NETFLIX INC

Previous wording

Operating margin for the three months ended March 31, 2026 increased by approximately one percentage point as compared to the prior comparative period. The increase in operating margin was primarily driven by revenue growth outpacing the growth in cost of revenues, partially offset by general and administrative, sales and marketing, and technology and development expenses growing at a faster rate relative to revenue growth.

Current wording

Operating margin for the three months ended June 30, 2026 decreased by approximately one percentage point as compared to the prior comparative period. The decrease in operating margin was primarily driven by technology and development expenses and sales and marketing expenses growing at a faster rate than revenue.

Previous wording

Net income for the three months ended March 31, 2026 increased $2,392 million as compared to the prior comparative period, primarily driven by an increase in interest and other income (expense) due to a $2.8 billion termination fee received in connection with the termination of our agreement 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”). The increase in net income was additionally impacted by a $610 million increase in operating income, driven by a $1,707 million increase in revenues, partially offset by a $625 million increase in cost of revenues due to an increase in content amortization, and a $941 million increase in the provision for income taxes.

Current wording

Net income for the three months ended June 30, 2026 increased $276 million as compared to the prior comparative period, primarily due to a $418 million increase in operating income, driven by a $1,481 million increase in revenues and partially offset by a $712 million increase in cost of revenues primarily due to an increase in content amortization. The impact of higher operating income was partially offset by a $161 million increase in the provision for income taxes.

Previous wording

We primarily derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan. As of March 31, 2026, pricing on our plans ranged from the U.S. dollar equivalent of $1 to $39 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $10 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.

Current wording

We primarily derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan. As of June 30, 2026, pricing on our plans ranged from the U.S. dollar equivalent of $1 to $38 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $10 per month. We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.

Previous wording

We also earn revenues from advertisements presented on our streaming service, consumer products and experiences, and various other sources. Revenues earned from sources other than monthly membership fees were not a material component of revenues for the three months ended March 31, 2026 and March 31, 2025.

Current wording

We also earn revenues from advertisements presented on our streaming service, consumer products and experiences, and various other sources. Revenues earned from sources other than monthly membership fees were not a material component of revenues for the three and six months ended June 30, 2026 and June 30, 2025.

Previous wording

Revenues for the three months ended March 31, 2026 increased 16% as compared to the three months ended March 31, 2025, primarily due to the growth in memberships, price increases, and increased advertising revenue.

Current wording

Revenues for the three and six months ended June 30, 2026 increased 13% and 15% as compared to the three and six months ended June 30, 2025, respectively, primarily due to the growth in memberships, price increases, and increased advertising revenue. Additionally, revenues for the three and six months ended June 30, 2026 as compared to the same periods in 2025, were impacted by favorable changes in foreign exchange rates, net of hedging.

Previous wording

The following table summarizes revenues by region for the three months ended March 31, 2026 and 2025. Total revenues are inclusive of hedging gains (losses) of $(133) million and $165 million for the three months ended March 31, 2026 and 2025, respectively. 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.

Current wording

The following tables summarize revenues by region for the three and six months ended June 30, 2026 and 2025. Total revenues are inclusive of hedging gains (losses) of $(48) million and $(180) million for the three and six months ended June 30, 2026, respectively, and $(37) million and $127 million for the three and six months ended June 30, 2025, respectively. 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.

Previous wording

The table below summarizes constant currency revenues by region for the three months ended March 31, 2026 and the constant currency percentage change in revenues by region for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:

Current wording

The tables below summarize constant currency revenues by region for the three and six months ended June 30, 2026 and the constant currency percentage change in revenues by region for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025:

Previous wording

The increase in cost of revenues was primarily due to a $395 million increase in content amortization relating to our existing and new content. No individual component of the remaining increase in cost of revenues was material.

Current wording

The increase in cost of revenues was primarily due to a $479 million increase in content amortization relating to our existing and new content. No individual component of the remaining increase in cost of revenues was material.

Previous wording

The increase in sales and marketing expenses was primarily driven by a $113 million increase in marketing expenses, coupled with a $48 million increase in personnel-related costs, primarily due to the growth in advertising sales headcount.

Current wording

The increase in sales and marketing expenses was primarily driven by a $71 million increase in marketing expenses, coupled with a $47 million increase in personnel-related costs, primarily due to the growth in advertising sales headcount.

Previous wording

The increase in technology and development expenses was primarily due to a $105 million increase in personnel-related costs.

Current wording

The increase in technology and development expenses was primarily due to a $142 million increase in personnel-related costs.

Previous wording

The increase in general and administrative expenses was primarily due to an $88 million increase in third-party expenses, driven by higher legal fees and transaction-related costs, including those associated with the WBD transaction. General and administrative expenses also increased due to a $79 million increase in personnel-related costs.

Current wording

The increase in general and administrative expenses was primarily due to a $105 million increase in personnel-related costs and a $107 million increase in third-party expenses, driven by higher legal fees and transaction-related costs, including those associated with the WBD transaction.

Previous wording

Interest expense primarily consisted of interest on our Notes of $176 million for the three months ended March 31, 2026. The increase in interest expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by higher amortization of debt issuance costs, including approximately $85 million recognized in connection with the termination of financing arrangements associated with the WBD transaction. See Note 7 Debt for additional details regarding the termination of financing arrangements associated with the WBD transaction.

Current wording

Interest expense, net of hedging impacts, primarily consisted of interest on our Notes of $175 million and $351 million for the three and six months ended June 30, 2026, respectively. The decrease in interest expense for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was due to the lower average aggregate principal of our Notes outstanding. The increase in interest expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by higher amortization of debt issuance costs, including approximately $85 million recognized in connection with the termination of financing arrangements associated with the WBD transaction in the first quarter of 2026. See Note 7 Debt for additional details regarding the termination of financing arrangements associated with the WBD transaction.

Previous wording

Interest and other income (expense) increased in the three months ended March 31, 2026, primarily due to a $2.8 billion termination fee received in connection with the termination of the WBD transaction. See Note 6 Acquisitions for further information.

Current wording

Interest and other income (expense) increased in the six months ended June 30, 2026, primarily due to a $2.8 billion termination fee received in connection with the termination of the WBD transaction in the first quarter of 2026. See Note 6 Acquisitions for further information.

Previous wording

The increase in the effective tax rate for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to a decrease in tax benefits associated with lower excess tax benefits on stock-based compensation as well as lower foreign-derived income deduction relative to the growth in income before income taxes.

Current wording

The increase in the effective tax rates for the three and six months ended June 30, 2026, as compared to the same periods in 2025, was primarily due to a decrease in tax benefits associated with lower excess tax benefits on stock-based compensation. The increase in the effective tax rate for the six months ended June 30, 2026, as compared to the same period in 2025, was also impacted by lower foreign-derived income deduction relative to the growth in income before income taxes.

Previous wording

Cash, cash equivalents, restricted cash and short-term investments increased $3,228 million in the three months ended March 31, 2026, primarily due to cash provided by operations, which includes the receipt of a $2.8 billion termination fee in connection with the termination of the WBD transaction, partially offset by repurchases of stock and cash paid for acquisitions. See Note 6 Acquisitions for further information.

Current wording

Cash, cash equivalents, restricted cash and short-term investments increased $64 million in the six months ended June 30, 2026, primarily due to cash provided by operations, which includes the receipt of a $2.8 billion termination fee in connection with the termination of the WBD transaction in the first quarter of 2026, partially offset by repurchases of stock and cash paid for acquisitions. See Note 6 Acquisitions for further information.

Previous wording

Debt, net of debt issuance costs and discounts, decreased $102 million primarily due to the remeasurement of our Euro-denominated notes in the three months ended March 31, 2026. The amount of principal and interest on our outstanding notes due in the next twelve months is $1,686 million. See Note 7 Debt in the accompanying notes to our consolidated financial statements.

Current wording

Debt, net of debt issuance costs and discounts, decreased $154 million primarily due to the remeasurement of our Euro-denominated notes in the six months ended June 30, 2026. The amount of principal and interest on our outstanding notes due in the next twelve months is $3,149 million. See Note 7 Debt in the accompanying notes to our consolidated financial statements.

Previous wording

In September 2023, the Board of Directors authorized the repurchase of up to $10 billion of our common stock, with no expiration date, and in December 2024, the Board of Directors increased the share repurchase authorization by an additional $15 billion, also with no expiration date. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. We are not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including our stock price, general economic, business and market conditions, and alternative investment opportunities. We may discontinue any repurchases of our common stock at any time without prior notice. During the three months ended March 31, 2026, the Company repurchased 13,497,098 shares of common stock for an aggregate amount of $1.3 billion. As of March 31, 2026, $6.8 billion remains available for repurchases.

Current wording

In March 2021, the Company’s Board of Directors authorized a share repurchase program for the Company’s common stock with no expiration date. The Board subsequently approved additional repurchase authorizations in September 2023 and December 2024, and most recently in April 2026, authorized the repurchase of an additional $25 billion of the Company’s common stock. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. We are not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including our stock price, general economic, business and market conditions, and alternative investment opportunities. We may discontinue any repurchases of our common stock at any time without prior notice. During the six months ended June 30, 2026, the Company repurchased 66,431,786 shares of common stock for an aggregate amount of $5.9 billion (excluding the 1% excise tax on stock repurchases as a result of the Inflation Reduction Act of 2022). As of June 30, 2026, $27.1 billion remains available for repurchases.

Previous wording

(1)As of March 31, 2026, content obligations were 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 $18.5 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.

Current wording

(1)As of June 30, 2026, content obligations were comprised of $3.9 billion included in “Current content liabilities” and $1.6 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $19.6 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 increased $2,501 million as compared to the corresponding period in 2025, primarily driven by a $2,392 million or 83% increase in net income which was largely attributable to an increase in interest and other income (expense) due to a $2.8 billion termination fee received in connection with the termination of the WBD transaction, a $749 million increase in adjustments for non-cash expenses, and $200 million in favorable changes in working capital, partially offset by an $841 million increase in payments for content assets. Changes in working capital includes $729 million of non-routine payments made during the current period in connection with non-income tax assessments in Brazil for prior tax periods, which were offset by favorable changes in other working capital balances.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 increased $1,822 million as compared to the corresponding period in 2025, primarily driven by a $2,668 million increase in net income which was largely attributable to an increase in interest and other income (expense) due to a $2.8 billion termination fee received in connection with the termination of the WBD transaction in the first quarter of 2026, a $1,474 million increase in adjustments for non-cash expenses, partially offset by a $1,900 million increase in payments for content assets and $420 million in unfavorable changes in working capital. Changes in working capital includes $729 million of non-routine payments made in connection with non-income tax assessments in Brazil for prior tax periods.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 increased $1,268 million as compared to the corresponding period in 2025, primarily due to a net decrease of $614 million in cash flows from maturities, sales and purchases of investments, coupled with net cash outflows for acquisitions for an aggregate amount of $586 million in the three months ended March 31, 2026, as compared to no acquisition-related cash flows in the corresponding period in 2025. In addition, purchases of property and equipment increased $68 million in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 increased $2,255 million as compared to the corresponding period in 2025, primarily due to the absence of cash flows related to investments in the six months ended June 30, 2026 as compared to $1,575 million in net cash inflows from maturities, sales and purchases of investments in the prior comparative period, coupled with net cash outflows for acquisitions for an aggregate amount of $586 million in the six months ended June 30, 2026, as compared to no acquisition-related cash flows in the corresponding period in 2025. In addition, purchases of property and equipment increased $131 million in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2026 decreased $2,798 million as compared to the corresponding period in 2025, primarily driven by a $2,266 million decrease in repurchases of common stock, coupled with no repayments of debt in the three months ended March 31, 2026, as compared to $800 million in repayments of debt in the corresponding period in 2025. In addition, proceeds from the issuance of common stock decreased $302 million in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 decreased $631 million as compared to the corresponding period in 2025, primarily driven by no repayments of debt in the six months ended June 30, 2026, as compared to $1,833 million in repayments of debt in the corresponding period in 2025, partially offset by a $794 million increase in repurchases of common stock. In addition, proceeds from the issuance of common stock decreased $411 million in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.