January 19, 2023
Fellow shareholders,
Summary:
● Q4’22 revenue, operating profit and membership growth exceeded our forecast - we continue to
lead the industry in streaming engagement, revenue and profit.
● Our Q4 content slate outperformed even our high expectations:
○ Wednesday was our third most popular series ever, Harry & Meghan our second most
popular documentary series, Troll our most popular non-English film, and Glass Onion: A
Knives Out Mystery our fourth most popular film .
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● We successfully launched our new, lower priced ad-supported plan in November and are pleased
with the early results, with much more still to do.
● We delivered on the high end of our operating profit margin target for full year 2022, and we
expect to increase our operating margin in 2023 vs. 2022.
● For 2022, we finished with 231M paid memberships and generated $32B of revenue, $5.6B in
operating income, $2.0B of net cash from operating activities and $1.6B of free cash flow (FCF).
In 2023, we expect at least $3B of FCF, assuming no material swings in F/X.
● Ted Sarandos and Greg Peters are now co-CEOs of Netflix, with Reed Hastings as Executive
Chairman – completing our succession process.
2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to
reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and
building our ads offering. As always, our north stars remain pleasing our members and building even
greater profitability over time.
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As defined by cumulative view hours in the first 28 days
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Ted Sarandos and Greg Peters as our co-CEOs
To complete our succession process, Reed Hastings has become Executive Chairman, and Greg Peters has
stepped up from COO to become Ted Sarandos’ co-CEO, and a member of the Netflix board. Reed, Greg,
and Ted have been working closely together for 15 years, and this makes formal externally how we have
been operating internally. More details are here on our blog.
Ted said: “I want to thank Reed for his visionary leadership, mentorship and friendship over the last 20
years. We’ve all learned so much from his intellectual rigor, honesty and willingness to take big bets –
and we look forward to working with him for many more years to come. Since Reed started to delegate
management to us, Greg and I have built a strong operating model based on our shared values and
like-minded approach to growth. I am so excited to start this new chapter with Greg as co-CEO.”
Greg said: "I feel humbled and privileged to become co-CEO of Netflix. Ted and I have worked together
for many years – building tremendous trust and respect for each other. We're also motivated by the
same goal: a desire to better serve our members so that we can continue to grow our business.”
In addition to these changes, Bela Bajaria, formerly Head of Global TV, has become Chief Content Officer
and Scott Stuber has become Chairman of Netflix Film. Ted said: “Bela and Scott are outstanding creative
executives with proven track records at Netflix. In 2022 we premiered many of our most popular series
and films in Netflix history, including Wednesday, Glass Onion: A Knives Out Mystery, Purple Hearts,
Monster: The Jeffrey Dahmer Story, The Adam Project and Harry & Meghan – a testament to their
leadership and creativity. I couldn’t be more excited to work alongside them as we seek to delight
audiences for years to come.”
For full details of Netflix leadership see here.
Q4 Results
Year over year revenue growth of 2% in Q4 (10% on a foreign exchange (F/X) neutral basis ) was driven
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by a 4% increase in average paid memberships. ARM declined 2% year over year, but grew 5% on a F/X
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neutral basis
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. Revenue was slightly above our beginning-of-quarter projection, as paid net adds of 7.7M
(vs. 8.3M in Q4’21) came in higher than our 4.5M forecast, due to both strong acquisition and retention,
driven primarily by the success of our Q4 content slate. In addition, the US dollar depreciated vs. most
other currencies during the quarter, which resulted in slightly higher than projected ARM.
Operating income of $550M in Q4 was down vs. $632M in Q4 ‘21. This was above our guidance forecast
of $330M primarily due to higher than expected revenue as well as slower-than-forecasted hiring.
Operating margin for Q4 amounted to 7% compared to 8% in Q4’21. This year over year decline was due
to the appreciation of the US dollar. For the full year 2022, our operating margin amounted to 18% vs.
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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.
2
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
21% in FY21. Based on F/X rates at the beginning of 2022 and excluding the $150M in restructuring
charges in Q2’22, this translates into an operating margin of 20%, at the high end of the 19%-20% target
we set in January of 2022.
F/X Neutral Operating Margin (Excluding Restructuring Charges in Q2 2022)
* Based on F/X rates at the beginning of each year (and excluding the $150M of restructuring costs in Q2 2022). Note: Excludes
F/X impact on content amortization, as titles are amortized at a historical blended rate based on timing of spend.
EPS in Q4’22 was $0.12 vs. $1.33 in Q4‘21. This was below our $0.36 forecast due to a $462M non-cash
unrealized loss from the F/X remeasurement on our Euro denominated debt as a result of the
depreciation of the US dollar vs. the Euro during Q4’22. As a reminder, our approximately $5B of Euro
bonds provides us with some natural hedge on the relative value of the Euro for net income. However, it
doesn’t affect operating income as unrealized gains or losses are recognized below operating income in
“interest and other income.” For the full year, we recognized a non-cash unrealized gain of $353M from
the F/X remeasurement on our Euro bonds.
Forecast
As we noted in our Q3’22 shareholder letter, revenue is our primary top line metric, particularly as we
develop additional revenue streams where membership is just one component of our growth (like
advertising and paid sharing). The quarterly guidance we provide is our actual internal forecast at the
time we report. As always, we strive for accuracy although the rollout of major new initiatives (paid
sharing and ads) plus current uncertain macroeconomic environment leads to less-than-normal visibility.
We forecast Q1’23 revenue growth of 4% (8% on a F/X neutral basis). We expect our F/X neutral revenue
growth to be driven by a combination of year over year growth in average paid memberships and ARM.
This translates into modest positive paid net adds in Q1 ‘23 (vs. paid net adds of -0.2M in Q1’22). Our
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expectation of fewer paid net adds in Q1’23 vs. Q4’22 is consistent with normal seasonality and factors
in our strong member growth in Q4’22, which likely pulled forward some growth from Q1’23.
In addition, we expect to roll out paid sharing more broadly later in Q1’23 (more details below in the
Product and Pricing section). We anticipate that this will result in a very different quarterly paid net adds
pattern in 2023, with paid net adds likely to be greater in Q2’23 than in Q1’23. From our experience in
Latin America, we expect some cancel reaction in each market when we roll out paid sharing, which
impacts near term member growth. But as borrower households begin to activate their own standalone
accounts and extra member accounts are added, we expect to see improved overall revenue, which is
our goal with all plan and pricing changes.
Our long term financial objectives remain unchanged - sustain double digit revenue growth, expand
operating margin and deliver growing positive free cash flow. For the full year 2023, as we continue to
improve our service, grow our advertising business and launch paid sharing, we expect constant currency
revenue growth to accelerate over the course of the year. We also expect year over year operating profit
growth and operating margin expansion for the full year (assuming no material swings in F/X).
We have been targeting a FY23 operating margin of 19%-20% based on F/X rates at the beginning of
2022. We now expect to deliver roughly 21%-22% operating margin on this basis (above the 19%-20%
range). Rolling forward to F/X rates as of January 1, 2023, this translates into a FY23 operating margin
target of 18%-20%. For Q1’23, we expect operating margin to be down year over year (20% vs. 25%) due
primarily to the timing of content spend.
Content and Marketing
People have more choice of films and TV shows than ever so we need to ensure that there’s always
something great for them to watch on Netflix, regardless of their taste, mood, or who they’re watching
with. It’s why we’re so focused on continuing to improve our content and broaden our slate. 2022's
successful slate was the result of having the best creative executives working with best in class creators.
Last year alone we launched :
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● Five of our Top 10 most popular English language TV seasons ever – Stranger Things 4 and
Wednesday (both of which hit 1B hours viewed), Monster: The Jeffrey Dahmer Story, Bridgerton
S2 and Inventing Anna – as well as Harry & Meghan, our second most successful doc series ever;
● Four of our Top 10 most popular English language films ever –The Adam Project, The Gray Man,
Purple Hearts and Glass Onion: A Knives Out Mystery – as well as The Sea Beast and The Tinder
Swindler, our most successful animated and documentary films respectively;
● Seven of our Top 10 most popular non-English films ever – Troll (Norway), All Quiet on the
Western Front (Germany), Black Crab (Sweden), Through My Window (Spain), The Takedown
(France), My Name is Vendetta (Italy), and Loving Adults (Denmark);
● Two of our Top 10 most popular non-English TV shows ever – All of Us Are Dead and
Extraordinary Attorney Woo, both from Korea.
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For View Hours for these titles, please visit Netflix Top 10.
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We’re also pleased with the progress we’ve made with returning titles. Members watched more Netflix
returning seasons and sequels in 2022 than ever before across a broad range of genres – from film (Enola
Holmes 2, Lost Bullet 2 and two 365 Days sequels) and unscripted (Selling Sunset S5 and Love is Blind S3)
to award winning drama (Ozark S4 and The Crown S5), local language series (Sintonia S3, Young Royals S2
and Alice in Borderland S2, whose success pushed S1 back into the Top 10 after its launch) and animation
(Big Mouth S6).
It’s hard to think of two titles that more successfully pierced the zeitgeist this year than Stranger Things 4
and Wednesday. Both pushed old songs into the music charts: Kate Bush’s Running Up That Hill went to
number 1 on Billboard’s Global charts for the first time, 37 years after it was first released, and Lady
Gaga’s Bloody Mary made it onto the Billboard top 40 list for the first time ever, 11 years after it was first
released. We get amazing results when we have a Wednesday, Glass Onion or Monster moment with our
members. We believe people typically sign up for a streaming service because they’ve heard about a title
“you simply must watch” from a friend, seen the excitement on social media or read about it in the
press. Generating conversation is our primary marketing goal because we see that it drives acquisition
and encourages existing members to watch more, which in turn helps with retention. For Ryan Murphy’s
The Watcher, conversation about the series led to fans flocking to the house, a Saturday Night Live spoof
and a spike in home security sales. Our Wednesday campaign, with all our marketing in Wednesday’s
iconic voice, generated 1.5B organic social impressions pre-launch, a record for a Netflix season one.
Over time, we hope to have more and more of these moments across film and TV, and to replicate these
successes on the games side.
It’s now slightly over a year since we launched games on the Netflix service. We’ve made good progress
in that time - creating the infrastructure to deliver games to mobile devices, building a portfolio of 50
games across many genres and acquiring four game studios to bolster our internal production
capabilities. In Q4, we launched season four of unscripted series Too Hot to Handle, which was a top 10
title for us globally for three consecutive weeks. Simultaneously, we debuted our Too Hot to Handle
game, which has been our biggest game launch to date and is another encouraging sign in the long term
opportunity to entertain members with Netflix intellectual property (IP) across different mediums. In
2023, we’ll continue to expand our offering with more games, with a focus on Netflix-related IP.
Product and Pricing
As discussed over the past few quarters, we’re working to give people more choice when it comes to
price as well as greater control over their Netflix account. In November, we successfully launched our
new, lower priced ad-supported plan in 12 countries. We believe branded television advertising is a
substantial long term incremental revenue and profit opportunity for Netflix, and our ability to stand up
this business in six months underscores our commitment both to give members more choice and to
reaccelerate our growth.
While it’s still early days for ads and we have lots to do (in particular better targeting and measurement),
we are pleased with our progress to date across every dimension: member experience, value to
advertisers, and incremental contribution to our business. Engagement, which is consistent with
members on comparable ad-free plans, is better than what we had expected and we believe the lower
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price point is driving incremental membership growth. Also, as expected, we’ve seen very little switching
from other plans. Overall the reaction to this launch from both consumers and advertisers has confirmed
our belief that our ad-supported plan has strong unit economics (at minimum, in-line with or better than
the comparable ad-free plan) and will generate incremental revenue and profit, though the impact on
2023 will be modest given that this will build slowly over time.
Later in Q1, we expect to start rolling out paid sharing more broadly. Today’s widespread account sharing
(100M+ households) undermines our long term ability to invest in and improve Netflix, as well as build
our business. While our terms of use limit use of Netflix to a household, we recognize this is a change for
members who share their account more broadly. So we’ve worked hard to build additional new features
that improve the Netflix experience, including the ability for members to review which devices are using
their account and to transfer a profile to a new account. As we roll out paid sharing, members in many
countries will also have the option to pay extra if they want to share Netflix with people they don’t live
with. As is the case today, all members will be able to watch while traveling, whether on a TV or mobile
device.
As we work through this transition – and as some borrowers stop watching either because they don’t
convert to extra members or full paying accounts – near term engagement, as measured by third parties
like Nielsen’s The Gauge, could be negatively impacted. However, we believe the pattern will be similar
to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a
great slate of programming and borrowers sign-up for their own accounts.
Competition
We continue to operate in a highly competitive market as consumers have a vast number of
entertainment choices. Beyond our direct streaming competitors, we also vie for consumers’ time
against linear TV, YouTube, short form entertainment like TikTok, and gaming, to name just a few. The
silver lining is that the market for entertainment is huge and Netflix is still very small by comparison. For
example, in the more than 190 countries we operate in, our $30B+ of annual revenue compares against
the combined annual estimated ~$300B pay TV/streaming industry, $180B branded TV advertising spend
and $130 billion consumer spend on gaming .
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It’s not easy to build a large and profitable streaming business. But we’re competing from a position of
strength, as we lead the industry in terms of engagement, revenue and streaming profit. As a pure-play
streaming company, we’re also not anchored to shrinking legacy business models, like traditional
entertainment firms, allowing us to lean hard into the big growth opportunity ahead of us.
As we’ve said before, beyond revenue and profitability, another way to look at our business is through
engagement, and we are pleased to have Kantar join Nielsen – who have expanded their efforts – and
BARB to publicly report on both the shift from linear to streaming as well as the viewing share of
different entertainment companies in Brazil, Mexico, and Poland.
5
Data based on Omdia, PWC, and SNL Kagan estimates and excludes China and Russia. Gaming figure excludes
hardware sales.
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As can be seen in the newly reported markets of Mexico, Brazil, and Poland, we are less than 5% of TV
viewing. And in our largest markets like the US and the UK, we are still less than 10% of TV screen time.
As one of the leaders in streaming across all markets, we’re encouraged by the fact that streaming
overall accounts for less than 40% of viewing across these markets (and as little as 6% in Poland). We
believe ultimately the vast majority of time spent on TV will happen via streaming, which should provide
a long runway for growth as we continue to improve our service.
Source: Nielsen (US, Mexico, Poland), Kantar (Brazil), BARB (UK). UK measures viewing across four screens (TV, smart phone,
tablet and laptop), all others are TV only.
Cash Flow and Capital Structure
Net cash generated by operating activities was $0.4B in Q4’22 (vs. -$0.4B in the prior year period) and
$2.0B for FY22 (vs. $0.4B in FY21). Free cash flow (FCF) for Q4 totaled $0.3B, compared with -$0.6B in
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the year ago quarter. For FY22, we generated FCF of $1.6B (vs. -$0.2B in FY21), above our forecast of
approximately $1B.
Now that we are a decade into our original programming initiative and have successfully scaled it, we are
past the most cash intensive phase of this buildout. As a result, we believe we will now be generating
sustained, positive annual free cash flow going forward. Assuming no material swings in F/X, we expect
at least $3B of FCF for the full year 2023.
We closed two previously announced acquisitions in Q4 - leading animation studio Animal Logic and
games studio Spry Fox. We funded these purchases from cash on hand.
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Defined as cash provided by (used in) operating activities less purchases of property and equipment and change
in other assets.
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Gross debt at quarter end totaled $14B, in-line with our targeted range of $10-$15B. With cash and short
term investments of $6B, net debt totaled $8B, or 1.3x LTM EBITDA. We don’t have any scheduled debt
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maturities in FY23 and only $400M of debt maturities in FY24. All of our debt is fixed rate.
Our capital structure policy is unchanged. The first priority for our cash is to reinvest in our core business
and to fund new opportunities like gaming, followed by selective acquisitions. We target maintaining
minimum cash equivalent to roughly two months of revenue (e.g., about $5.2B based on Q4 revenue).
After meeting those needs, we intend to return cash to stockholders through share repurchases.
Assuming no material acquisitions, we anticipate resuming our share buyback program in 2023.
Environmental, Social, and Governance (ESG)
Two years ago we increased our focus on sustainability and related initiatives – building a team of
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experts, announcing an ambitious environmental commitment, and exploring creative-friendly ways to
reduce emissions in our productions (which account for more than half of our emissions as a company).
As a result, Netflix production sets are becoming more sustainable through cleaner technologies,
including electric vehicles and clean alternatives to diesel generators.
In 2021, we created the Netflix Fund for Creative Equity, committing $100M over five years to further
develop our pipeline for underrepresented talent. Through the fund, Netflix supports external
organizations committed to creating equitable opportunities in the TV and film industries, as well as
bespoke Netflix programs that help us to identify, train and provide job placement for emerging talent
globally. To date we've committed $29M towards these initiatives, supporting over 1,000 up-and-coming
creatives and more than 35 programs around the world.
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.
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Learn more at sustainability.netflix.com.
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Defined as net debt divided by last twelve months (LTM) adjusted EBITDA (net income before interest expense
and other income/expense, income taxes, depreciation and amortization of property, plant and equipment and
further adjusted to exclude other non-cash charges).
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Annualized Performance (%)*
1 Year
3 Year
5 Year
10 Year
Since IPO
NFLX
-51%
-3%
9%
36%
31%
S&P 500
-18%
8%
9%
13%
8%
NASDAQ
-33%
6%
10%
15%
10%
Cumulative Return (%)*
1 Year
3 Year
5 Year
10 Year
Since IPO
NFLX
-51%
-9%
54%
2,129%
27,422%
S&P 500
-18%
25%
57%
226%
430%
NASDAQ
-33%
20%
59%
287%
678%
* As of 12/31/22. Source: Bloomberg. For NFLX, based on IPO price, split adjusted. IPO was May 23, 2002. Total Shareholder
Returns basis.
Reference
For quick reference, our eight most recent investor letters are: October 2022, July 2022, April 2022,
January 2022, October 2021, July 2021, April 2021, January 2021.
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Regional Breakdown
January 19, 2023 Earnings Interview, 3pm PT
Our video interview with Jessica Reif Ehrlich, BofA Securities will be on youtube/netflixir at 3pm PT
today. Questions that investors would like to see asked should be sent to jessica.r[email protected]om. Reed
Hastings, Executive Chairman; co-CEO’s Ted Sarandos and Greg Peters; Spence Neumann, CFO; and
Spencer Wang, VP of IR/Corporate Development will all be on the video to answer Jessica’s questions.
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IR Contact:
Spencer Wang
VP, Finance/IR & Corporate Development
408 809-5360
PR Contact:
Emily Feingold
Vice President, Corporate Communications
323 287-0756
Use of Non-GAAP Measure
This shareholder letter and its attachments include reference to the non-GAAP financial measures of F/X
neutral revenue and operating margin, free cash flow, last twelve months (“LTM”) EBITDA, and adjusted
EBITDA. Management believes that free cash flow, LTM EBITDA and adjusted EBITDA are important
liquidity metrics because they measure, 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 operating margin
allows investors to compare our projected results to our actual results absent intra-year currency
fluctuations. However, these non-GAAP financial measures should be considered in addition to, not as a
substitute for or superior to, net income, operating income, 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. 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, 2023 and fiscal year ending December 31, 2023; adoption and growth of internet
entertainment; growth outlook and market opportunity; competitive position; core strategy and
business model; content offerings; our games strategy; monetization through pricing and tiering
structures, including paid sharing; ad-supported tier and its prospects; our competitors’ performance;
account sharing; impact of foreign exchange rates; seasonality; cash spend; stock repurchases; paid net
additions, membership growth and retention; engagement; consolidated revenue, revenue and ARM
growth, operating income, operating margin, net income, 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; our ability to monetize account 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 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
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Commission (“SEC”) on January 27, 2022. 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.
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Netflix,Inc.
ConsolidatedStatementsofOperations
(unaudited)
(inthousands,exceptpersharedata)
ThreeMonthsEnded TwelveMonthsEnded
December31,
2022
September30,
2022
December31,
2021
December31,
2022
December31,
2021
Revenues
$ 7,852,053 $ 7,925,589 $ 7,709,318 $ 31,615,550 $ 29,697,844
Costofrevenues
5,404,160 4,788,665 5,239,575 19,168,285 17,332,683
Marketing
831,610 567,954 792,713 2,530,502 2,545,146
Technologyanddevelopment
673,926 662,739 647,470 2,711,041 2,273,885
Generalandadministrative
392,453 373,213 397,790 1,572,891 1,351,621
Operatingincome
549,904 1,533,018 631,770 5,632,831 6,194,509
Otherincome(expense):
Interestexpense
(170,603) (172,575) (189,429) (706,212) (765,620)
Interestandotherincome(expense)
(339,965) 261,404 108,512 337,310 411,214
Incomebeforeincometaxes
39,336 1,621,847 550,853 5,263,929 5,840,103
Benefitfrom(provisionfor)incometaxes
15,948 (223,605) 56,576 (772,005) (723,875)
Netincome
$ 55,284 $ 1,398,242 $ 607,429 $ 4,491,924 $ 5,116,228
Earningspershare:
Basic
$ 0.12 $ 3.14 $ 1.37 $ 10.10 $ 11.55
Diluted
$ 0.12 $ 3.10 $ 1.33 $ 9.95 $ 11.24
Weighted-averagesharesofcommonstockoutstanding:
Basic
445,200 444,878 443,462 444,698 443,155
Diluted
451,649 450,344 455,795 451,290 455,372
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Netflix,Inc.
ConsolidatedBalanceSheets
(inthousands)
Asof
December31,
2022
December31,
2021
(unaudited)
Assets
Currentassets:
Cashandcashequivalents
$ 5,147,176 $ 6,027,804
Short-terminvestments
911,276 —
Othercurrentassets
3,208,021 2,042,021
Totalcurrentassets
9,266,473 8,069,825
Contentassets,net
32,736,713 30,919,539
Propertyandequipment,net
1,398,257 1,323,453
Othernon-currentassets
5,193,325 4,271,846
Totalassets
$ 48,594,768 $ 44,584,663
LiabilitiesandStockholders'Equity
Currentliabilities:
Currentcontentliabilities
$ 4,480,150 $ 4,292,967
Accountspayable
671,513 837,483
Accruedexpensesandotherliabilities
1,514,650 1,449,351
Deferredrevenue
1,264,661 1,209,342
Short-termdebt
— 699,823
Totalcurrentliabilities
7,930,974 8,488,966
Non-currentcontentliabilities
3,081,277 3,094,213
Long-termdebt
14,353,076 14,693,072
Othernon-currentliabilities
2,452,040 2,459,164
Totalliabilities
27,817,367 28,735,415
Stockholders'equity:
Commonstock
4,637,601 4,024,561
Treasurystockatcost
(824,190) (824,190)
Accumulatedothercomprehensiveloss
(217,306) (40,495)
Retainedearnings
17,181,296 12,689,372
Totalstockholders'equity
20,777,401 15,849,248
Totalliabilitiesandstockholders'equity
$ 48,594,768 $ 44,584,663
SupplementalInformation
Totalstreamingcontentobligations*
$ 21,831,947 $ 23,161,360
* 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assetrecognition.
14
Netflix,Inc.
ConsolidatedStatementsofCashFlows
(unaudited)
(inthousands)
ThreeMonthsEnded TwelveMonthsEnded
December31,
2022
September30,
2022
December31,
2021
December31,
2022
December31,
2021
Cashflowsfromoperatingactivities:
Netincome
$ 55,284 $ 1,398,242 $ 607,429 $ 4,491,924 $ 5,116,228
Adjustmentstoreconcilenetincometonetcashprovidedby
(usedin)operatingactivities:
Additionstocontentassets
(3,985,192) (4,582,671) (5,654,639) (16,839,038) (17,702,202)
Changeincontentliabilities
274,364 60,867 840,392 179,310 232,898
Amortizationofcontentassets
3,944,827 3,653,592 3,741,317 14,026,132 12,230,367
Depreciationandamortizationofproperty,equipmentand
intangibles
93,387 85,188 63,984 336,682 208,412
Stock-basedcompensationexpense
153,789 152,062 99,329 575,452 403,220
Foreigncurrencyremeasurementloss(gain)ondebt
461,681 (348,458) (103,917) (353,111) (430,661)
Othernon-cashitems
123,688 102,513 93,806 533,543 376,777
Deferredincometaxes
75,973 (57,797) (62,279) (166,550) 199,548
Changesinoperatingassetsandliabilities:
Othercurrentassets
(398,319) (120,071) (608) (353,834) (369,681)
Accountspayable
125,074 53,875 185,279 (158,543) 145,115
Accruedexpensesandotherliabilities
(379,629) 212,072 (95,903) (55,513) 180,338
Deferredrevenue
69,409 (48,420) 26,710 27,356 91,350
Othernon-currentassetsandliabilities
(170,478) (4,184) (144,174) (217,553) (289,099)
Netcashprovidedby(usedin)operatingactivities
443,858 556,810 (403,274) 2,026,257 392,610
Cashflowsfrominvestingactivities:
Purchasesofpropertyandequipment
(111,593) (84,960) (165,979) (407,729) (524,585)
Changeinotherassets
— — — — (26,919)
Acquisitions
(563,990) — (788,349) (757,387) (788,349)
Purchasesofshort-terminvestments
(911,276) — — (911,276) —
Netcashusedininvestingactivities
(1,586,859) (84,960) (954,328) (2,076,392) (1,339,853)
Cashflowsfromfinancingactivities:
Repaymentsofdebt
— — — (700,000) (500,000)
Proceedsfromissuanceofcommonstock
6,705 4,113 88,149 35,746 174,414
Repurchasesofcommonstock
— — — — (600,022)
Taxespaidrelatedtonetsharesettlementofequityawards
— — (224,168) — (224,168)
Netcashprovidedby(usedin)financingactivities
6,705 4,113 (136,019) (664,254) (1,149,776)
Effectofexchangeratechangesoncash,cashequivalents,and
restrictedcash
166,564 (180,058) (4,236) (170,140) (86,740)
Netincrease(decrease)incash,cashequivalents,andrestricted
cash
(969,732) 295,905 (1,497,857) (884,529) (2,183,759)
Cash,cashequivalentsandrestrictedcashatbeginningof
period
6,140,314 5,844,409 7,552,968 6,055,111 8,238,870
Cash,cashequivalentsandrestrictedcashatendofperiod
$ 5,170,582 $ 6,140,314 $ 6,055,111 $ 5,170,582 $ 6,055,111
ThreeMonthsEnded TwelveMonthsEnded
December31,
2022
September30,
2022
December31,
2021
December31,
2022
December31,
2021
Non-GAAPfreecashflowreconciliation:
Netcashprovidedby(usedin)operatingactivities
$ 443,858 $ 556,810 $ (403,274) $ 2,026,257 $ 392,610
Purchasesofpropertyandequipment
(111,593) (84,960) (165,979) (407,729) (524,585)
Changeinotherassets
— — — — (26,919)
Non-GAAPfreecashflow
$ 332,265 $ 471,850 $ (569,253) $ 1,618,528 $ (158,894)
15
Netflix,Inc.
Non-GAAPInformation
(unaudited)
(inthousands)
ThreeMonthsEnded
TwelveMonths
Ended
March31,
2022
June30,
2022
September30,
2022
December31,
2022
December31,
2022
Non-GAAPAdjustedEBITDAreconciliation:
GAAPnetincome
$ 1,597,447 $ 1,440,951 $ 1,398,242 $ 55,284 $ 4,491,924
Add:
Otherexpense(income)
(8,066) (44,771) (88,829) 510,568 368,902
Provisionfor(benefitfrom)incometaxes
382,245 182,103 223,605 (15,948) 772,005
Depreciationandamortizationofproperty,
equipmentandintangibles
74,602 83,505 85,188 93,387 336,682
Stock-basedcompensationexpense
119,209 150,392 152,062 153,789 575,452
AdjustedEBITDA
$ 2,165,437 $ 1,812,180 $ 1,770,268 $ 797,080 $ 6,544,965
Asof
December31,
2022
Non-GAAPLTMEBITDAreconciliation:
Totaldebt
$ 14,353,076
Add:Debtissuancecosts
78,824
Less:Cash,cashequivalentsandshort-term
investments
(6,058,452)
Netdebt
$ 8,373,448
LTMEBITDA(Netdebt/LTMAdjustedEBITDA)
1.3
AsReported
Currency
Translation
Adjustment
Adjusted
Revenueat2021
Rates
Reported
Change
Constant
Currency
Change
Non-GAAPreconciliationofreportedandconstantcurrencyrevenuegrowthforthequarterendedDecember31,2022:
Globalrevenue
$ 7,852,053 $ 606,895 $ 8,458,948 2% 10%
16