Netflix NFLX · USD

Segment and Geographic InformationThe Company operates as one operating segment. The Company's chief operating decision maker (“CODM”) is its co-chief executive officers, who review financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow global operating margin and the allocation of budget between cost of revenues, sales and marketing, technology and development, and general and administrative expenses.The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2025, 2024 and 2023:Year Ended December 31, 202520242023(in thousands)Revenues$45,183,036 $39,000,966 $33,723,297 Less:Content amortization16,422,166 15,301,517 14,197,437 Other cost of revenues6,853,163 5,736,947 5,517,931 Sales and marketing3,301,306 2,917,554 2,657,883 Technology and development3,391,390 2,925,295 2,675,758 General and administrative1,888,408 1,702,039 1,720,285 Operating income13,326,603 10,417,614 6,954,003 Operating margin29.5 %26.7 %20.6 %Other income (expense)Interest expense(776,510)(718,733)(699,826)Interest and other income (expense)(1)172,459 266,776 (48,772)Income before income taxes12,722,552 9,965,657 6,205,405 Provision for income taxes(1,741,351)(1,254,026)(797,415)Net income$10,981,201 $8,711,631 $5,407,990 (1) Includes interest income of $295 million, $294 million and $281 million for the years ended December 31, 2025, 2024 and 2023, respectively.See the consolidated financial statements for other financial information regarding the Company’s operating segment.Total U.S. revenues were $18.5 billion, $16.1 billion and $13.8 billion for the years ended December 31, 2025, 2024 and 2023, respectively. See Note 2 Revenue Recognition for additional information about streaming revenue by region.

Revenue RecognitionThe following table summarizes streaming revenues by region for the years ended December 31, 2025, 2024 and 2023. Total streaming revenues are inclusive of hedging gains (losses) of $(91) million and $124 million for the years ended December 31, 2025 and 2024, respectively. No hedging gains and losses were recognized in total streaming revenues for the year ended December 31, 2023. See Note 8 Derivative Financial Instruments and Hedging Activities for further information.Year Ended December 31, 202520242023 (in thousands)United States and Canada (UCAN)$19,957,152 $17,359,369 $14,873,783 Europe, Middle East, and Africa (EMEA)14,514,646 12,387,035 10,556,487 Latin America (LATAM)5,357,521 4,839,816 4,446,461 Asia-Pacific (APAC)5,353,717 4,414,746 3,763,727 Total Streaming Revenues$45,183,036 $39,000,966 $33,640,458 Deferred revenue consists of membership fees billed that have not been recognized, as well as gift and other prepaid memberships that have not been fully redeemed. As of December 31, 2025, total deferred revenue was $1,776 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. Deferred revenue increased $255 million from $1,521 million as of December 31, 2024 to $1,776 million as of December 31, 2025. Deferred revenue balances may fluctuate due to the number of paid memberships and the price of our memberships.

Commitments and ContingenciesContentAt December 31, 2025, the Company had $24.0 billion of obligations comprised of $4.1 billion included in “Current content liabilities” and $1.6 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $18.4 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition. At December 31, 2024, the Company had $23.2 billion of obligations comprised of $4.4 billion included in “Current content liabilities” and $1.8 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $17.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition.The expected timing of payments for these content obligations is as follows:As of December 31,20252024 (in thousands)Less than one year$11,528,030 $11,424,696 Due after one year and through three years8,376,160 8,113,910 Due after three years and through five years3,041,538 2,809,834 Due after five years1,093,500 900,491 Total content obligations$24,039,228 $23,248,931 Content obligations include amounts related to the acquisition, licensing and production of content. Obligations that are in non-U.S. dollar currencies are translated to the U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements as well as other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant.

DebtAs of December 31, 2025, the Company had aggregate outstanding notes of $14,463 million, net of $56 million of issuance costs and discounts, with varying maturities (the “Notes”). As of December 31, 2024, the Company had aggregate outstanding notes of $15,583 million, net of $70 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 €4,700 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement loss, net of hedging impacts, totaling $72 million for the year ended December 31, 2025). See Note 8 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Company’s derivative and non-derivative financial instruments.The following table provides a summary of the Company's outstanding debt and the fair values based on quoted market prices in less active markets as of December 31, 2025 and December 31, 2024:Principal Amount at ParLevel 2 Fair Value as ofDecember 31,2025December 31,2024Issuance DateMaturityDecember 31,2025December 31,2024(in millions)(in millions)5.875% Senior Notes— 800 February 2015February 2025— 801 3.000% Senior Notes(1)— 487 April 2020June 2025— 487 3.625% Senior Notes— 500 April 2020June 2025— 497 4.375% Senior Notes1,000 1,000 October 2016November 20261,006 998 3.625% Senior Notes(1)1,526 1,346 May 2017May 20271,550 1,375 4.875% Senior Notes1,600 1,600 October 2017April 20281,634 1,607 5.875% Senior Notes1,900 1,900 April 2018November 20281,998 1,970 4.625% Senior Notes(1)1,292 1,139 October 2018May 20291,363 1,220 6.375% Senior Notes800 800 October 2018May 2029857 848 3.875% Senior Notes(1)1,409 1,242 April 2019November 20291,455 1,293 5.375% Senior Notes900 900 April 2019November 2029939 918 3.625% Senior Notes(1)1,292 1,139 October 2019June 20301,322 1,174 4.875% Senior Notes1,000 1,000 October 2019June 20301,025 996 4.900% Senior Notes1,000 1,000 August 2024August 20341,025 982 5.400% Senior Notes800 800 August 2024August 2054777 782 $14,519 $15,653 $14,951 $15,948 (1) The following Senior Notes have a principal amount denominated in Euro: 3.000% Senior Notes for €470 million, 3.625% Senior Notes for €1,300 million, 4.625% Senior Notes for €1,100 million, 3.875% Senior Notes for €1,200 million, and 3.625% Senior Notes for €1,100 million.

Income TaxesIncome before provision for income taxes was as follows: Year Ended December 31, 202520242023 (in thousands)United States$12,198,273 $9,101,391 $5,602,762 Foreign524,279 864,266 602,643 Income before income taxes$12,722,552 $9,965,657 $6,205,405 The components of provision for income taxes for all periods presented were as follows: Year Ended December 31, 202520242023 (in thousands)Current tax provision:Federal$1,317,011 $1,093,667 $854,170 State311,863 214,814 181,684 Foreign561,577 536,915 304,539 Total current2,190,451 1,845,396 1,340,393 Deferred tax provision:Federal(155,477)(520,510)(412,760)State(34,115)(41,700)(55,475)Foreign(259,508)(29,160)(74,743)Total deferred(449,100)(591,370)(542,978)Provision for income taxes$1,741,351 $1,254,026 $797,415 A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows: Year Ended December 31, 2025 (in thousands)PercentTax at U.S. Statutory Rate$2,671,734 21.0 %State and Local Income Taxes(1)191,271 1.5 %Foreign Tax EffectsBrazilWithholding tax on services238,233 1.9 %Others(77,189)(0.6)%Other foreign jurisdictions23,290 0.2 %Effect of Cross-Border Tax LawsForeign-derived intangible income(656,828)(5.2)%Foreign tax credit for withholding taxes(292,148)(2.3)%Other32,815 0.3 %Tax CreditsResearch and development tax credits(184,709)(1.5)%Other(9,748)(0.1)%Changes in Valuation Allowances(8,615)(0.1)%Nontaxable and Nondeductible itemsShare-based payment awards(393,156)(3.1)%Others80,904 0.6 %Changes in Unrecognized Tax Benefits130,400 1.0 %Other Adjustments(4,903)0.1 %Effective Tax Rate$1,741,351 13.7 %(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York state and city, California, Illinois, New Jersey, and New Mexico.A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows: Year Ended December 31, 20242023 (in thousands)Expected tax expense at U.S. federal statutory tax rate$2,092,710 $1,303,123 State income taxes, net of federal income tax effect166,311 104,717 Foreign earnings at other than U.S.

AcquisitionsIn December 2025, the Company completed an acquisition which was accounted for as a business combination for a total purchase price of approximately $28 million, consisting of cash consideration.On December 4, 2025, the Company entered into a definitive agreement and plan of merger with Warner Bros. Discovery, Inc. (“WBD”), to acquire WBD's streaming and studios businesses, including its film and television studios, HBO Max and HBO (such transaction, the "WBD transaction"), which was then amended by the parties thereto on January 19, 2026 (as so amended and restated, the "Amended and Restated Merger Agreement"). WBD is a leading global media and entertainment company and will separate its Global Linear Networks business, Discovery Global, into a new publicly-traded company prior to the closing of the WBD transaction. See Note 9 Commitments and Contingencies for further details.

We have an enterprise-wide information security program designed to identify, protect, detect and respond to and manage reasonably foreseeable cybersecurity risks and threats. To protect our information systems from cybersecurity threats, we use various security tools that help prevent, identify, escalate, investigate, resolve and recover from identified vulnerabilities and security incidents in a timely manner. These include, but are not limited to, internal reporting, monitoring and detection tools, and a bug bounty program to allow security researchers to assist us in identifying vulnerabilities in our products before they are exploited by malicious threat actors. We also maintain a third party security program to identify, prioritize, assess, mitigate and remediate third party risks; however, we rely on the third parties we use to implement security programs commensurate with their risk, and we cannot ensure in all circumstances that their efforts will be successful.We regularly assess risks from cybersecurity and technology threats and monitor our information systems for potential vulnerabilities. We use a widely-adopted risk quantification model to identify, measure and prioritize cybersecurity and technology risks and develop related security controls and safeguards. We conduct regular reviews and tests of our information security program and also leverage audits by our internal audit team, tabletop exercises, penetration and vulnerability testing, red team exercises, simulations, and other exercises to evaluate the effectiveness of our information security program and improve our security measures and planning. We also engage an external auditor to conduct an annual payment card industry data security standard review of our security controls protecting payment information, as well as third-party penetration testing of our cardholder environment and related systems. The results of these assessments are reported to the Audit Committee.

Subsequent EventOn January 19, 2026, the Company entered into the Amended and Restated Merger Agreement, which amended and restated in its entirety the agreement and plan of merger entered into with WBD and the other parties thereto on December 4, 2025. See Note 6 Acquisitions and Note 9 Commitments and Contingencies for further information.Also on January 19, 2026, in connection with the Amended and Restated Merger Agreement, the Company entered into a bridge facility incremental commitments agreement (the “Incremental Commitments Agreement”). The Incremental Commitments Agreement increased the existing commitments under the Company’s bridge commitment letter, dated as of December 4, 2025, from $34 billion to $42.2 billion of senior unsecured bridge term loan commitments for the purpose of financing the purchase price under the Amended and Restated Merger Agreement, paying certain other fees, costs and expenses incurred in connection with the transaction with WBD and, at the Company’s option, refinancing certain indebtedness.