|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
77-0467272
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, $0.001 par value per share
|
NFLX
|
NASDAQ Global Select Market
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
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Page
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PART I
|
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II
|
|
|
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
PART III
|
|
|
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
PART IV
|
|
|
|
|
|
Item 15.
|
Item 1.
|
Business
|
Item 1A.
|
Risk Factors
|
•
|
the need to adapt our content and user interfaces for specific cultural and language differences;
|
•
|
difficulties and costs associated with staffing and managing foreign operations;
|
•
|
political or social unrest and economic instability;
|
•
|
compliance with laws such as the Foreign Corrupt Practices Act, UK Bribery Act and other anti-corruption laws, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials;
|
•
|
difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions, including local ownership requirements for streaming content providers;
|
•
|
regulatory requirements or government action against our service, whether in response to enforcement of actual or purported legal and regulatory requirements or otherwise, that results in disruption or non-availability of our service or particular content in the applicable jurisdiction;
|
•
|
foreign intellectual property laws, such as the EU copyright directive, or changes to such laws, which may be less favorable than U.S. law and, among other issues, may impact the economics of creating or distributing content, anti-piracy efforts, or our ability to protect or exploit intellectual property rights;
|
•
|
adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, and the related application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate tax determination is uncertain;
|
•
|
fluctuations in currency exchange rates, which we do not use foreign exchange contracts or derivatives to hedge against and which will impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk;
|
•
|
profit repatriation and other restrictions on the transfer of funds;
|
•
|
differing payment processing systems as well as consumer use and acceptance of electronic payment methods, such as payment cards;
|
•
|
new and different sources of competition;
|
•
|
censorship requirements that cause us to remove or edit popular content, leading to consumer disappointment, brand tarnishment or dissatisfaction with our service;
|
•
|
low usage and/or penetration of internet-connected consumer electronic devices;
|
•
|
different and more stringent user protection, data protection, privacy and other laws, including data localization and/or restrictions on data export, and local ownership requirements;
|
•
|
availability of reliable broadband connectivity and wide area networks in targeted areas for expansion;
|
•
|
differing, and often more lenient, laws and consumer understanding/attitudes regarding the illegality of piracy;
|
•
|
negative impacts from trade disputes; and
|
•
|
implementation of regulations designed to stimulate the local production of film and TV series in order to promote and preserve local culture and economic activity, including local content quotas, investment obligations, and levies to support local film funds. For example, the European Union recently revised its Audio Visual Media Services Directive to require that European works comprise at least thirty (30) percent of media service providers’ catalogs, and to require prominence of those works.
|
•
|
make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on our Notes and our other obligations;
|
•
|
limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;
|
•
|
increase our cost of borrowing;
|
•
|
limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;
|
•
|
require us to use a substantial portion of our cash flow from operations to make debt service payments and pay our other obligations when due;
|
•
|
limit our flexibility to plan for, or react to, changes in our business and industry;
|
•
|
place us at a competitive disadvantage compared to our less leveraged competitors; and
|
•
|
increase our vulnerability to the impact of adverse economic and industry conditions, including changes in interest rates and foreign exchange rates.
|
•
|
authorize our board of directors, without stockholder approval, to issue up to 10,000,000 shares of undesignated preferred stock;
|
•
|
provide for a classified board of directors;
|
•
|
prohibit our stockholders from acting by written consent;
|
•
|
establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings; and
|
•
|
prohibit stockholders from calling a special meeting of stockholders.
|
•
|
variations in our operating results, including our membership acquisition and retention, revenues, operating income, net income and free cash flow;
|
•
|
variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
|
•
|
announcements of developments affecting our business, systems or expansion plans by us or others;
|
•
|
competition, including the introduction of new competitors, their pricing strategies and services;
|
•
|
market volatility in general;
|
•
|
the level of demand for our stock, including the amount of short interest in our stock; and
|
•
|
the operating results of our competitors.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Item 6.
|
Selected Financial Data
|
|
|
Year ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Revenues
|
|
$
|
20,156,447
|
|
|
$
|
15,794,341
|
|
|
$
|
11,692,713
|
|
|
$
|
8,830,669
|
|
|
$
|
6,779,511
|
|
Operating income
|
|
2,604,254
|
|
|
1,605,226
|
|
|
838,679
|
|
|
379,793
|
|
|
305,826
|
|
|||||
Operating margin
|
|
13
|
%
|
|
10
|
%
|
|
7
|
%
|
|
4
|
%
|
|
5
|
%
|
|||||
Net income
|
|
1,866,916
|
|
|
1,211,242
|
|
|
558,929
|
|
|
186,678
|
|
|
122,641
|
|
|||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
4.26
|
|
|
$
|
2.78
|
|
|
$
|
1.29
|
|
|
$
|
0.44
|
|
|
$
|
0.29
|
|
Diluted
|
|
$
|
4.13
|
|
|
$
|
2.68
|
|
|
$
|
1.25
|
|
|
$
|
0.43
|
|
|
$
|
0.28
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
437,799
|
|
|
435,374
|
|
|
431,885
|
|
|
428,822
|
|
|
425,889
|
|
|||||
Diluted
|
|
451,765
|
|
|
451,244
|
|
|
446,814
|
|
|
438,652
|
|
|
436,456
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Net cash used in operating activities
|
|
$
|
(2,887,322
|
)
|
|
$
|
(2,680,479
|
)
|
|
$
|
(1,785,948
|
)
|
|
$
|
(1,473,984
|
)
|
|
$
|
(749,439
|
)
|
Free cash flow (1)
|
|
(3,274,386
|
)
|
|
(3,019,599
|
)
|
|
(2,019,659
|
)
|
|
(1,659,755
|
)
|
|
(920,557
|
)
|
(1)
|
Free cash flow is defined as net cash used in operating and investing activities, excluding the non-operational cash flows from purchases, maturities and sales of short-term investments. See Liquidity and Capital Resources in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a reconciliation of "free cash flow" to "net cash used in operating activities."
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cash, cash equivalents and short-term investments
|
|
$
|
5,018,437
|
|
|
$
|
3,794,483
|
|
|
$
|
2,822,795
|
|
|
$
|
1,733,782
|
|
|
$
|
2,310,715
|
|
Total content assets, net (2)
|
|
24,504,567
|
|
|
20,102,327
|
|
|
14,668,688
|
|
|
10,975,393
|
|
|
7,192,298
|
|
|||||
Total assets (3)
|
|
33,975,712
|
|
|
25,974,400
|
|
|
19,012,742
|
|
|
13,586,610
|
|
|
10,202,871
|
|
|||||
Long-term debt
|
|
14,759,260
|
|
|
10,360,058
|
|
|
6,499,432
|
|
|
3,364,311
|
|
|
2,371,362
|
|
|||||
Non-current content liabilities (2)
|
|
3,334,323
|
|
|
3,759,026
|
|
|
3,329,796
|
|
|
2,894,654
|
|
|
2,025,095
|
|
|||||
Total content liabilities (2)
|
|
7,747,884
|
|
|
8,440,588
|
|
|
7,497,520
|
|
|
6,515,920
|
|
|
4,801,400
|
|
|||||
Total stockholders’ equity
|
|
7,582,157
|
|
|
5,238,765
|
|
|
3,581,956
|
|
|
2,679,800
|
|
|
2,223,426
|
|
(2)
|
Certain prior period amounts in the Consolidated Balance Sheets related to DVD content assets and liabilities have been reclassified to conform to the current period presentation. See Note 1 Reclassification in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further detail.
|
(3)
|
The selected financial data for fiscal year 2019 reflects the adoption of ASU 2016-02, Leases (Topic 842). See Note 3 Balance Sheet Components for further detail. The selected financial data for fiscal years 2018, 2017, 2016, and 2015 do not reflect the adoption of ASU 2016-02.
|
|
|
As of / Year Ended December 31,
|
|||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
|
|
(in thousands)
|
|||||||||||||
Global streaming paid memberships at end of period
|
|
167,090
|
|
|
139,259
|
|
|
110,644
|
|
|
89,090
|
|
|
70,839
|
|
Global streaming paid net membership additions
|
|
27,831
|
|
|
28,615
|
|
|
21,554
|
|
|
18,251
|
|
|
16,363
|
|
A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or other promotional offering by the Company to certain new and rejoining members. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellation of the service, as a result of a failed method of payment, becomes effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
As of/ Year Ended December 31,
|
|
Change
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
|
(in thousands, except revenue per membership and percentages)
|
||||||||||||||||
Global Streaming Memberships:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Paid net membership additions
|
|
27,831
|
|
|
28,615
|
|
|
21,554
|
|
|
(3
|
)%
|
|
33
|
%
|
|||
Paid memberships at end of period
|
|
167,090
|
|
|
139,259
|
|
|
110,644
|
|
|
20
|
%
|
|
26
|
%
|
|||
Average paying memberships
|
|
152,984
|
|
|
124,658
|
|
|
99,323
|
|
|
23
|
%
|
|
26
|
%
|
|||
Average monthly revenue per paying membership
|
|
$
|
10.82
|
|
|
$
|
10.31
|
|
|
$
|
9.43
|
|
|
5
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Results:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Streaming revenues
|
|
$
|
19,859,230
|
|
|
$
|
15,428,752
|
|
|
$
|
11,242,216
|
|
|
29
|
%
|
|
37
|
%
|
DVD revenues
|
|
297,217
|
|
|
365,589
|
|
|
450,497
|
|
|
(19
|
)%
|
|
(19
|
)%
|
|||
Total revenues
|
|
$
|
20,156,447
|
|
|
$
|
15,794,341
|
|
|
$
|
11,692,713
|
|
|
28
|
%
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
|
$
|
2,604,254
|
|
|
$
|
1,605,226
|
|
|
$
|
838,679
|
|
|
62
|
%
|
|
91
|
%
|
Operating margin
|
|
13
|
%
|
|
10
|
%
|
|
7
|
%
|
|
30
|
%
|
|
43
|
%
|
|
|
As of/ Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except revenue per membership and percentages)
|
|
|
||||||||||||||||||||||
Revenues
|
|
$
|
10,051,208
|
|
|
$
|
8,281,532
|
|
|
$
|
6,660,859
|
|
|
$
|
1,769,676
|
|
|
21
|
%
|
|
$
|
1,620,673
|
|
|
24
|
%
|
Paid net membership additions
|
|
2,905
|
|
|
6,335
|
|
|
5,512
|
|
|
(3,430
|
)
|
|
(54
|
)%
|
|
823
|
|
|
15
|
%
|
|||||
Paid memberships at end of period
|
|
67,662
|
|
|
64,757
|
|
|
58,422
|
|
|
2,905
|
|
|
4
|
%
|
|
6,335
|
|
|
11
|
%
|
|||||
Average paying memberships
|
|
66,615
|
|
|
61,845
|
|
|
55,660
|
|
|
4,770
|
|
|
8
|
%
|
|
6,185
|
|
|
11
|
%
|
|||||
Average monthly revenue per paying membership
|
|
$
|
12.57
|
|
|
$
|
11.16
|
|
|
$
|
9.97
|
|
|
$
|
1.41
|
|
|
13
|
%
|
|
$
|
1.19
|
|
|
12
|
%
|
Constant currency change (1)
|
|
|
|
|
|
|
|
|
|
13
|
%
|
|
|
|
12
|
%
|
|
|
As of/ Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except revenue per membership and percentages)
|
|
|
||||||||||||||||||||||
Revenues
|
|
$
|
5,543,067
|
|
|
$
|
3,963,707
|
|
|
$
|
2,362,813
|
|
|
$
|
1,579,360
|
|
|
40
|
%
|
|
$
|
1,600,894
|
|
|
68
|
%
|
Paid net membership additions
|
|
13,960
|
|
|
11,814
|
|
|
8,173
|
|
|
2,146
|
|
|
18
|
%
|
|
3,641
|
|
|
45
|
%
|
|||||
Paid memberships at end of period
|
|
51,778
|
|
|
37,818
|
|
|
26,004
|
|
|
13,960
|
|
|
37
|
%
|
|
11,814
|
|
|
45
|
%
|
|||||
Average paying memberships
|
|
44,731
|
|
|
31,601
|
|
|
21,476
|
|
|
13,130
|
|
|
42
|
%
|
|
10,125
|
|
|
47
|
%
|
|||||
Average monthly revenue per paying membership
|
|
$
|
10.33
|
|
|
$
|
10.45
|
|
|
$
|
9.17
|
|
|
$
|
(0.12
|
)
|
|
(1
|
)%
|
|
$
|
1.28
|
|
|
14
|
%
|
Constant currency change (1)
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
|
9
|
%
|
|
|
As of/ Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except revenue per membership and percentages)
|
|
|
||||||||||||||||||||||
Revenues
|
|
$
|
2,795,434
|
|
|
$
|
2,237,697
|
|
|
$
|
1,642,616
|
|
|
$
|
557,737
|
|
|
25
|
%
|
|
$
|
595,081
|
|
|
36
|
%
|
Paid net membership additions
|
|
5,340
|
|
|
6,360
|
|
|
5,509
|
|
|
(1,020
|
)
|
|
(16
|
)%
|
|
851
|
|
|
15
|
%
|
|||||
Paid memberships at end of period
|
|
31,417
|
|
|
26,077
|
|
|
19,717
|
|
|
5,340
|
|
|
20
|
%
|
|
6,360
|
|
|
32
|
%
|
|||||
Average paying memberships
|
|
28,391
|
|
|
22,767
|
|
|
16,917
|
|
|
5,624
|
|
|
25
|
%
|
|
5,850
|
|
|
35
|
%
|
|||||
Average monthly revenue per paying membership
|
|
$
|
8.21
|
|
|
$
|
8.19
|
|
|
$
|
8.09
|
|
|
$
|
0.02
|
|
|
—
|
%
|
|
$
|
0.10
|
|
|
1
|
%
|
Constant currency change (1)
|
|
|
|
|
|
|
|
|
|
13
|
%
|
|
|
|
13
|
%
|
|
|
As of/ Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except revenue per membership and percentages)
|
|
|
||||||||||||||||||||||
Revenues
|
|
$
|
1,469,521
|
|
|
$
|
945,816
|
|
|
$
|
575,928
|
|
|
$
|
523,705
|
|
|
55
|
%
|
|
$
|
369,888
|
|
|
64
|
%
|
Paid net membership additions
|
|
5,626
|
|
|
4,106
|
|
|
2,360
|
|
|
1,520
|
|
|
37
|
%
|
|
1,746
|
|
|
74
|
%
|
|||||
Paid memberships at end of period
|
|
16,233
|
|
|
10,607
|
|
|
6,501
|
|
|
5,626
|
|
|
53
|
%
|
|
4,106
|
|
|
63
|
%
|
|||||
Average paying memberships
|
|
13,247
|
|
|
8,446
|
|
|
5,271
|
|
|
4,801
|
|
|
57
|
%
|
|
3,175
|
|
|
60
|
%
|
|||||
Average monthly revenue per paying membership
|
|
$
|
9.24
|
|
|
$
|
9.33
|
|
|
$
|
9.11
|
|
|
$
|
(0.09
|
)
|
|
(1
|
)%
|
|
$
|
0.22
|
|
|
2
|
%
|
Constant currency change (1)
|
|
|
|
|
|
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Cost of revenues
|
|
$
|
12,440,213
|
|
|
$
|
9,967,538
|
|
|
$
|
8,033,000
|
|
|
$
|
2,472,675
|
|
|
25
|
%
|
|
$
|
1,934,538
|
|
|
24
|
%
|
As a percentage of revenues
|
|
62
|
%
|
|
63
|
%
|
|
69
|
%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Marketing
|
|
$
|
2,652,462
|
|
|
$
|
2,369,469
|
|
|
$
|
1,436,281
|
|
|
$
|
282,993
|
|
|
12
|
%
|
|
$
|
933,188
|
|
|
65
|
%
|
As a percentage of revenues
|
|
13
|
%
|
|
15
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Technology and development
|
|
$
|
1,545,149
|
|
|
$
|
1,221,814
|
|
|
$
|
953,710
|
|
|
$
|
323,335
|
|
|
26
|
%
|
|
$
|
268,104
|
|
|
28
|
%
|
As a percentage of revenues
|
|
8
|
%
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
General and administrative
|
|
$
|
914,369
|
|
|
$
|
630,294
|
|
|
$
|
431,043
|
|
|
$
|
284,075
|
|
|
45
|
%
|
|
$
|
199,251
|
|
|
46
|
%
|
As a percentage of revenues
|
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Interest expense
|
|
$
|
(626,023
|
)
|
|
$
|
(420,493
|
)
|
|
$
|
(238,204
|
)
|
|
$
|
205,530
|
|
|
49
|
%
|
|
$
|
182,289
|
|
|
77
|
%
|
As a percentage of revenues
|
|
(3
|
)%
|
|
(3
|
)%
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Interest and other income (expense)
|
|
$
|
84,000
|
|
|
$
|
41,725
|
|
|
$
|
(115,154
|
)
|
|
$
|
42,275
|
|
|
101
|
%
|
|
$
|
156,879
|
|
|
136
|
%
|
As a percentage of revenues
|
|
—
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
|||||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||||||||||
Provision for (benefit from) income taxes
|
|
$
|
195,315
|
|
|
$
|
15,216
|
|
|
$
|
(73,608
|
)
|
|
$
|
180,099
|
|
|
1,184
|
%
|
|
88,824
|
|
|
(121
|
)%
|
Effective tax rate
|
|
9
|
%
|
|
1
|
%
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash, cash equivalents and restricted cash
|
$
|
5,043,786
|
|
|
$
|
3,812,041
|
|
Long-term debt
|
14,759,260
|
|
|
10,360,058
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Net cash used in operating activities
|
$
|
(2,887,322
|
)
|
|
$
|
(2,680,479
|
)
|
|
$
|
(1,785,948
|
)
|
Net cash provided by (used in) investing activities
|
(387,064
|
)
|
|
(339,120
|
)
|
|
34,329
|
|
|||
Net cash provided by financing activities
|
4,505,662
|
|
|
4,048,527
|
|
|
3,076,990
|
|
|||
|
|
|
|
|
|
||||||
Non-GAAP free cash flow reconciliation:
|
|
|
|
|
|
||||||
Net cash used in operating activities
|
(2,887,322
|
)
|
|
(2,680,479
|
)
|
|
(1,785,948
|
)
|
|||
Purchases of property and equipment
|
(253,035
|
)
|
|
(173,946
|
)
|
|
(173,302
|
)
|
|||
Change in other assets
|
(134,029
|
)
|
|
(165,174
|
)
|
|
(60,409
|
)
|
|||
Free cash flow
|
$
|
(3,274,386
|
)
|
|
$
|
(3,019,599
|
)
|
|
$
|
(2,019,659
|
)
|
|
|
Payments due by Period
|
||||||||||||||||||
Contractual obligations (in thousands):
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Streaming content obligations (1)
|
|
$
|
19,490,082
|
|
|
$
|
8,477,367
|
|
|
$
|
8,352,731
|
|
|
$
|
2,041,340
|
|
|
$
|
618,644
|
|
Debt (2)
|
|
20,723,441
|
|
|
736,969
|
|
|
2,581,471
|
|
|
1,705,201
|
|
|
15,699,800
|
|
|||||
Operating lease obligations (3)
|
|
2,756,893
|
|
|
277,642
|
|
|
571,313
|
|
|
521,124
|
|
|
1,386,814
|
|
|||||
Other purchase obligations (4)
|
|
894,108
|
|
|
624,674
|
|
|
232,492
|
|
|
36,612
|
|
|
330
|
|
|||||
Total
|
|
$
|
43,864,524
|
|
|
$
|
10,116,652
|
|
|
$
|
11,738,007
|
|
|
$
|
4,304,277
|
|
|
$
|
17,705,588
|
|
(1)
|
As of December 31, 2019, streaming content obligations were comprised of $4.4 billion included in "Current content liabilities" and $3.3 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $11.8 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
|
(2)
|
Long-term debt obligations include our Notes consisting of principal and interest payments. See Note 4 Long-term Debt in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for further details.
|
(3)
|
See Note 3 Leases in the accompanying notes to our consolidated financial statements for further details regarding leases. As of December 31, 2019, the Company has additional operating leases for real estate that have not yet commenced of $699 million which has been included above. Total lease obligations as of December 31, 2019 increased $1,049 million from $1,708 million as of December 31, 2018 to $2,757 million as of December 31, 2019 due to growth in facilities to support our growing headcount and growing number of original productions.
|
(4)
|
Other purchase obligations include all other non-cancelable contractual obligations. These contracts are primarily related to streaming delivery and cloud computing costs, as well as other miscellaneous open purchase orders for which we have not received the related services or goods.
|
|
As of/Year ended December 31, 2019
|
||||||||||||||
|
Domestic
Streaming
|
|
International
Streaming
|
|
Domestic
DVD
|
|
Consolidated
|
||||||||
|
(in thousands)
|
||||||||||||||
Total paid memberships at end of period
|
61,043
|
|
|
106,047
|
|
|
2,153
|
|
|
|
|||||
Total paid net membership additions (losses)
|
2,557
|
|
|
25,274
|
|
|
(553
|
)
|
|
|
|||||
Revenues
|
$
|
9,243,005
|
|
|
$
|
10,616,225
|
|
|
$
|
297,217
|
|
|
$
|
20,156,447
|
|
Cost of revenues
|
4,867,343
|
|
|
7,449,663
|
|
|
123,207
|
|
|
12,440,213
|
|
||||
Marketing
|
1,063,042
|
|
|
1,589,420
|
|
|
—
|
|
|
2,652,462
|
|
||||
Contribution profit
|
$
|
3,312,620
|
|
|
$
|
1,577,142
|
|
|
$
|
174,010
|
|
|
5,063,772
|
|
|
Other operating expenses
|
|
|
|
|
|
|
2,459,518
|
|
|||||||
Operating income
|
|
|
|
|
|
|
2,604,254
|
|
|||||||
Other income (expense)
|
|
|
|
|
|
|
(542,023
|
)
|
|||||||
Provision for income taxes
|
|
|
|
|
|
|
195,315
|
|
|||||||
Net income
|
|
|
|
|
|
|
$
|
1,866,916
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management’s Annual Report on Internal Control Over Financial Reporting
|
(c)
|
Changes in Internal Control Over Financial Reporting
|
|
/s/ Ernst & Young LLP
|
San Jose, California
|
|
January 29, 2020
|
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
(a)
|
The following documents are filed as part of this Annual Report on Form 10-K:
|
(1)
|
Financial Statements:
|
(2)
|
Financial Statement Schedules:
|
(3)
|
Exhibits:
|
Item 16.
|
Form 10-K Summary
|
|
Page
|
|
/s/ Ernst & Young LLP
|
We have served as the Company's auditor since 2012.
|
|
San Jose, California
|
|
January 29, 2020
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
$
|
20,156,447
|
|
|
$
|
15,794,341
|
|
|
$
|
11,692,713
|
|
Cost of revenues
|
|
12,440,213
|
|
|
9,967,538
|
|
|
8,033,000
|
|
|||
Marketing
|
|
2,652,462
|
|
|
2,369,469
|
|
|
1,436,281
|
|
|||
Technology and development
|
|
1,545,149
|
|
|
1,221,814
|
|
|
953,710
|
|
|||
General and administrative
|
|
914,369
|
|
|
630,294
|
|
|
431,043
|
|
|||
Operating income
|
|
2,604,254
|
|
|
1,605,226
|
|
|
838,679
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(626,023
|
)
|
|
(420,493
|
)
|
|
(238,204
|
)
|
|||
Interest and other income (expense)
|
|
84,000
|
|
|
41,725
|
|
|
(115,154
|
)
|
|||
Income before income taxes
|
|
2,062,231
|
|
|
1,226,458
|
|
|
485,321
|
|
|||
Provision for (benefit from) income taxes
|
|
195,315
|
|
|
15,216
|
|
|
(73,608
|
)
|
|||
Net income
|
|
$
|
1,866,916
|
|
|
$
|
1,211,242
|
|
|
$
|
558,929
|
|
Earnings per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
4.26
|
|
|
$
|
2.78
|
|
|
$
|
1.29
|
|
Diluted
|
|
$
|
4.13
|
|
|
$
|
2.68
|
|
|
$
|
1.25
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
437,799
|
|
|
435,374
|
|
|
431,885
|
|
|||
Diluted
|
|
451,765
|
|
|
451,244
|
|
|
446,814
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
1,866,916
|
|
|
$
|
1,211,242
|
|
|
$
|
558,929
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments
|
(3,939
|
)
|
|
975
|
|
|
27,409
|
|
|||
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $0, $0, and $378, respectively
|
—
|
|
|
—
|
|
|
599
|
|
|||
Total other comprehensive income (loss)
|
(3,939
|
)
|
|
975
|
|
|
28,008
|
|
|||
Comprehensive income
|
$
|
1,862,977
|
|
|
$
|
1,212,217
|
|
|
$
|
586,937
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
1,866,916
|
|
|
$
|
1,211,242
|
|
|
$
|
558,929
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
Additions to streaming content assets
|
|
(13,916,683
|
)
|
|
(13,043,437
|
)
|
|
(9,805,763
|
)
|
|||
Change in streaming content liabilities
|
|
(694,011
|
)
|
|
999,880
|
|
|
900,006
|
|
|||
Amortization of streaming content assets
|
|
9,216,247
|
|
|
7,532,088
|
|
|
6,197,817
|
|
|||
Depreciation and amortization of property, equipment and intangibles
|
|
103,579
|
|
|
83,157
|
|
|
71,911
|
|
|||
Stock-based compensation expense
|
|
405,376
|
|
|
320,657
|
|
|
182,209
|
|
|||
Other non-cash items
|
|
228,230
|
|
|
81,640
|
|
|
117,864
|
|
|||
Foreign currency remeasurement loss (gain) on long-term debt
|
|
(45,576
|
)
|
|
(73,953
|
)
|
|
140,790
|
|
|||
Deferred taxes
|
|
(94,443
|
)
|
|
(85,520
|
)
|
|
(208,688
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
(252,113
|
)
|
|
(200,192
|
)
|
|
(234,090
|
)
|
|||
Accounts payable
|
|
96,063
|
|
|
199,198
|
|
|
74,559
|
|
|||
Accrued expenses and other liabilities
|
|
157,778
|
|
|
150,422
|
|
|
114,337
|
|
|||
Deferred revenue
|
|
163,846
|
|
|
142,277
|
|
|
177,974
|
|
|||
Other non-current assets and liabilities
|
|
(122,531
|
)
|
|
2,062
|
|
|
(73,803
|
)
|
|||
Net cash used in operating activities
|
|
(2,887,322
|
)
|
|
(2,680,479
|
)
|
|
(1,785,948
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(253,035
|
)
|
|
(173,946
|
)
|
|
(173,302
|
)
|
|||
Change in other assets
|
|
(134,029
|
)
|
|
(165,174
|
)
|
|
(60,409
|
)
|
|||
Purchases of short-term investments
|
|
—
|
|
|
—
|
|
|
(74,819
|
)
|
|||
Proceeds from sale of short-term investments
|
|
—
|
|
|
—
|
|
|
320,154
|
|
|||
Proceeds from maturities of short-term investments
|
|
—
|
|
|
—
|
|
|
22,705
|
|
|||
Net cash provided by (used in) investing activities
|
|
(387,064
|
)
|
|
(339,120
|
)
|
|
34,329
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of debt
|
|
4,469,306
|
|
|
3,961,852
|
|
|
3,020,510
|
|
|||
Debt issuance costs
|
|
(36,134
|
)
|
|
(35,871
|
)
|
|
(32,153
|
)
|
|||
Proceeds from issuance of common stock
|
|
72,490
|
|
|
124,502
|
|
|
88,378
|
|
|||
Other financing activities
|
|
—
|
|
|
(1,956
|
)
|
|
255
|
|
|||
Net cash provided by financing activities
|
|
4,505,662
|
|
|
4,048,527
|
|
|
3,076,990
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
469
|
|
|
(39,682
|
)
|
|
29,848
|
|
|||
Net increase in cash, cash equivalents and restricted cash
|
|
1,231,745
|
|
|
989,246
|
|
|
1,355,219
|
|
|||
Cash, cash equivalents and restricted cash, beginning of year
|
|
3,812,041
|
|
|
2,822,795
|
|
|
1,467,576
|
|
|||
Cash, cash equivalents and restricted cash, end of year
|
|
$
|
5,043,786
|
|
|
$
|
3,812,041
|
|
|
$
|
2,822,795
|
|
Supplemental disclosure:
|
|
|
|
|
|
|
||||||
Income taxes paid
|
|
$
|
400,658
|
|
|
$
|
131,069
|
|
|
$
|
113,591
|
|
Interest paid
|
|
599,132
|
|
|
375,831
|
|
|
213,313
|
|
|
|
As of December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
5,018,437
|
|
|
$
|
3,794,483
|
|
Current content assets, net
|
|
—
|
|
|
5,151,186
|
|
||
Other current assets
|
|
1,160,067
|
|
|
748,466
|
|
||
Total current assets
|
|
6,178,504
|
|
|
9,694,135
|
|
||
Non-current content assets, net
|
|
24,504,567
|
|
|
14,951,141
|
|
||
Property and equipment, net
|
|
565,221
|
|
|
418,281
|
|
||
Other non-current assets
|
|
2,727,420
|
|
|
910,843
|
|
||
Total assets
|
|
$
|
33,975,712
|
|
|
$
|
25,974,400
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current content liabilities
|
|
$
|
4,413,561
|
|
|
$
|
4,681,562
|
|
Accounts payable
|
|
674,347
|
|
|
562,985
|
|
||
Accrued expenses and other liabilities
|
|
843,043
|
|
|
481,874
|
|
||
Deferred revenue
|
|
924,745
|
|
|
760,899
|
|
||
Total current liabilities
|
|
6,855,696
|
|
|
6,487,320
|
|
||
Non-current content liabilities
|
|
3,334,323
|
|
|
3,759,026
|
|
||
Long-term debt
|
|
14,759,260
|
|
|
10,360,058
|
|
||
Other non-current liabilities
|
|
1,444,276
|
|
|
129,231
|
|
||
Total liabilities
|
|
26,393,555
|
|
|
20,735,635
|
|
||
Commitments and contingencies (Note 5)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2019 and 2018; no shares issued and outstanding at December 31, 2019 and 2018
|
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 4,990,000,000 shares authorized at December 31, 2019 and December 31, 2018, respectively; 438,806,649 and 436,598,597 issued and outstanding at December 31, 2019 and December 31, 2018, respectively
|
|
2,793,929
|
|
|
2,315,988
|
|
||
Accumulated other comprehensive loss
|
|
(23,521
|
)
|
|
(19,582
|
)
|
||
Retained earnings
|
|
4,811,749
|
|
|
2,942,359
|
|
||
Total stockholders’ equity
|
|
7,582,157
|
|
|
5,238,765
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
33,975,712
|
|
|
$
|
25,974,400
|
|
|
Common Stock and Additional
Paid-in Capital
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings |
|
Total
Stockholders’ Equity |
|||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||
Balances as of December 31, 2016
|
430,054,212
|
|
|
$
|
1,599,762
|
|
|
$
|
(48,565
|
)
|
|
$
|
1,128,603
|
|
|
$
|
2,679,800
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
558,929
|
|
|
558,929
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
28,008
|
|
|
—
|
|
|
28,008
|
|
||||
Issuance of common stock upon exercise of options
|
3,338,474
|
|
|
89,425
|
|
|
—
|
|
|
—
|
|
|
89,425
|
|
||||
Stock-based compensation expense
|
—
|
|
|
182,209
|
|
|
—
|
|
|
—
|
|
|
182,209
|
|
||||
Cumulative Effect Adjustment of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
43,585
|
|
|
43,585
|
|
||||
Balances as of December 31, 2017
|
433,392,686
|
|
|
$
|
1,871,396
|
|
|
$
|
(20,557
|
)
|
|
$
|
1,731,117
|
|
|
$
|
3,581,956
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,211,242
|
|
|
1,211,242
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
975
|
|
|
—
|
|
|
975
|
|
||||
Issuance of common stock upon exercise of options
|
3,205,911
|
|
|
123,935
|
|
|
—
|
|
|
—
|
|
|
123,935
|
|
||||
Stock-based compensation expense
|
—
|
|
|
320,657
|
|
|
—
|
|
|
—
|
|
|
320,657
|
|
||||
Balances as of December 31, 2018
|
436,598,597
|
|
|
$
|
2,315,988
|
|
|
$
|
(19,582
|
)
|
|
$
|
2,942,359
|
|
|
$
|
5,238,765
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,866,916
|
|
|
1,866,916
|
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
(3,939
|
)
|
|
—
|
|
|
(3,939
|
)
|
||||
Issuance of common stock upon exercise of options
|
2,208,052
|
|
|
72,565
|
|
|
—
|
|
|
—
|
|
|
72,565
|
|
||||
Stock-based compensation expense
|
—
|
|
|
405,376
|
|
|
—
|
|
|
—
|
|
|
405,376
|
|
||||
Adoption of ASU 2016-02, Leases (Topic 842)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,474
|
|
|
2,474
|
|
||||
Balances as of December 31, 2019
|
438,806,649
|
|
|
$
|
2,793,929
|
|
|
$
|
(23,521
|
)
|
|
$
|
4,811,749
|
|
|
$
|
7,582,157
|
|
1.
|
Organization and Summary of Significant Accounting Policies
|
|
|
As of/ Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Revenues
|
|
$
|
10,051,208
|
|
|
$
|
8,281,532
|
|
|
$
|
6,660,859
|
|
Paid net membership additions
|
|
2,905
|
|
|
6,335
|
|
|
5,512
|
|
|||
Paid memberships at end of period
|
|
67,662
|
|
|
64,757
|
|
|
58,422
|
|
|
|
As of/ Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Revenues
|
|
$
|
5,543,067
|
|
|
$
|
3,963,707
|
|
|
$
|
2,362,813
|
|
Paid net membership additions
|
|
13,960
|
|
|
11,814
|
|
|
8,173
|
|
|||
Paid memberships at end of period
|
|
51,778
|
|
|
37,818
|
|
|
26,004
|
|
|
|
As of/ Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Revenues
|
|
$
|
2,795,434
|
|
|
$
|
2,237,697
|
|
|
$
|
1,642,616
|
|
Paid net membership additions
|
|
5,340
|
|
|
6,360
|
|
|
5,509
|
|
|||
Paid memberships at end of period
|
|
31,417
|
|
|
26,077
|
|
|
19,717
|
|
|
|
As of/ Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Revenues
|
|
$
|
1,469,521
|
|
|
$
|
945,816
|
|
|
$
|
575,928
|
|
Paid net membership additions
|
|
5,626
|
|
|
4,106
|
|
|
2,360
|
|
|||
Paid memberships at end of period
|
|
16,233
|
|
|
10,607
|
|
|
6,501
|
|
A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or other promotional offering by the Company to certain new and rejoining members. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellation of the service, as a result of a failed method of payment, becomes effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Basic earnings per share:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,866,916
|
|
|
$
|
1,211,242
|
|
|
$
|
558,929
|
|
Shares used in computation:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
437,799
|
|
|
435,374
|
|
|
431,885
|
|
|||
Basic earnings per share
|
$
|
4.26
|
|
|
$
|
2.78
|
|
|
$
|
1.29
|
|
Diluted earnings per share:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,866,916
|
|
|
$
|
1,211,242
|
|
|
$
|
558,929
|
|
Shares used in computation:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
437,799
|
|
|
435,374
|
|
|
431,885
|
|
|||
Employee stock options
|
13,966
|
|
|
15,870
|
|
|
14,929
|
|
|||
Weighted-average number of shares
|
451,765
|
|
|
451,244
|
|
|
446,814
|
|
|||
Diluted earnings per share
|
$
|
4.13
|
|
|
$
|
2.68
|
|
|
$
|
1.25
|
|
|
Year ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
|
(in thousands)
|
|||||||
Employee stock options
|
1,588
|
|
|
330
|
|
|
189
|
|
2.
|
Cash, Cash Equivalents and Restricted Cash
|
|
As of December 31, 2019
|
||||||||||||||
|
Cash and cash equivalents
|
|
Other Current Assets
|
|
Non-current Assets
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Cash
|
$
|
3,103,525
|
|
|
$
|
1,863
|
|
|
$
|
22,161
|
|
|
$
|
3,127,549
|
|
Level 1 securities:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
1,614,912
|
|
|
—
|
|
|
1,325
|
|
|
1,616,237
|
|
||||
Level 2 securities:
|
|
|
|
|
|
|
|
||||||||
Foreign Time Deposits
|
300,000
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
$
|
5,018,437
|
|
|
$
|
1,863
|
|
|
$
|
23,486
|
|
|
$
|
5,043,786
|
|
|
As of December 31, 2018
|
||||||||||
|
Cash and cash equivalents
|
|
Non-current Assets
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Cash
|
$
|
2,572,685
|
|
|
$
|
16,260
|
|
|
$
|
2,588,945
|
|
Level 1 securities:
|
|
|
|
|
|
||||||
Money market funds
|
1,221,798
|
|
|
1,298
|
|
|
1,223,096
|
|
|||
|
|
|
|
|
|
||||||
|
$
|
3,794,483
|
|
|
$
|
17,558
|
|
|
$
|
3,812,041
|
|
3.
|
Balance Sheet Components
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
|
|
|
|
||||
Licensed content, net
|
$
|
14,703,352
|
|
|
$
|
14,081,463
|
|
Produced content, net
|
|
|
|
||||
Released, less amortization
|
4,382,685
|
|
|
2,403,896
|
|
||
In production
|
4,750,664
|
|
|
3,305,126
|
|
||
In development and pre-production
|
667,866
|
|
|
311,842
|
|
||
|
9,801,215
|
|
|
6,020,864
|
|
||
|
|
|
|
||||
Total
|
$
|
24,504,567
|
|
|
$
|
20,102,327
|
|
|
|
|
|
||||
Current content assets, net
|
$
|
—
|
|
|
$
|
5,151,186
|
|
Non-current content assets, net
|
$
|
24,504,567
|
|
|
$
|
14,951,141
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Licensed content
|
$
|
7,242,799
|
|
|
$
|
6,511,689
|
|
|
$
|
5,680,373
|
|
Produced content
|
1,973,448
|
|
|
1,020,399
|
|
|
517,444
|
|
|||
Total streaming content
|
$
|
9,216,247
|
|
|
$
|
7,532,088
|
|
|
$
|
6,197,817
|
|
|
|
As of December 31,
|
|
Estimated Useful Lives (in Years)
|
||||||
|
|
2019
|
|
2018
|
|
|||||
|
|
(in thousands)
|
|
|
||||||
Land
|
|
$
|
6,125
|
|
|
$
|
6,125
|
|
|
|
Buildings
|
|
33,141
|
|
|
73,468
|
|
|
30 years
|
||
Leasehold improvements
|
|
354,999
|
|
|
282,028
|
|
|
Over life of lease
|
||
Furniture and fixtures
|
|
87,465
|
|
|
63,667
|
|
|
3-15 years
|
||
Information technology
|
|
243,565
|
|
|
224,296
|
|
|
3 years
|
||
Corporate aircraft
|
|
108,995
|
|
|
62,560
|
|
|
8 years
|
||
Machinery and equipment
|
|
46,415
|
|
|
55,108
|
|
|
3-5 years
|
||
Capital work-in-progress
|
|
100,521
|
|
|
19,548
|
|
|
|
||
Property and equipment, gross
|
|
981,226
|
|
|
786,800
|
|
|
|
||
Less: Accumulated depreciation
|
|
(416,005
|
)
|
|
(368,519
|
)
|
|
|
||
Property and equipment, net
|
|
$
|
565,221
|
|
|
$
|
418,281
|
|
|
|
|
Year ended December 31,
|
||
|
2019
|
||
|
(in thousands)
|
||
Cash paid for operating lease liabilities
|
$
|
192,084
|
|
Right-of-use assets obtained in exchange for new operating lease obligations (1)
|
1,672,462
|
|
|
As of
|
|
|
December 31, 2019
|
|
|
|
|
Weighted-average remaining lease term
|
8.8 years
|
|
Weighted-average discount rate
|
5.0
|
%
|
|
|
As of
|
||||||
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
|
|
(in thousands)
|
||||||
Trade receivables
|
|
$
|
454,399
|
|
|
$
|
362,712
|
|
Prepaid expenses
|
|
180,999
|
|
|
178,833
|
|
||
Other receivables
|
|
524,669
|
|
|
206,921
|
|
||
Total other current assets
|
|
$
|
1,160,067
|
|
|
$
|
748,466
|
|
4.
|
Long-term Debt
|
|
|
|
|
|
|
|
|
|
Level 2 Fair Value as of
|
||||||||
|
Principal Amount at Par
|
|
Issuance Date
|
|
Maturity
|
|
Interest Due Dates
|
|
December 31,
2019 |
|
December 31,
2018 |
||||||
|
(in millions)
|
|
|
|
|
|
|
|
(in millions)
|
||||||||
5.375% Senior Notes
|
$
|
500
|
|
|
February 2013
|
|
February 2021
|
|
February and August
|
|
$
|
518
|
|
|
$
|
509
|
|
5.500% Senior Notes
|
700
|
|
|
February 2015
|
|
February 2022
|
|
April and October
|
|
744
|
|
|
706
|
|
|||
5.750% Senior Notes
|
400
|
|
|
February 2014
|
|
March 2024
|
|
March and September
|
|
444
|
|
|
407
|
|
|||
5.875% Senior Notes
|
800
|
|
|
February 2015
|
|
February 2025
|
|
April and October
|
|
896
|
|
|
812
|
|
|||
4.375% Senior Notes
|
1,000
|
|
|
October 2016
|
|
November 2026
|
|
May and November
|
|
1,026
|
|
|
915
|
|
|||
3.625% Senior Notes (1)
|
1,459
|
|
|
May 2017
|
|
May 2027
|
|
May and November
|
|
1,565
|
|
|
1,446
|
|
|||
4.875% Senior Notes
|
1,600
|
|
|
October 2017
|
|
April 2028
|
|
April and October
|
|
1,670
|
|
|
1,464
|
|
|||
5.875% Senior Notes
|
1,900
|
|
|
April 2018
|
|
November 2028
|
|
May and November
|
|
2,111
|
|
|
1,851
|
|
|||
4.625% Senior Notes (2)
|
1,234
|
|
|
October 2018
|
|
May 2029
|
|
May and November
|
|
1,378
|
|
|
1,241
|
|
|||
6.375% Senior Notes
|
800
|
|
|
October 2018
|
|
May 2029
|
|
May and November
|
|
916
|
|
|
797
|
|
|||
3.875% Senior Notes (3)
|
1,346
|
|
|
April 2019
|
|
November 2029
|
|
June and December
|
|
1,429
|
|
|
—
|
|
|||
5.375% Senior Notes
|
900
|
|
|
April 2019
|
|
November 2029
|
|
June and December
|
|
960
|
|
|
—
|
|
|||
3.625% Senior Notes (4)
|
1,234
|
|
|
October 2019
|
|
June 2030
|
|
June and December
|
|
1,273
|
|
|
—
|
|
|||
4.875% Senior Notes
|
1,000
|
|
|
October 2019
|
|
June 2030
|
|
June and December
|
|
1,019
|
|
|
—
|
|
|||
|
$
|
14,873
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
||||||
|
December 31,
2019 |
|
December 31, 2018
|
||||
|
(in thousands)
|
||||||
Less than one year
|
$
|
736,969
|
|
|
$
|
538,384
|
|
Due after one year and through three years
|
2,581,471
|
|
|
1,550,581
|
|
||
Due after three years and through five years
|
1,705,201
|
|
|
1,646,101
|
|
||
Due after five years
|
15,699,800
|
|
|
11,138,129
|
|
||
Total debt obligations
|
$
|
20,723,441
|
|
|
$
|
14,873,195
|
|
5.
|
Commitments and Contingencies
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Less than one year
|
$
|
8,477,367
|
|
|
$
|
8,611,398
|
|
Due after one year and through 3 years
|
8,352,731
|
|
|
8,841,561
|
|
||
Due after 3 years and through 5 years
|
2,041,340
|
|
|
1,684,582
|
|
||
Due after 5 years
|
618,644
|
|
|
148,334
|
|
||
Total streaming content obligations
|
$
|
19,490,082
|
|
|
$
|
19,285,875
|
|
6.
|
Guarantees—Indemnification Obligations
|
7.
|
Stockholders’ Equity
|
|
Shares Available
for Grant
|
|
Options Outstanding
|
|
Weighted- Average Remaining Contractual Term (in Years)
|
|
Aggregate
Intrinsic Value
(in Thousands)
|
||||||||
|
Number of
Shares
|
|
Weighted- Average Exercise Price
(per Share) |
|
|||||||||||
Balances as of December 31, 2016
|
13,289,953
|
|
|
22,437,347
|
|
|
$
|
44.83
|
|
|
|
|
|
||
Granted
|
(2,550,038
|
)
|
|
2,550,038
|
|
|
159.56
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
(3,338,474
|
)
|
|
26.79
|
|
|
|
|
|
|||
Expired
|
—
|
|
|
(1,561
|
)
|
|
3.25
|
|
|
|
|
|
|||
Balances as of December 31, 2017
|
10,739,915
|
|
|
21,647,350
|
|
|
$
|
61.13
|
|
|
|
|
|
||
Granted
|
(2,039,974
|
)
|
|
2,039,974
|
|
|
311.66
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
(3,205,911
|
)
|
|
38.66
|
|
|
|
|
|
|||
Expired
|
—
|
|
|
(2,135
|
)
|
|
$
|
4.60
|
|
|
|
|
|
||
Balances as of December 31, 2018
|
8,699,941
|
|
|
20,479,278
|
|
|
$
|
89.61
|
|
|
|
|
|
||
Granted
|
(2,588,380
|
)
|
|
2,588,380
|
|
|
320.66
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
(2,208,052
|
)
|
|
32.88
|
|
|
|
|
|
|||
Expired
|
—
|
|
|
(280
|
)
|
|
6.74
|
|
|
|
|
|
|||
Balances as of December 31, 2019
|
6,111,561
|
|
|
20,859,326
|
|
|
$
|
124.28
|
|
|
5.57
|
|
$
|
4,230,013
|
|
Vested and exercisable at
December 31, 2019
|
|
|
20,859,326
|
|
|
$
|
124.28
|
|
|
5.57
|
|
$
|
4,230,013
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Expected volatility
|
|
37% - 41%
|
|
|
40% - 42%
|
|
|
34% - 37%
|
|
|||
Risk-free interest rate
|
|
1.74% - 2.74%
|
|
|
2.61% - 3.09%
|
|
|
2.24% - 2.45%
|
|
|||
Suboptimal exercise factor
|
|
3.07 - 3.23
|
|
|
2.80 - 3.01
|
|
|
2.48 - 2.63
|
|
|||
Valuation data:
|
|
|
|
|
|
|
||||||
Weighted-average fair value (per share)
|
|
$
|
156.60
|
|
|
$
|
157.19
|
|
|
$
|
71.45
|
|
Total stock-based compensation expense (in thousands)
|
|
405,376
|
|
|
320,657
|
|
|
182,209
|
|
|||
Total income tax impact on provision (in thousands)
|
|
90,856
|
|
|
67,575
|
|
|
61,842
|
|
|
Foreign currency
|
||
|
(in thousands)
|
||
Balances as of December 31, 2017
|
$
|
(20,557
|
)
|
Other comprehensive income before reclassifications
|
975
|
|
|
Net decrease in accumulated other comprehensive loss
|
975
|
|
|
Balances as of December 31, 2018
|
$
|
(19,582
|
)
|
Other comprehensive loss before reclassifications
|
(3,939
|
)
|
|
Net increase in accumulated other comprehensive loss
|
(3,939
|
)
|
|
Balances as of December 31, 2019
|
$
|
(23,521
|
)
|
8.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
United States
|
$
|
1,719,326
|
|
|
$
|
845,402
|
|
|
$
|
144,100
|
|
Foreign
|
342,905
|
|
|
381,056
|
|
|
341,221
|
|
|||
Income before income taxes
|
$
|
2,062,231
|
|
|
$
|
1,226,458
|
|
|
$
|
485,321
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current tax provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
21,498
|
|
|
$
|
(22,176
|
)
|
|
$
|
54,245
|
|
State
|
45,228
|
|
|
(10,234
|
)
|
|
(7,601
|
)
|
|||
Foreign
|
223,328
|
|
|
133,146
|
|
|
88,436
|
|
|||
Total current
|
290,054
|
|
|
100,736
|
|
|
135,080
|
|
|||
Deferred tax provision:
|
|
|
|
|
|
||||||
Federal
|
(28,003
|
)
|
|
(37,396
|
)
|
|
(153,963
|
)
|
|||
State
|
(54,507
|
)
|
|
(52,391
|
)
|
|
(52,695
|
)
|
|||
Foreign
|
(12,229
|
)
|
|
4,267
|
|
|
(2,030
|
)
|
|||
Total deferred
|
(94,739
|
)
|
|
(85,520
|
)
|
|
(208,688
|
)
|
|||
Provision for (benefit from) income taxes
|
$
|
195,315
|
|
|
$
|
15,216
|
|
|
$
|
(73,608
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Expected tax expense at U.S. Federal statutory rates
|
$
|
433,059
|
|
|
$
|
257,556
|
|
|
$
|
169,860
|
|
State income taxes, net of Federal income tax effect
|
47,909
|
|
|
33,611
|
|
|
6,404
|
|
|||
Foreign earnings at other than U.S. rates
|
56,969
|
|
|
63,519
|
|
|
(87,514
|
)
|
|||
Federal and California R&D tax credits
|
(134,523
|
)
|
|
(140,749
|
)
|
|
(79,868
|
)
|
|||
Excess tax benefits on stock-based compensation
|
(148,693
|
)
|
|
(191,323
|
)
|
|
(157,888
|
)
|
|||
Impact of the Tax Cuts and Jobs Act of 2017
|
|
|
|
|
|
||||||
Rate Change / Transition Tax
|
—
|
|
|
(71,516
|
)
|
|
79,077
|
|
|||
Tax effects of the Tax Cuts and Jobs Act
|
(127,534
|
)
|
|
43,099
|
|
|
—
|
|
|||
Global corporate structure simplification
|
35,939
|
|
|
—
|
|
|
—
|
|
|||
Nondeductible Officers Compensation
|
24,111
|
|
|
14,377
|
|
|
28
|
|
|||
Other
|
8,078
|
|
|
6,642
|
|
|
(3,707
|
)
|
|||
Provision for (benefit from) income taxes
|
$
|
195,315
|
|
|
$
|
15,216
|
|
|
$
|
(73,608
|
)
|
Effective Tax Rate
|
9
|
%
|
|
1
|
%
|
|
(15
|
)%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Stock-based compensation
|
$
|
258,376
|
|
|
$
|
190,451
|
|
Federal and California tax R&D credits
|
408,715
|
|
|
369,023
|
|
||
Foreign tax credits
|
137,818
|
|
|
218,026
|
|
||
Accruals and reserves
|
42,450
|
|
|
36,396
|
|
||
Operating leases
|
349,208
|
|
|
—
|
|
||
Other
|
6,510
|
|
|
27,203
|
|
||
Gross deferred tax assets
|
1,203,077
|
|
|
841,099
|
|
||
Depreciation & amortization
|
(80,921
|
)
|
|
(151,678
|
)
|
||
Operating leases
|
(329,168
|
)
|
|
—
|
|
||
Gross deferred tax liabilities
|
(410,089
|
)
|
|
(151,678
|
)
|
||
Valuation allowance
|
(134,782
|
)
|
|
(124,996
|
)
|
||
Net deferred tax assets
|
$
|
658,206
|
|
|
$
|
564,425
|
|
Balances as of December 31, 2017
|
$
|
42,902
|
|
Increases related to tax positions taken during prior periods
|
4,486
|
|
|
Decreases related to tax positions taken during prior periods
|
(17,922
|
)
|
|
Increases related to tax positions taken during the current period
|
18,068
|
|
|
Balances as of December 31, 2018
|
47,534
|
|
|
Increases related to tax positions taken during prior periods
|
925
|
|
|
Decreases related to tax positions taken during prior periods
|
(417
|
)
|
|
Increases related to tax positions taken during the current period
|
18,826
|
|
|
Decreases related to expiration of statute of limitations
|
(100
|
)
|
|
Balances as of December 31, 2019
|
$
|
66,768
|
|
9.
|
Employee Benefit Plan
|
10.
|
Segment and Geographic Information
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
United States
|
$
|
1,503,459
|
|
|
$
|
381,947
|
|
International
|
594,047
|
|
|
36,334
|
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
|
(in thousands, except for per share data)
|
||||||||||||||
2019
|
|
||||||||||||||
Total revenues
|
$
|
5,467,434
|
|
|
$
|
5,244,905
|
|
|
$
|
4,923,116
|
|
|
$
|
4,520,992
|
|
Gross profit
|
2,001,411
|
|
|
2,146,986
|
|
|
1,917,459
|
|
|
1,650,378
|
|
||||
Net income
|
586,970
|
|
|
665,244
|
|
|
270,650
|
|
|
344,052
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.34
|
|
|
$
|
1.52
|
|
|
$
|
0.62
|
|
|
$
|
0.79
|
|
Diluted
|
1.30
|
|
|
1.47
|
|
|
0.60
|
|
|
0.76
|
|
||||
2018
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
4,186,841
|
|
|
$
|
3,999,374
|
|
|
$
|
3,907,270
|
|
|
$
|
3,700,856
|
|
Gross profit
|
1,453,441
|
|
|
1,468,246
|
|
|
1,504,839
|
|
|
1,400,277
|
|
||||
Net income
|
133,934
|
|
|
402,835
|
|
|
384,349
|
|
|
290,124
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.31
|
|
|
$
|
0.92
|
|
|
$
|
0.88
|
|
|
$
|
0.67
|
|
Diluted
|
0.30
|
|
|
0.89
|
|
|
0.85
|
|
|
0.64
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||||
|
|
10-Q
|
|
001-35727
|
|
3.1
|
|
July 17, 2015
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
3.1
|
|
April 3, 2019
|
|
|
||
|
|
10-Q
|
|
000-49802
|
|
3.3
|
|
August 2, 2004
|
|
|
||
|
|
S-1/A
|
|
333-83878
|
|
4.1
|
|
April 16, 2002
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
February 1, 2013
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
February 19, 2014
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
February 5, 2015
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.2
|
|
February 5, 2015
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
October 27, 2016
|
|
|
||
|
|
10-Q
|
|
001-35727
|
|
4.7
|
|
April 20, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
May 3, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
October 26, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
April 26, 2018
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
October 26, 2018
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.3
|
|
October 26, 2018
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
April 29, 2019
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.3
|
|
April 29, 2019
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
4.1
|
|
October 25, 2019
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||||
|
|
8-K
|
|
001-35727
|
|
4.3
|
|
October 25, 2019
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
S-1/A
|
|
333-83878
|
|
10.1
|
|
March 20, 2002
|
|
|
||
|
|
Def 14A
|
|
000-49802
|
|
A
|
|
March 31, 2006
|
|
|
||
|
|
Def 14A
|
|
000-49802
|
|
A
|
|
April 20, 2011
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
Item 5.02
|
|
January 24, 2018
|
|
|
||
|
|
10-K
|
|
000-49802
|
|
10.7
|
|
February 1, 2013
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
February 19, 2014
|
|
|
||
|
|
Def 14A
|
|
001-35727
|
|
A
|
|
April 28, 2014
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
February 5, 2015
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.2
|
|
February 5, 2015
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
October 27, 2016
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.2
|
|
October 27, 2016
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
April 27, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
May 3, 2017
|
|
|
||
|
|
10-Q
|
|
001-35727
|
|
10.14
|
|
July 19, 2017
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||||
|
|
10-Q
|
|
001-35727
|
|
10.15
|
|
October 18, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
October 26, 2017
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
October 26, 2018
|
|
|
||
|
|
8-K
|
|
001-35727
|
|
10.2
|
|
October 26, 2018
|
|
|
||
|
|
|
8-K
|
|
001-35727
|
|
10.1
|
|
April 1, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
24
|
|
Power of Attorney (see signature page)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
101
|
|
The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags
|
|
|
|
|
|
|
|
|
|
X
|
104
|
|
The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
Netflix, Inc.
|
||
|
|
|
|
|
|
Dated:
|
January 29, 2020
|
|
By:
|
|
/S/ REED HASTINGS
|
|
|
|
|
|
Reed Hastings
Chief Executive Officer
(principal executive officer)
|
|
|
|
|
|
|
Dated:
|
January 29, 2020
|
|
By:
|
|
/S/ SPENCER NEUMANN
|
|
|
|
|
|
Spencer Neumann
Chief Financial Officer
(principal financial and accounting officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ REED HASTINGS
|
|
President, Chief Executive Officer and Director (principal executive officer)
|
|
January 29, 2020
|
Reed Hastings
|
|
|
||
|
|
|
|
|
/S/ SPENCER NEUMANN
|
|
Chief Financial Officer (principal financial and accounting officer)
|
|
January 29, 2020
|
Spencer Neumann
|
|
|
||
|
|
|
|
|
/S/ RICHARD BARTON
|
|
Director
|
|
January 29, 2020
|
Richard Barton
|
|
|
||
|
|
|
|
|
/S/ TIMOTHY M. HALEY
|
|
Director
|
|
January 29, 2020
|
Timothy M. Haley
|
|
|
||
|
|
|
|
|
/S/ JAY C. HOAG
|
|
Director
|
|
January 29, 2020
|
Jay C. Hoag
|
|
|
||
|
|
|
|
|
/S/ ANN MATHER
|
|
Director
|
|
January 29, 2020
|
Ann Mather
|
|
|
||
|
|
|
|
|
/S/ SUSAN RICE
|
|
Director
|
|
January 29, 2020
|
Susan Rice
|
|
|
||
|
|
|
|
|
/S/ MATHIAS DÖPFNER
|
|
Director
|
|
January 29, 2020
|
Mathias Döpfner
|
|
|
||
|
|
|
|
|
/S/ LESLIE J. KILGORE
|
|
Director
|
|
January 29, 2020
|
Leslie J. Kilgore
|
|
|
||
|
|
|
|
|
/S/ BRAD SMITH
|
|
Director
|
|
January 29, 2020
|
Brad Smith
|
|
|
||
|
|
|
|
|
/S/ ANNE SWEENEY
|
|
Director
|
|
January 29, 2020
|
Anne Sweeney
|
|
|
||
|
|
|
|
|
/S/ RODOLPHE BELMER
|
|
Director
|
|
January 29, 2020
|
Rodolphe Belmer
|
|
|
•
|
impairing the dividend rights of the common stock;
|
•
|
diluting the voting power of the common stock;
|
•
|
impairing the liquidation rights of the common stock; and
|
•
|
delaying, deferring or preventing a change in control.
|
•
|
our acquisition by means of a tender offer;
|
•
|
acquisition of control by means of a proxy contest or otherwise; and
|
•
|
removal of our incumbent officers and directors.
|
•
|
for any breach of the director’s duty of loyalty to us or our shareholders;
|
•
|
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
|
•
|
under Section 174 of the DGCL (governing distributions to shareholders); or
|
•
|
for any transaction from which the director derived any improper personal benefit.
|
•
|
absence of the necessity of the directors to be elected by written ballot;
|
•
|
management of the business of the Company by the board of directors;
|
•
|
absence of the authority of stockholders to act by written consent;
|
•
|
authority to call a special meeting of stockholders;
|
•
|
number of directors and structure of the board of directors;
|
•
|
removal of directors and the filling of vacancies on the board of directors;
|
•
|
authority of the bylaws to govern advance notice provisions with respect to nominations by stockholders for the election of directors and other business to be brought before any meeting of stockholders;
|
•
|
the method of amending and authority to amend the bylaws and certificate of incorporation of the Company;
|
•
|
personal liability of directors to the Company and the stockholders;
|
•
|
indemnification of the directors, officers, employees and agents of the Company; and
|
•
|
authority or vote required to amend or repeal the section of the certificate of incorporation providing for the right to amend or repeal provisions of the certificate of incorporation.
|
•
|
meetings of or actions taken by stockholders;
|
•
|
number of directors and their term of office;
|
•
|
election and qualification of directors;
|
•
|
removal of directors and the filling of vacancies on the board of directors;
|
•
|
indemnification of the directors, officers, employees and agents of the Company; and
|
•
|
amendments to the bylaws.
|
Legal Name
|
|
Jurisdiction
|
|
Percent Owned
|
|
Netflix Entretenimento Brasil LTDA
|
|
Brazil
|
|
100
|
%
|
Netflix International B.V.
|
|
The Netherlands
|
|
100
|
%
|
Netflix Studios, LLC
|
|
United States
|
|
100
|
%
|
Netflix Global, LLC
|
|
United States
|
|
100
|
%
|
(1)
|
Registration Statement (Form S-8 No. 333-89024) pertaining to Netflix.com, Inc. 1997 Stock Plan, as amended, Netflix, Inc. 2002 Stock Plan, Netflix, Inc. 2002 Employee Stock Purchase Plan, and Netflix.com, Inc. Stand-Alone Stock Option Agreements,
|
(2)
|
Registration Statement (Form S-8 No. 333-104250) pertaining to Netflix, Inc. 2002 Stock Plan and Netflix, Inc. 2002 Employee Stock Purchase Plan,
|
(3)
|
Registration Statement (Form S-8 No. 333-113198) pertaining to Netflix, Inc. 2002 Stock Plan and Netflix, Inc. 2002 Employee Stock Purchase Plan,
|
(4)
|
Registration Statement (Form S-8 No. 333-123501) pertaining to Netflix, Inc. 2002 Stock Plan and Netflix, Inc. 2002 Employee Stock Purchase Plan,
|
(5)
|
Registration Statement (Form S-8 No. 333-136403) pertaining to Netflix, Inc. Amended and Restated 2002 Stock Plan and Netflix, Inc. 2002 Employee Stock Purchase Plan,
|
(6)
|
Registration Statement (Form S-8 No. 333-145147) pertaining to Netflix, Inc. 2002 Employee Stock Purchase Plan,
|
(7)
|
Registration Statement (Form S-8 No. 333-160946) pertaining to Netflix, Inc. 2002 Employee Stock Purchase Plan, and
|
(8)
|
Registration Statement (Form S-8 No. 333-177561) pertaining to Netflix, Inc. 2011 Stock Plan;
|
|
/s/ Ernst & Young LLP
|
San Jose, California
|
|
January 29, 2020
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Netflix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: January 29, 2020
|
|
|
By:
|
|
/S/ REED HASTINGS
|
|
|
|
|
|
Reed Hastings
|
|
|
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Netflix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: January 29, 2020
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By:
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/S/ SPENCER NEUMANN
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Spencer Neumann
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Chief Financial Officer
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Dated: January 29, 2020
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By:
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/S/ REED HASTINGS
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Reed Hastings
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Chief Executive Officer
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Dated: January 29, 2020
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By:
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/S/ SPENCER NEUMANN
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Spencer Neumann
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Chief Financial Officer
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