | | $ | | | | $ | | |
6.
million, net of $ million of issuance costs and discounts, with varying maturities (the "Notes"). Of the outstanding balance, $ million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, 2024, the Company had aggregate outstanding notes of $ million, net of $ million of issuance costs and discounts. 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 € million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement loss, net of hedging impacts, totaling $ million for the three months ended March 31, 2025). 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.
% Senior Notes | $ | | | | $ | | | | February 2015 | | February 2025 | | $ | | | | $ | | | % Senior Notes(1) | | | | | | | | April 2020 | | June 2025 | | | | | | |
% Senior Notes | | | | | | | | April 2020 | | June 2025 | | | | | | |
% Senior Notes | | | | | | | | October 2016 | | November 2026 | | | | | | |
% Senior Notes(1) | | | | | | | | May 2017 | | May 2027 | | | | | | |
% Senior Notes | | | | | | | | October 2017 | | April 2028 | | | | | | |
% Senior Notes | | | | | | | | April 2018 | | November 2028 | | | | | | |
% Senior Notes(1) | | | | | | | | October 2018 | | May 2029 | | | | | | |
% Senior Notes | | | | | | | | October 2018 | | May 2029 | | | | | | |
% Senior Notes(1) | | | | | | | | April 2019 | | November 2029 | | | | | | |
% Senior Notes | | | | | | | | April 2019 | | November 2029 | | | | | | |
% Senior Notes(1) | | | | | | | | October 2019 | | June 2030 | | | | | | |
% Senior Notes | | | | | | | | October 2019 | | June 2030 | | | | | | |
% Senior Notes | | | | | | | | August 2024 | | August 2034 | | | | | | |
% Senior Notes | | | | | | | | August 2024 | | August 2054 | | | | | | |
| | $ | | | | $ | | | | | | | | $ | | | | $ | | |
(1) The following Senior Notes have a principal amount denominated in euros: % Senior Notes for € million, % Senior Notes for € million, % Senior Notes for € million, % Senior Notes for € million, and % Senior Notes for € million.
In the three months ended March 31, 2025, the Company repaid upon maturity the $ million aggregate principal amount of its % 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 % 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 March 31, 2025 and December 31, 2024, the Company was in compliance with all related covenants.
, $ billion unsecured revolving credit facility that matures on April 12, 2029 (the “Revolving Credit Agreement”), to replace its previous $ billion unsecured revolving credit facility. As of March 31, 2025, 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 % to %, and the applicable margin for Adjusted Term SOFR Rate loans will range from % to %, 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 to 1.0 as of the last day of each fiscal quarter. As of March 31, 2025 and December 31, 2024, the Company was in compliance with all related covenants and ratios.
7.
| | $ | | | Fair value hedges | | | | | |
| Derivatives not designated as hedging instruments:
| | | |
| Foreign exchange contracts | | | | | |
Total | $ | | | | $ | | |
As of March 31, 2025 and December 31, 2024, approximately $ billion and $ billion, respectively, of the Company’s euro–denominated Senior Notes were designated as hedges of the foreign exchange risk of the Company’s net investment in certain foreign subsidiaries.
As of March 31, 2025 and 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 $ billion and $ billion, respectively.
Note 6 Debt for further information on the Company’s debt obligations.
Fair Value of Derivative Contracts
| | $ | | | | $ | | | | $ | | | | Derivatives not designated as hedging instruments: | | | | | | | |
| Foreign exchange contracts | | | | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | $ | | | | $ | | | | $ | | | | $ | | |
| Derivatives not designated as hedging instruments: | | | | | | | |
| Foreign exchange contracts | | | | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
|
|
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 March 31, 2025, 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 $ 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.
| | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
| Derivative liabilities | | | | | | | | | | () | | | | | | | |
| | | |
| | | |
| | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | |
| Derivative liabilities | | | | | | | | | | () | | | | | | | |
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(1) Includes interest income of $ million and $ million for the three months ended March 31, 2025 and 2024, respectively.
See the consolidated financial statements for other financial information regarding the Company’s operating segment.
Total U.S. revenues were $ billion and $ billion for the three months ended March 31, 2025 and 2024, respectively. See Note 2 Revenue Recognition for additional information about revenues by region.
| | $ | | |
| International | | | | | |
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding: our core strategy; our ability to improve our content offerings and service; our future financial performance, including expectations regarding revenues, deferred revenue, operating income and margin, net income, expenses, and profitability; liquidity, including the sufficiency of our capital resources, net cash provided by (used in) operating activities, access to financing sources and free cash flows; capital allocation strategies, including any stock repurchases or repurchase programs; seasonality; stock price volatility; impact of foreign exchange rate fluctuations, including on net income, revenues; expectations regarding hedging activity; impact of interest rate fluctuations; adequacy of existing facilities; future regulatory changes and their impact on our business; intellectual property; cybersecurity; price changes and testing; accounting treatment for changes related to content assets; acquisitions; actions by competitors; partnerships; advertising; multi-household usage; reporting of membership-related data; member viewing patterns; dividends; future contractual obligations, including unknown content obligations and timing of payments; our global content and marketing investments, including investments in original programming, consumer products and live experiences; impact of work stoppages; content amortization; resolution of tax examinations; tax expense; unrecognized tax benefits; deferred tax assets; resolution of disputes and other proceedings; our ability to effectively manage change and growth; our company culture; and our ability to attract and retain qualified employees and key personnel. These forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those included in forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to,
those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on January 27, 2025, in particular the risk factors discussed under the heading “Risk Factors” in Part I, Item 1A.
We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.
Investors and others should note that we announce material financial and other information to our investors using our investor relations website (ir.netflix.net), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media and blogs to communicate with our members and the public about our company, our services and other issues. It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels and blogs listed on our investor relations website.
Overview
We are one of the world’s leading entertainment services offering 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.
Our core strategy is to grow our business globally within the parameters of our operating margin target. We strive to continuously improve our members' experience by offering compelling content that delights them and attracts new members. We aim to offer a range of pricing plans, including our ad-supported subscription plan, to meet a variety of consumer needs. We seek to drive conversation around our content to further enhance member joy, and we are continuously enhancing our user interface to help our members more easily choose content that they will find enjoyable.
Results of Operations
The following represents our consolidated performance highlights(1):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Change |
| March 31,
2025 | | March 31,
2024 | | Q1'25 vs. Q1'24 |
| (in thousands, except percentages) |
| Financial Results: | | | | | | | |
| Revenues | $ | 10,542,801 | | | $ | 9,370,440 | | | $ | 1,172,361 | | | 13 | % |
Constant currency change in revenues(2) | | | | | | | 16 | % |
| | | | | | | |
| Operating income | $ | 3,346,999 | | | $ | 2,632,534 | | | $ | 714,465 | | | 27 | % |
| Operating margin | 31.7 | % | | 28.1 | % | | 3.6 | % | | |
| | | | | | | |
Net income | $ | 2,890,351 | | | $ | 2,332,209 | | | $ | 558,142 | | | 24 | % |
(1) We have discontinued the quarterly reporting of membership numbers, focusing instead on revenue and operating margin as the primary financial metrics that we believe best represent our business performance. Therefore, effective in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, we are no longer reporting streaming membership metrics, including paid net membership additions (losses), paid memberships at end of period, average paying memberships or average monthly revenue per paying membership.
(2) See the “Non-GAAP Constant Currency Information” section below for additional details on our use of constant currency revenue.
Operating margin for the three months ended March 31, 2025 increased approximately four percentage points as compared to the prior comparative period, primarily due to revenues growing at a faster rate as compared to the growth in cost of revenues, sales and marketing, and general and administrative expenses.
Net income for the three months ended March 31, 2025 increased $558 million as compared to the prior comparative period, primarily due to a $714 million increase in operating income, driven by a $1,172 million increase in revenues and partially offset by a $286 million increase in cost of revenues primarily due to the increase in content amortization. The impact of higher operating income was partially offset by a $130 million decrease in foreign exchange gains and losses and a $41 million increase in the provision for income taxes.
Revenues
We primarily derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan. As of March 31, 2025, pricing on our plans ranged from the U.S. dollar equivalent of $1 to $31 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $9 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.
We also earn revenues from advertisements presented on our streaming service, consumer products, live experiences and various other sources. Revenues earned from sources other than monthly membership fees were not a material component of revenues for the three months ended March 31, 2025 and March 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Change |
| | | March 31,
2025 | | March 31,
2024 | | Q1'25 vs. Q1'24 |
| | | (in thousands, except percentages) |
Revenues | | $ | 10,542,801 | | | $ | 9,370,440 | | | $ | 1,172,361 | | | 13 | % |
|
|
Revenues for the three months ended March 31, 2025 increased 13% as compared to the three months ended March 31, 2024, primarily due to the growth in memberships and higher pricing, partially offset by unfavorable changes in foreign exchange rates, net of hedging.
The following table summarizes revenue by region for the three months ended March 31, 2025 and 2024. Hedging gains (losses) of $165 million and $(11) million are included in “Revenues” for the three months ended March 31, 2025 and 2024, respectively. 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Change |
| | March 31,
2025 | | March 31,
2024 | | Q1'25 vs. Q1'24 |
| | | (in thousands, except percentages) |
| United States and Canada (UCAN) | | $ | 4,617,098 | | | $ | 4,224,315 | | | $ | 392,783 | | | 9 | % |
| Europe, Middle East, and Africa (EMEA) | | 3,404,676 | | | 2,958,193 | | | 446,483 | | | 15 | % |
| Latin America (LATAM) | | 1,261,934 | | | 1,165,008 | | | 96,926 | | | 8 | % |
| Asia-Pacific (APAC) | | 1,259,093 | | | 1,022,924 | | | 236,169 | | | 23 | % |
| Total Revenues | | $ | 10,542,801 | | | $ | 9,370,440 | | | $ | 1,172,361 | | | 13 | % |
|
|
Total | | $ | 43,866,864 | | | $ | 13,205,364 | | | $ | 30,661,500 | |
(1)As of March 31, 2025, content obligations were comprised of $4.1 billion included in “Current content liabilities” and $1.7 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $16.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
The material cash requirements above do not include any estimated obligation for the unknown future titles, payment for which could range from less than one year to more than five years. However, these unknown obligations are expected to be significant and we believe could include approximately $1 billion to $4 billion over the next three years, with the payments for the vast majority of such amounts expected to occur after the next twelve months. The foregoing range is based on considerable management judgments and the actual amounts may differ. Once we know the title that we will receive and the license fees, we include the amount in the contractual obligations table above.
(2)Debt obligations include our Notes consisting of principal and interest payments. See Note 6 Debt to the consolidated financial statements for further details.
(3)Operating lease obligations are comprised of operating lease liabilities included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Consolidated Balance Sheets, inclusive of imputed interest. Operating lease obligations also include additional obligations that are not reflected on the Consolidated Balance Sheets as they did not meet the criteria for recognition. See Note 5 Balance Sheet Components in the accompanying notes to our consolidated financial statements for further details regarding leases.
In addition to the material cash requirements summarized in the table above, we may be required to pay deposits of approximately $900 million related to certain direct and indirect taxes in the next twelve months, which are in excess of our typical annual obligations.
Cash Flows
The following table summarizes our cash flows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Change |
| March 31,
2025 | | March 31,
2024 | | Q1'25 vs. Q1'24 |
| (in thousands, except percentages) |
Net cash provided by operating activities | $ | 2,789,199 | | | $ | 2,212,522 | | | $ | 576,677 | | | 26 | % |
Net cash provided by (used in) investing activities | 485,662 | | | (75,714) | | | 561,376 | | | 741 | % |
| Net cash used in financing activities | (4,028,316) | | | (2,132,944) | | | 1,895,372 | | | 89 | % |
Net cash provided by operating activities for the three months ended March 31, 2025 increased $577 million as compared to the corresponding period in 2024, primarily driven by a $558 million or 24% increase in net income, an increase in adjustments for non-cash expenses, partially offset by unfavorable changes in working capital and a $43 million increase in payments for content assets.
Net cash provided by (used in) investing activities for the three months ended March 31, 2025 increased $561 million as compared to the corresponding period in 2024, primarily due to net cash inflows of $614 million from maturities, sales and purchases of investments in the three
months ended March 31, 2025 as compared to no cash flows related to investments in the corresponding period in 2024, partially offset by a $53 million increase in purchases of property and equipment.
Net cash used in financing activities for the three months ended March 31, 2025 increased $1,895 million as compared to the corresponding period in 2024, primarily driven by a $1,536 million increase in repurchases of common stock, coupled with a $400 million increase in repayments of debt due to the repayment upon maturity of the $800 million aggregate principal amount of our 5.875% Senior Notes in the three months ended March 31, 2025 as compared to the repayment upon maturity of the $400 million aggregate principal amount of our 5.750% Senior Notes in the three months ended March 31, 2024.
Indemnification
The information set forth under Note 8 Commitments and Contingencies to the consolidated financial statements under the caption “Indemnification” is incorporated herein by reference.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” of the Notes to consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024, describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks related to interest rate changes, which affect the market values of our investments and debt, as well as foreign currency fluctuations.
Interest Rate Risk
At March 31, 2025, our cash equivalents were generally invested in money market funds and time deposits. Interest paid on such funds fluctuates with the prevailing interest rate. Our short-term investments are primarily comprised of investments in government securities. These securities are classified as available-for-sale and are recorded at fair value with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (“AOCI”) within Stockholders' equity in the Consolidated Balance Sheets. Changes in interest rates could adversely affect the market value of these securities.
As of March 31, 2025, we had $15.1 billion of debt, consisting of fixed rate unsecured debt in fourteen tranches due between 2025 and 2054. Refer to Note 6 Debt to the consolidated financial statements for details about all issuances. The fair value of our debt will fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. The fair value of our debt will also fluctuate based on changes in foreign currency rates, as discussed below.
Foreign Currency Risk
We operate our business globally and transact in multiple currencies. Currencies denominated in other than the U.S. dollar accounted for 55% of revenue and 29% of operating expenses for the three months ended March 31, 2025. We therefore have foreign currency risk related to these currencies, which are primarily the euro, the British pound, the Brazilian real, the Mexican peso, and the Canadian dollar.
Accordingly, volatility in exchange rates and, in particular, a weakening of foreign currencies relative to the U.S. dollar may negatively affect our revenue and operating income as expressed in U.S. dollars. Excluding the impact of hedging gains or losses realized as revenues, our revenues for the three months ended March 31, 2025 would have been approximately $311 million higher had foreign currency exchange rates remained constant with those in the same period of 2024. See Part I, Item 2, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for further information regarding our non-GAAP financial measure of constant currency.
We enter into foreign exchange forward contracts to mitigate fluctuations in forecasted U.S. dollar-equivalent revenues from changes in foreign currency exchange rates. These contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures. We designate these contracts as cash flow hedges of forecasted foreign currency revenue and initially record the gains or losses on these derivative instruments as a component of AOCI and reclassify the amounts into “Revenues” on the Consolidated Statements of Operations in the same period the forecasted transaction affects earnings. If the U.S dollar weakened by 10% as of March 31, 2025 and December 31, 2024, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $1,908 million and $1,850 million lower, respectively. This adverse change in AOCI would be expected to offset a corresponding favorable foreign currency change in the underlying forecasted revenues when recognized in earnings.
We enter into foreign exchange forward contracts to mitigate fluctuations in forecasted and firmly committed U.S. dollar-equivalent transactions related to the licensing and production of content assets from changes in foreign currency exchange rates. These contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures. We designate these contracts as cash flow hedges and initially record the gains or losses on these derivative instruments as a component of AOCI and reclassify the amounts into “Cost of Revenues” to offset the hedged exposures as they affect earnings, which occurs as the underlying hedged content assets are amortized. If the U.S dollar strengthened by 10% as of March 31, 2025 and December 31, 2024, the amount recorded in AOCI related to our foreign exchange contracts, before taxes, would have been approximately $201 million and $187 million lower, respectively. This adverse change in AOCI would be expected to offset a corresponding favorable foreign currency change in the underlying exposures when recognized in earnings.
We use non-derivative instruments to mitigate foreign exchange risk related to our net investments in certain foreign subsidiaries. These non-derivative instruments may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures. We designate a portion of our foreign currency-denominated Senior Notes in euros as net investment hedges and the gains or losses on these non-derivative instruments are reported as a component of AOCI and remain in AOCI until the hedged net investment is sold or liquidated, at which point the amounts recognized in AOCI are reclassified into earnings.
We have also experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on the settlement and the remeasurement of monetary assets and liabilities denominated in currencies that are not the functional currency. We enter into foreign exchange forward contracts to mitigate 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 contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange fluctuations, and we may choose not to hedge certain exposures. Certain contracts are not designated as hedging instruments and the gains or losses on these derivative instruments are recorded in “Interest and other income (expense)” in the Consolidated Statements of Operations. We also designate certain contracts as fair value hedges to mitigate the foreign exchange risk on the remeasurement of our foreign-currency denominated debt. The gains or losses on these derivative instruments included in the assessment of hedge effectiveness are recorded in “Interest and other income (expense),” net with the offsetting foreign currency remeasurement gains and losses on the hedged items. If an adverse change in exchange rates of 10% was applied to our monetary assets and liabilities denominated in
currencies other than the functional currencies as of March 31, 2025 and December 31, 2024, income before income taxes would have been approximately $46 million and $38 million lower, respectively, after considering the offsetting impact of the foreign currency exchange contracts and our net investment hedges.
Item 4.Controls and Procedures
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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q 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 the Company have been detected.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
The information set forth under Note 8 Commitments and Contingencies in the notes to the consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference.
Item 1A.Risk Factors
There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Company Purchases of Equity Securities
Stock repurchases during the three months ended March 31, 2025 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased (1) | | Average Price Paid per Share (2) | | Total Number of Shares Purchased as Part of Publicly Announced Programs (1) | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) |
| | | | | | | | (in thousands) |
| January 1 - 31, 2025 | | 703,147 | | | $ | 866.91 | | | 703,147 | | | $ | 16,534,209 | |
| February 1 - 28, 2025 | | 1,354,600 | | | $ | 1,007.46 | | | 1,354,600 | | | $ | 15,169,503 | |
| March 1 - 31, 2025 | | 1,656,081 | | | $ | 943.27 | | | 1,656,081 | | | $ | 13,607,380 | |
Total | | 3,713,828 | | | | | 3,713,828 | | | |
| | |
(1) In September 2023, the Company’s Board of Directors authorized the repurchase of up to $10 billion of its common stock, 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. For further information regarding stock repurchase activity, see Note 9 Stockholders’ Equity to the consolidated financial statements in this Quarterly Report. |
| (2) Average price paid per share includes costs associated with the repurchases but excludes the 1% excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022. |
Item 5.Other Information
Rule 10b5-1 Trading Plans
(1) | | | | | | | | | | (2) | | | | | | | | | | |
(3) | | | | | | | | | | |
(4) | | | | | | | | | | |
(5) | | | | | | | | | | |
| | |
(1) Jay Hoag, a member of the Board of Directors, trusts for which he serves as a trustee and a partnership for which he serves as the sole general partner and limited partner, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on January 28, 2025. The plan provides for the potential sale of up to shares of Netflix common stock. The plan expires on January 30, 2026, or upon the earlier completion of all authorized transactions under the plan. |
(2) Ann Mather, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on February 7, 2025. Ms. Mather's plan provides for the potential exercise of vested stock options and the associated sale of up to shares of Netflix common stock. The plan expires on December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. |
(3) Strive Masiyiwa, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on February 10, 2025. Mr. Masiyiwa's plan provides for the potential exercise of vested stock options and the associated sale of up to shares of Netflix common stock. The plan expires on December 31, 2025, or upon the earlier completion of all authorized transactions under the plan. |
(4) Brad Smith, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on February 10, 2025. Mr. Smith's plan provides for the potential exercise of vested stock options and the associated sale of up to shares of Netflix common stock. The plan expires on June 18, 2026, or upon the earlier completion of all authorized transactions under the plan. |
(5) Leslie Kilgore, a member of the Board of Directors, entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1 on January 22, 2025. Ms. Kilgore's plan provides for the potential exercise of vested stock options and the associated sale of up to shares of Netflix common stock. The plan expires on April 30, 2026, or upon the earlier completion of all authorized transactions under the plan. |
Other than those disclosed above, none of our directors or officers or a "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K.
Item 6.Exhibits
(a) Exhibits:
See Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Exhibit Number | | Exhibit Description | | Incorporated by Reference | | Filed
Herewith |
| | | | Form | | File No. | | Exhibit | | Filing Date | | |
| | | | | | | | | | | | |
| | | | 8-K | | 001-35727 | | 3.1 | | June 8, 2022 | | |
| | | | | | | | | | | | |
| | | | 8-K | | 001-35727 | | 3.2 | | February 24, 2023 | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | X |
| | | | | | | |
| | | | | | | | | | | | X |
| | | | | | | | | | | | |
| | | | | | | | | | | | X |
| | | | | | | |
| | | | | | | | | | | | X |
| | | | | | | |
| 101 | | The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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.
SIGNATURES
Pursuant to the requirements 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: | April 18, 2025 | By: | /s/ Ted Sarandos |
| | | Ted Sarandos
Co-Chief Executive Officer
(Principal executive officer) |
| | | |
| Dated: | April 18, 2025 | By: | /s/ Greg Peters |
| | | Greg Peters
Co-Chief Executive Officer
(Principal executive officer) |
| | | |
| Dated: | April 18, 2025 | By: | /s/ Jeffrey Karbowski |
| | | Jeffrey Karbowski
Chief Accounting Officer
(Principal accounting officer) |
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