January 23, 2024
Fellow shareholders,
Summary:
● We’ve just ended our first year with Ted and Greg as co-CEOs and, under their leadership, Netflix
achieved the key financial objectives we set at the start of 2023. We’ve:
○ Accelerated our growth, exiting the year with 12% revenue growth, up from 6% in 2022;
○ Grown our FY23 operating margin to 21% from 18% in 2022, ahead of our 20% target;
○ Increased our free cash flow to $6.9B for 2023.
● The year has shown the need for Netflix to balance consistency and continuous improvement
with adaptability. In 2024, we see big opportunities to:
○ Increase our value to members by further improving the core (series and film), while
broadening our offering (games, live and sports-adjacent programming);
○ Tap into a significant new long term revenue and profit pool by scaling our ads business;
○ Deepen our connection with fans through our marketing, consumer products and
innovative new live experiences.
● We believe there is plenty of room for growth ahead as streaming expands, and our north star
remains the same: to thrill members with our entertainment. If we can continue to improve
Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers,
creators and shareholders.
Our summary results, and forecast for Q1, are below.
(in millions except per share data)
Q4'22
Q1'23
Q2'23
Q3'23
Q4'23
Q1'24
Forecast
Revenue
$7,852
$8,162
$8,187
$8,542
$8,833
$9,240
Y/Y % Growth
1.9%
3.7%
2.7%
7.8%
12.5%
13.2%
Operating Income
$550
$1,714
$1,827
$1,916
$1,496
$2,420
Operating Margin
7.0%
21.0%
22.3%
22.4%
16.9%
26.2%
Net Income
$55
$1,305
$1,488
$1,677
$938
$1,976
Diluted EPS
$0.12
$2.88
$3.29
$3.73
$2.11
$4.49
Global Streaming Paid Memberships
230.75
232.50
238.39
247.15
260.28
Y/Y % Growth
4.0%
4.9%
8.0%
10.8%
12.8%
Global Streaming Paid Net Additions
7.66
1.75
5.89
8.76
13.12
Net cash provided by operating activities
$444
$2,179
$1,440
$1,992
$1,663
Free Cash Flow
$332
$2,117
$1,339
$1,888
$1,581
Shares (FD)
451.6
452.4
451.6
450.0
444.3
1
Q4 Results and Forecast
Revenue in Q4 grew 12% year over year, or 13% on a foreign exchange (F/X) neutral basis. Our healthy
1
top line growth reflects the benefits of paid sharing, our recent price changes and the strength of our
underlying business driven by a strong slate. Revenue was $0.1B (2%) above our October forecast due to
favorable F/X movement and stronger than anticipated membership growth. Paid net additions totaled
13.1M in Q4’23 vs. 7.7M in Q4’22 — our largest Q4 ever. ARM was up 1% year over year on both a
2
reported and F/X neutral basis. This was in-line with our expectations of “roughly flat year-over-year”
ARM due to limited price increases over the last 18 months, as well as price reductions in some countries
early in 2023, which were partially offset by price rises in the US, UK and France in Q4’23.
In Q4’23, operating income amounted to $1.5B, up from $0.5B in the year ago period, while operating
margin improved to 17% vs. 7% in the year ago quarter. We under-forecasted both operating income and
operating margin (forecast of $1.2B and 13%, respectively) due to the revenue upside in the quarter and
lower-than-planned spending. For 2023, we generated $7B of operating income, up 23% year over year.
Operating margin for 2023 was 21% (both reported and using F/X rates at the beginning of 2023) —
ahead of our 18%-20% beginning-of-year forecast.
EPS for the fourth quarter was $2.11 compared with $0.12 last year and our forecast of $2.15. EPS
includes a $239 million non-cash unrealized loss from F/X remeasurement on our Euro denominated
debt (due to the intra-quarter depreciation of the US dollar against most currencies).
As a reminder, the quarterly guidance we provide is our actual internal forecast at the time we report.
Our primary financial metrics are revenue for growth and operating margin for profitability. Our goals are
to sustain healthy revenue growth, expand operating margin and deliver growing free cash flow.
We enter 2024 with good momentum. We expect healthy double digit revenue growth for the full year
2024 on a F/X neutral basis driven by continued membership growth as well as improvement in F/X
neutral ARM as we adjust prices. We’ll also continue to invest in and build our ads business; we expect
strong growth in 2024 but off a small base so it’s not yet a primary driver of our overall revenue growth.
Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue
growth in 2025 and beyond.
Our forecast for Q1’24 revenue growth of 13% includes a three percentage point headwind from F/X on a
year over year basis, primarily due to the large decrease in the Argentine peso relative to the US dollar.
Therefore, we expect revenue to increase 16% on a F/X neutral basis in Q1’24. Similar to prior years, we
expect paid net additions to be down sequentially (reflecting typical seasonality as well as some likely
pull forward from our strong Q4’23 performance) but to be up versus Q1’23 paid net adds of 1.8M. We
expect global ARM to be up year over year on a F/X neutral basis in Q1.
2
ARM (Average Revenue per Membership) is defined as streaming revenue divided by the average number of
streaming paid memberships divided by the number of months in the period. These figures do not include sales
taxes or VAT.
1
Excluding the year over year effect of foreign exchange rate movements. Assumes foreign exchange rates
remained constant with foreign exchange rates from each of the corresponding months of the prior-year period.
2
We are increasing our full year 2024 operating margin forecast from 22%-23% to 24% (based on F/X rates
as of January 1, 2024). This reflects the weakening of the US dollar vs. most other currencies since
October as well as our stronger-than-forecasted Q4’23 performance and our expectation for how that
will carry through 2024. As we noted in our Q3 letter, while we've launched a F/X risk management
program with a goal of reducing near term volatility, we aren't fully hedged, which is why we are still
guiding and managing to a F/X neutral operating margin target. Our goal is to steadily increase our
operating margin each year, though the rate of margin expansion may vary year to year.
2024 Perspective
Entertainment has always been a fast changing industry — with new technology and consumer behavior
patterns creating new business models. Choice and control are the price of entry in modern
entertainment, and that is streaming. It’s what consumers want, and we believe it’s the best way for our
industry to stay relevant and growing. As Netflix has shown, it can also be a very healthy business. Since
our global launch in 2016, we’ve been able to invest heavily in our slate — with content amortization up
almost 3X from $4.8B in 2016 to $14.2B in 2023 — while steadily increasing our operating margins (up
more than 5X, from 4% to 21% over the same period) and growing our free cash flow (from negative
$3.3B in 2019 to positive $6.9B in 2023).
As our competitors adjust to these changes, it’s logical to expect further consolidation, particularly
among companies with large and declining linear networks. We’re not interested in acquiring linear
assets. Nor do we believe that further M&A among traditional entertainment companies will materially
change the competitive environment given all the consolidation that has already happened over the last
decade (Viacom/CBS, AT&T/Time Warner, Disney/Fox, Time Warner/Discovery, etc.). But we expect our
industry to remain highly competitive given: the franchise strength and programming expertise within
traditional entertainment companies; ongoing heavy investment from large tech players like YouTube,
Amazon and Apple; and broader competition for people’s time, including gaming and social media
(TikTok, Instagram etc.). It’s why continuing to improve our entertainment offering is so important, and
as many of our competitors cut back on their content spend, we continue to invest in our slate. In FY24,
we expect a high single digit percentage year over year increase in content amortization.
If we continue to execute well and drive continuous improvement — with a better slate, easier discovery
and more fandom — while establishing ourselves in new areas like advertising and games, we believe we
have a lot more room to grow. It’s a $600B+ opportunity revenue market across pay TV, film, games and
branded advertising — and today Netflix accounts for only roughly 5% of that addressable market. And
our share of TV viewing is still less than 10% in every country. But it all starts with the consumer. Because
when we delight our members, we can drive more engagement, revenue and profit than the competition
— creating an increasingly valuable entertainment company (for our members, content creators and
shareholders) that will strengthen and grow over time.
3
Share of Viewing, December 2023 (Streaming Only with Remainder being Linear + Other)
Source: Nielsen (Mexico, Poland, US), Kantar (Brazil, Spain), BARB (UK). The UK measures viewing across four screens (TV, smart
phone, tablet and laptop), all others are TV only.
Content & Engagement
Despite a lot of competition for people’s time, we continue to improve our service and drive many times
more viewing than any competitor other than YouTube. According to Nielsen, in the US in 2023, Netflix
had the number one:
● Original TV series 48 out of 52 weeks (vs 49 out of 52 weeks in 2022);
● Original film 41 out of 52 weeks, a significant increase on 2022 when we took the top slot 25 out
of 52 weeks; and
● Acquired series 44 out of 52 weeks (vs 43 out of 52 weeks in 2022).
In December, we published our first ever bi-annual What We Watched: A Netflix Engagement Report
which also shows the scale of our engagement. It covers over 18,000 titles, which together drove nearly
100 billion view hours (99% of all viewing on Netflix) between January and June 2023. The report, which
closely mirrors viewing patterns in our weekly Top 10 lists, underscored many of the trends we’ve
highlighted in previous investor letters, and which we saw continue in Q4:
● Our ability to develop and sustain intellectual property (IP), with the success in Q4 of: Berlin*,
our La Casa de Papel prequel (46.6M views ); Squid Game: The Challenge*, the reality TV version
3
of Netflix’s most watched TV show ever (34.5M views), Virgin River S5 (34.3M views) and Selling
Sunset S7* (11.9M views), as well as blockbuster finales for Sex Education and The Crown*, two
beloved and critically acclaimed titles, which generated 45.7M and 30.0M views respectively;
3
Views are based on the first 91 days of release. For titles released less than 91 days (denoted with an asterisk),
data is from launch date through January 21, 2024. We publish weekly our top titles based on engagement at
Netflix Top 10.
4
● The popularity of our new, original TV series, including in Q4: English language scripted series
like My Life with the Walter Boys* (42.6M views) and All the Light We Cannot See* (35.4M
views), unscripted hits like Beckham (44.0M views) and World War II from the Frontlines* (15.1M
views) and animated series like Blue Eye Samurai* (13.1M views);
● The huge audiences generated by our films, including two animated hit films in Q4; Adam
Sandler’s Leo* (108.1M views) and Chicken Run: Dawn of the Nugget* (43.8M views) and live
action features like David Fincher’s The Killer* (70.5M views); Leave the World Behind* starring
Julia Roberts (134.2M views) and Rebel Moon: A Child of Fire* from Zack Snyder (74.6M views)
— of which the second installment premieres in April;
● The strength of our non-English programming, including Lupin S3 from France (50.0M views),
Elite S7 (15.9M views) and the movie Nowhere from Spain (85.7M views), Cigarette Girl* from
Indonesia (5.6M views), Yu Yu Hakusho* from Japan (19.3M views), Gyeongseong Creature*
from Korea (13.6M views), The Railway Men* from India (11.2M views), Criminal Code* from
Brazil (20.9M view) and Nothing to See Here* from Mexico (8.3M views); and
● The strong demand for licensed titles like Young Sheldon and The Super Mario Bros. Movie
which generate tremendous value for our members and for rights holders.
Looking ahead, despite last year’s strikes pushing back the launch of some titles, we have a big, bold
slate for 2024. Audiences will be able to choose from hit returning dramas like The Diplomat S2,
Bridgerton S3, Squid Game S2 and Empress S2; unscripted series like Tour de France: Unchained S2, Love
is Blind S6, F1: Drive to Survive S6 and Full Swing S2; and brand new shows like 3 Body Problem (based on
the best selling novel and from the Game of Thrones showrunners), Griselda (starring Sofia Vegara,
which premieres this week), The Gentlemen (from Guy Ritchie), Eric (starring Benedict Cumberbach),
Avatar: The Last Airbender, Cien Años de Soledad, from Colombia based on the novel by Gabriel García
Márquez and Senna from Brazil. On the film side, in addition to the Rebel Moon sequel, our slate
includes Back in Action with Cameron Diaz and Jamie Foxx, Carry On from Steven Spielberg’s Amblin
Entertainment starring Jason Bateman and Taron Edgerton, Spellbound from producer John Lasseter,
Eddie Murphy reprising his role in Beverly Hills Cop: Axel F, and Six Triple Eight starring Kerry Washington
and directed by Tyler Perry.
We continue to invest in and experiment with live programming — for example, with the upcoming SAG
Awards and Netflix Slam, an exhibition tennis match between Rafael Nadal and Carlos Alcaraz. This will
enable us to understand what audiences value most, and how to eventize these moments, as we did
with Chris Rock’s stand-up special Selective Outrage in March 2023. Today, we’re excited to announce
that starting in January 2025, WWE’s Raw will be live on Netflix exclusively in the US, Canada, UK and
Latin America, with other countries and regions to be added over time. In addition, Netflix will become
the home of WWE shows and specials outside the US, including SmackDown and NXT, as well as its
premium live sports events — like Wrestlemania, SummerSlam and Royal Rumble — and award winning
documentaries and series beginning in 2025. WWE is great sports entertainment with a huge,
established and passionate fanbase, and we believe this long term partnership will be a big value add for
our members.
We’ve been very excited by the reaction to our first stage production, Stranger Things: The First Shadow,
based on our hit series Stranger Things. The show opened on London’s West End in December to rave
5
reviews and sold out crowds. The show is an origin story of the series and all that happens in Hawkins,
Indiana and the Upside Down. The play is part of a broader effort to give fans more ways to engage with
their favorite titles, including between seasons, through live experiences like Squid Game: The Trials in
Los Angeles (timed to the launch of our reality competition show of Squid Game) and consumer
products, like our recent Bridgerton wedding dress collection.
While it’s still early days for our games offering, engagement tripled last year — and despite games still
being small, and certainly not yet material relative to our film and series business, we’re pleased with
this progress. For example, in Q4, we debuted the Grand Theft Auto trilogy from Rockstar Games. This
has become our most successful launch to date in terms of installs and engagement, with some
consumers clearly signing up simply to play these games.
With over 260 million households and growing, no entertainment company has ever tried to program at
this scale, and for so many tastes and cultures. That requires us to invest in a wide variety of movies and
shows, and to continually improve our slate, title by title. The goal is simple: for people to know that
when they start a show or movie, they will love it. Because when people regularly press play and stay,
they’re happier and place a higher value on our service — which means they stick around longer
(retention) and recommend Netflix to their friends (acquisition).
Monetization
Over the last few years we’ve increased sophistication on our pricing and plans strategy so that we can
more effectively capture the value created by our service.
First, pricing. We seek to provide a range of prices and plans to meet a wide range of needs, including
highly competitive starting prices. As we invest in and improve Netflix, we’ll occasionally ask our
members to pay a little extra to reflect those improvements, which in turn helps drive the positive
flywheel of additional investment to further improve and grow our service.
Second, ads. Scaling our ads business represents an opportunity to tap into significant new revenue and
profit pools over the medium to longer term. In Q4‘23, like the quarter before, our ads membership
increased by nearly 70% quarter over quarter, supported by improvements in our offering (e.g.,
downloads) and the phasing out of our Basic plan for new and rejoining members in our ads markets.
The ads plan now accounts for 40% of all Netflix sign-ups in our ads markets and we’re looking to retire
our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from
there. On the advertiser side, we continue to improve the targeting and measurement we offer our
customers.
Third, monetizing sharing. We believe we've successfully addressed account sharing, ensuring that when
people enjoy Netflix they pay for the service too. Features like Transfer Profile and Extra Member were
much requested, and many millions of our members are now taking advantage of them. At this stage,
paid sharing is our normal course of business — creating a much bigger base from which we can grow
and enabling us to more effectively penetrate the near term addressable market of ~500M connected TV
6
households (excluding China and Russia), which should increase over time as broadband penetration
rises.
Cash Flow and Capital Structure
Net cash provided by operating activities in Q4 was $1.7B vs. $0.4B in the prior year period. Free cash
flow (FCF) for Q4 was $1.6B vs. $0.3B in the prior year period. For the full year 2023, net cash provided
4
by operating activities was $7.3B vs. $2.0B in 2022 while FCF totaled $6.9B compared to $1.6B in 2022.
This included approximately $1B in delayed spending due to the WGA and SAG-AFTRA strikes. Over the
past four years, we’ve generated $12B in net cash provided by operating activities and over $10B in
positive FCF, recouping the $9B in net cash used in operating activities and $10B FCF deficit we
generated from 2016-2019, when we invested heavily to build our original programming and production
capabilities around the world.
Netflix Net Cash Provided by (Used In) Operating Activities and Free Cash Flow, 2016-2023
As we’ve said previously, the strikes will cause some lumpiness in our year to year FCF progression. For
the full year 2024, assuming no material swings in F/X, we currently expect FCF of approximately $6B.
We continue to expect 2024 cash spend on content of up to $17B. In Q4’23, we repurchased 5.5M shares
for $2.5B and we have $8.4B remaining under our current buyback authorization. We have $400M in
senior notes maturing in Q1 of this year and we plan to pay that down with cash on hand.
Environmental, Social, and Governance (ESG)
We continue to evolve our executive compensation model to address feedback from shareholders. As
outlined in our 8-K filed on December 8, 2023, the 2024 program reflects several key changes including:
expanding participation in the performance-based bonus program to include our CFO, Chief Legal Officer
and Executive Chairman (in addition to our co-CEOs), eliminating the ability to allocate compensation
4
Defined as cash provided by (used in) operating activities less purchases of property and equipment and change
in other assets.
7
between cash and stock options, and granting long-term equity compensation in the form of RSUs and
PSUs (tied to total shareholder return relative to the S&P 500) in lieu of stock options.
Long Term Stock Price Performance
In each January investor letter, we provide an update on our long term stock performance. We continue
to manage our business for the long term and under the belief that pleasing our members will lead to
strong value creation for our fellow shareholders. We thank our equity and debt investors for their trust
and for coming along with us on our journey to build one of the world’s leading entertainment
companies.
Annualized Performance (%)*
1 Year
3 Year
5 Year
10 Year
Since IPO
NFLX
65%
-3%
13%
25%
33%
S&P 500
26%
10%
16%
12%
9%
NASDAQ
45%
6%
19%
15%
12%
Cumulative Return (%)*
1 Year
3 Year
5 Year
10 Year
Since IPO
NFLX
65%
-10%
82%
826%
45,342%
S&P 500
26%
33%
107%
211%
570%
NASDAQ
45%
19%
137%
300%
1,025%
* As of 12/31/23. Source: Bloomberg For NFLX, based on IPO price, split adjusted. IPO was May 23, 2002. Total Shareholder
Returns basis.
Reference
For quick reference, our past investor letters can be found here.
8
Regional Breakdown
Q4'22
Q1'23
Q2'23
Q3'23
Q4'23
$3,595
$3,609
$3,599
$3,735
$3,931
74.30
74.40
75.57
77.32
80.13
0.91
0.10
1.17
1.75
2.81
$16.23
$16.18
$16.00
$16.29
$16.64
10%
9%
0%
0%
3%
10%
9%
1%
0%
3%
$2,350
$2,518
$2,562
$2,693
$2,784
76.73
77.37
79.81
83.76
88.81
3.20
0.64
2.43
3.95
5.05
$10.43
$10.89
$10.87
$10.98
$10.75
-10%
-6%
-3%
2%
3%
5%
1%
-1%
-2%
-1%
$1,017
$1,070
$1,077
$1,143
$1,156
41.70
41.25
42.47
43.65
46.00
1.76
(0.45)
1.22
1.18
2.35
$8.30
$8.60
$8.58
$8.85
$8.60
2%
3%
-1%
3%
4%
7%
8%
8%
8%
16%
$857
$934
$919
$948
$963
38.02
39.48
40.55
42.43
45.34
1.80
1.46
1.07
1.88
2.91
$7.69
$8.03
$7.66
$7.62
$7.31
-17%
-13%
-13%
-9%
-5%
-4%
-6%
-7%
-6%
-4%
F/X Neutral ARM growth excludes the year over year effect of foreign exchange rate movements. Assumes foreign exchange
rates remained constant with foreign exchange rates from each of the corresponding months of the prior-year period.
9
F/X Neutral Operating Margin Disclosure
To provide additional transparency around our operating margin, we disclose each quarter our
year-to-date (YTD) operating margin based on F/X rates at the beginning of each year. This will allow
investors to see how our operating margin is tracking against our target (which was set in January of
2023 based on F/X rates at that time), absent intra-year fluctuations in F/X.
$'s in Millions
Full Year 2020
Full Year 2021
Full Year 2022
Full Year 2023
As Reported
Revenue
$24,996
$29,698
$31,616
$33,723
Operating Expenses
$20,411
$23,503
$25,983
$26,769
Operating Profit
$4,585
$6,195
$5,633
$6,954
Operating Margin
18.3%
20.9%
17.8%
20.6%
FX Impact
Revenue
$(560)
$(404)
$(962)
$(124)
Operating Expenses
$(71)
$(82)
$(214)
$2
Operating Profit
$(489)
$(322)
$(748)
$(126)
Adjusted*
Revenue
$25,556
$30,102
$32,578
$33,847
Operating Expenses
$20,482
$23,585
$26,196
$26,768
Operating Profit
$5,074
$6,517
$6,381
$7,080
Restructuring Charges
$150
Operating Profit x-Restructuring
$5,074
$6,517
$6,531
$7,080
Operating Margin
19.9%
21.6%
20.0%
20.9%
* Based on F/X rates at the beginning of each year. Note: Excludes F/X impact on content amortization, as titles are amortized at
a historical blended rate based on timing of spend.
January 23, 2024 Earnings Interview, 1:45pm PT
Our live video interview will be on youtube/netflixir at 1:45pm PT today. Co-CEOs Greg Peters and Ted
Sarandos, CFO Spence Neumann and VP of Finance/IR/Corporate Development Spencer Wang, will all be
on the video to answer questions submitted by sellside analysts.
10
IR Contact:
Spencer Wang
VP, Finance/IR & Corporate Development
408 809-5360
PR Contact:
Emily Feingold
VP, Corporate Communications
323 287-0756
Use of Non-GAAP Measures
This shareholder letter and its attachments include reference to the non-GAAP financial measures of F/X
neutral revenue and adjusted operating profit and margin, and free cash flow. Management believes that
free cash flow is an important liquidity metric because it measures, during a given period, the amount of
cash generated that is available to repay debt obligations, make strategic acquisitions and investments
and for certain other activities like stock repurchases. Management believes that F/X neutral revenue
and adjusted operating profit and margin allow investors to compare our projected results to our actual
results absent intra-year currency fluctuations and the impact of restructuring costs. However, these
non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to,
net income, operating income (profit), operating margin, diluted earnings per share and net cash
provided by (used in) operating activities, or other financial measures prepared in accordance with
GAAP. Reconciliation to the GAAP equivalent of these non-GAAP measures are contained in tabular form
on the attached unaudited financial statements and in the F/X neutral operating margin disclosure
above. We are not able to reconcile forward-looking non-GAAP financial measures because we are
unable to predict without unreasonable effort the exact amount or timing of the reconciling items,
including property and equipment and change in other assets, and the impact of changes in currency
exchange rates. The variability of these items could have a significant impact on our future GAAP
financial results.
Forward-Looking Statements
This shareholder letter contains certain forward-looking statements within the meaning of the federal
securities laws, including statements regarding our expected results for the fiscal quarter ending March
31, 2024 and fiscal year ending December 31, 2024; adoption and growth of streaming entertainment;
growth outlook and market opportunity; competitive landscape and position; core strategy and business
model; content offerings, including content licensing; slate strength; consumer products and live
experiences; games; monetization through pricing and tiering structures, including paid sharing;
ad-supported tier and its prospects; ads business; product features; acquisitions; impact of foreign
exchange rates; foreign currency exchange hedging program; seasonality; cash balance and spend; stock
repurchases; debt repayment; paid net additions, membership growth and retention; engagement;
consolidated revenue, revenue growth; ARM, operating income, operating margin, net income, content
amortization, and earnings per share; and free cash flow. The forward-looking statements in this letter
are subject to risks and uncertainties that could cause actual results and events to differ, including,
without limitation: our ability to attract new members and retain existing members; our ability to
compete effectively, including for consumer engagement with different modes of entertainment;
adoption of the ads plan and paid sharing; maintenance and expansion of device platforms for
streaming; fluctuations in consumer usage of our service; service disruptions; production risks;
macroeconomic conditions and timing of content releases. A detailed discussion of these and other risks
11
and uncertainties that could cause actual results and events to differ materially from such
forward-looking statements is included in our filings with the Securities and Exchange Commission,
including our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on
January 26, 2023. The Company provides internal forecast numbers. Investors should anticipate that
actual performance will vary from these forecast numbers based on risks and uncertainties discussed
above and in our Annual Report on Form 10-K. We undertake no obligation to update forward-looking
statements to reflect events or circumstances occurring after the date of this shareholder letter.
12
Netflix,Inc.
ConsolidatedStatementsofOperations
(unaudited)
(inthousands,exceptpersharedata)
ThreeMonthsEnded TwelveMonthsEnded
December31,
2023
September30,
2023
December31,
2022
December31,
2023
December31,
2022
Revenues
$ 8,832,825 $ 8,541,668 $ 7,852,053 $ 33,723,297 $ 31,615,550
Costofrevenues
5,307,485 4,930,788 5,404,160 19,715,368 19,168,285
Marketing
916,617 558,736 831,610 2,657,883 2,530,502
Technologyanddevelopment
673,341 657,159 673,926 2,675,758 2,711,041
Generalandadministrative
439,273 478,591 392,453 1,720,285 1,572,891
Operatingincome
1,496,109 1,916,394 549,904 6,954,003 5,632,831
Otherincome(expense):
Interestexpense
(175,212) (175,563) (170,603) (699,826) (706,212)
Interestandotherincome(expense)
(172,747) 168,218 (339,965) (48,772) 337,310
Incomebeforeincometaxes
1,148,150 1,909,049 39,336 6,205,405 5,263,929
Benefitfrom(provisionfor)incometaxes
(210,312) (231,627) 15,948 (797,415) (772,005)
Netincome
$ 937,838 $ 1,677,422 $ 55,284 $ 5,407,990 $ 4,491,924
Earningspershare:
Basic
$ 2.15 $ 3.80 $ 0.12 $ 12.25 $ 10.10
Diluted
$ 2.11 $ 3.73 $ 0.12 $ 12.03 $ 9.95
Weighted-averagesharesofcommonstockoutstanding:
Basic
435,923 441,537 445,200 441,571 444,698
Diluted
444,292 450,011 451,649 449,498 451,290
13
Netflix,Inc.
ConsolidatedBalanceSheets
(inthousands)
Asof
December31,
2023
December31,
2022
(unaudited)
Assets
Currentassets:
Cashandcashequivalents
$ 7,116,913 $ 5,147,176
Short-terminvestments
20,973 911,276
Othercurrentassets
2,780,247 3,208,021
Totalcurrentassets
9,918,133 9,266,473
Contentassets,net
31,658,056 32,736,713
Propertyandequipment,net
1,491,444 1,398,257
Othernon-currentassets
5,664,359 5,193,325
Totalassets
$ 48,731,992 $ 48,594,768
LiabilitiesandStockholders'Equity
Currentliabilities:
Currentcontentliabilities
$ 4,466,470 $ 4,480,150
Accountspayable
747,412 671,513
Accruedexpensesandotherliabilities
1,803,960 1,514,650
Deferredrevenue
1,442,969 1,264,661
Short-termdebt
399,844 —
Totalcurrentliabilities
8,860,655 7,930,974
Non-currentcontentliabilities
2,578,173 3,081,277
Long-termdebt
14,143,417 14,353,076
Othernon-currentliabilities
2,561,434 2,452,040
Totalliabilities
28,143,679 27,817,367
Stockholders'equity:
Commonstock
5,145,172 4,637,601
Treasurystockatcost
(6,922,200) (824,190)
Accumulatedothercomprehensiveloss
(223,945) (217,306)
Retainedearnings
22,589,286 17,181,296
Totalstockholders'equity
20,588,313 20,777,401
Totalliabilitiesandstockholders'equity
$ 48,731,992 $ 48,594,768
SupplementalInformation
Totalstreamingcontentobligations*
$ 21,713,349 $ 21,831,947
* Totalstreamingcontentobligationsarecomprisedofcontentliabilitiesincludedin"Currentcontentliabilities"and"Non-
currentcontentliabilities"ontheConsolidatedBalanceSheetsandobligationsthatarenotreflectedontheConsolidated
BalanceSheetsastheydidnotyetmeetthecriteriaforrecognition.
14
Netflix,Inc.
ConsolidatedStatementsofCashFlows
(unaudited)
(inthousands)
ThreeMonthsEnded TwelveMonthsEnded
December31,
2023
September30,
2023
December31,
2022
December31,
2023
December31,
2022
Cashflowsfromoperatingactivities:
Netincome
$ 937,838 $ 1,677,422 $ 55,284 $ 5,407,990 $ 4,491,924
Adjustmentstoreconcilenetincometonetcashprovidedby
operatingactivities:
Additionstocontentassets
(3,529,191) (2,883,839) (3,985,192) (12,554,703) (16,839,038)
Changeincontentliabilities
49,059 (325,989) 274,364 (585,602) 179,310
Amortizationofcontentassets
3,754,079 3,573,353 3,944,827 14,197,437 14,026,132
Depreciationandamortizationofproperty,equipmentand
intangibles
86,567 90,660 93,387 356,947 336,682
Stock-basedcompensationexpense
82,519 79,720 153,789 339,368 575,452
Foreigncurrencyremeasurementloss(gain)ondebt
239,371 (172,678) 461,681 176,296 (353,111)
Othernon-cashitems
154,896 115,688 123,688 512,075 533,543
Deferredincometaxes
(171,128) (86,277) 75,973 (459,359) (166,550)
Changesinoperatingassetsandliabilities:
Othercurrentassets
(13,198) 103,766 (398,319) (181,003) (353,834)
Accountspayable
213,228 (68,390) 125,074 93,502 (158,543)
Accruedexpensesandotherliabilities
(194,536) (65,029) (379,629) 103,565 (55,513)
Deferredrevenue
137,184 (5,733) 69,409 178,708 27,356
Othernon-currentassetsandliabilities
(83,674) (40,359) (170,478) (310,920) (217,553)
Netcashprovidedbyoperatingactivities
1,663,014 1,992,315 443,858 7,274,301 2,026,257
Cashflowsfrominvestingactivities:
Purchasesofpropertyandequipment
(81,632) (103,929) (111,593) (348,552) (407,729)
Acquisitions
— — (563,990) — (757,387)
Purchasesofshort-terminvestments
— — (911,276) (504,862) (911,276)
Proceedsfrommaturitiesofshort-terminvestments
493,228 400,000 — 1,395,165 —
Netcashprovidedby(usedin)investingactivities
411,596 296,071 (1,586,859) 541,751 (2,076,392)
Cashflowsfromfinancingactivities:
Repaymentsofdebt
— — — — (700,000)
Proceedsfromissuanceofcommonstock
51,427 57,818 6,705 169,990 35,746
Repurchasesofcommonstock
(2,500,000) (2,500,100) — (6,045,347) —
Otherfinancingactivities
(3,700) (32,826) — (75,446) —
Netcashprovidedby(usedin)financingactivities
(2,452,273) (2,475,108) 6,705 (5,950,803) (664,254)
Effectofexchangeratechangesoncash,cashequivalents,and
restrictedcash
139,342 (122,707) 166,564 82,684 (170,140)
Netincrease(decrease)incash,cashequivalents,andrestricted
cash
(238,321) (309,429) (969,732) 1,947,933 (884,529)
Cash,cashequivalentsandrestrictedcashatbeginningof
period
7,356,836 7,666,265 6,140,314 5,170,582 6,055,111
Cash,cashequivalentsandrestrictedcashatendofperiod
$ 7,118,515 $ 7,356,836 $ 5,170,582 $ 7,118,515 $ 5,170,582
15
Netflix,Inc.
Non-GAAPInformation
(unaudited)
(inthousands,exceptpercentages)
ThreeMonthsEnded TwelveMonthsEnded
December31,
2023
September30,
2023
December31,
2022
December31,
2023
December31,
2022
Non-GAAPfreecashflowreconciliation:
Netcashprovidedbyoperatingactivities
$ 1,663,014 $ 1,992,315 $ 443,858 $ 7,274,301 $ 2,026,257
Purchasesofpropertyandequipment
(81,632) (103,929) (111,593) (348,552) (407,729)
Non-GAAPfreecashflow
$ 1,581,382 $ 1,888,386 $ 332,265 $ 6,925,749 $ 1,618,528
TwelveMonthsEnded
Cumulative
Forty-Eight
MonthsEnded
December31,
2016
December31,
2017
December31,
2018
December31,
2019
December31,
2019
Non-GAAPfreecashflowreconciliation:
Netcashusedinoperatingactivities
$ (1,473,984) $ (1,785,948) $ (2,680,479) $ (2,887,322) $ (8,827,733)
Purchasesofpropertyandequipment
(107,653) (173,302) (173,946) (253,035) (707,936)
Changeinotherassets
(78,118) (60,409) (165,174) (134,029) (437,730)
Non-GAAPfreecashflow
$ (1,659,755) $ (2,019,659) $ (3,019,599) $ (3,274,386) $ (9,973,399)
TwelveMonthsEnded
Cumulative
Forty-Eight
MonthsEnded
December31,
2020
December31,
2021
December31,
2022
December31,
2023
December31,
2023
Non-GAAPfreecashflowreconciliation:
Netcashprovidedbyoperatingactivities
$ 2,427,077 $ 392,610 $ 2,026,257 $ 7,274,301 $ 12,120,245
Purchasesofpropertyandequipment
(497,923) (524,585) (407,729) (348,552) (1,778,789)
Changeinotherassets
(7,431) (26,919) — — (34,350)
Non-GAAPfreecashflow
$ 1,921,723 $ (158,894) $ 1,618,528 $ 6,925,749 $ 10,307,106
AsReported
Currency
Translation
Adjustment
Adjusted
Revenueat2022
Rates
Reported
Change
Constant
Currency
Change
Non-GAAPreconciliationofreportedandconstantcurrencyrevenuegrowthforthequarterendedDecember31,2023:
Totalrevenues
$ 8,832,825 $ 28,294 $ 8,861,119 12% 13%
16