Netflix(NFLX) - 2024 Q3 - Quarterly Report

Streaming Revenues and Membership Growth - Streaming revenues increased by 15% to $9.82 billion in Q3 2024 compared to$ 8.52 billion in Q3 2023[103] - Paid memberships grew by 14% to 282.72 million at the end of Q3 2024, up from 247.15 million in Q3 2023[103] - UCAN region streaming revenues increased by 16% to $4.32 billion in Q3 2024, with average monthly revenue per paying membership up 5% to$ 17.06[108] - EMEA region streaming revenues grew by 16% to $3.13 billion in Q3 2024, with paid memberships increasing by 15% to 96.13 million[112] - Streaming revenues increased by$ 1.33 billion (17%) year-over-year to $9.10 billion for the nine months ended September 30, 2024[113] - Paid memberships grew by 12,371 (15%) to 96,131 at the end of the period compared to the previous year[113] - Latin America streaming revenues increased by$ 98.08 million (9%) in Q3 2024 compared to Q3 2023, despite a net membership loss of 68[116] - Asia-Pacific streaming revenues grew by $179.65 million (19%) in Q3 2024, with paid net membership additions increasing by 399 (21%)[119] - Paid net membership additions in Asia-Pacific surged by 2,862 (65%) year-over-year for the nine months ended September 30, 2024[120] Operating Income and Margins - Operating income rose by 52% to$ 2.91 billion in Q3 2024, with operating margin improving to 29.6% from 22.4% in Q3 2023[103] Membership Revenue and Growth by Region - Average monthly revenue per paying membership remained flat at $11.69 in Q3 2024 compared to$ 11.70 in Q3 2023[103] - UCAN region paid net membership additions decreased by 60% to 694,000 in Q3 2024 compared to 1.75 million in Q3 2023[108] - EMEA region paid net membership additions fell by 45% to 2.17 million in Q3 2024 compared to 3.95 million in Q3 2023[112] - Average monthly revenue per paying membership decreased by $0.49 (6%) in Asia-Pacific for the nine months ended September 30, 2024[120] - Constant currency change in Latin America showed a significant 27% increase in Q3 2024 compared to Q3 2023[116] Costs and Expenses - Cost of revenues increased by$ 863.22 million (6%) year-over-year, primarily due to a $697 million increase in content amortization[124] - Marketing expenses rose by$ 200.08 million (11%) year-over-year, driven by a $98 million increase in advertising expenses[127] - Technology and development expenses increased by$ 146.37 million (7%) year-over-year, mainly due to higher personnel-related costs[131] - General and administrative expenses decreased by $61.2 million (13%) in Q3 2024 compared to Q3 2023, primarily due to a$ 38 million decrease in personnel-related costs and a $24 million decrease in third-party expenses[133] - General and administrative expenses decreased by$ 32.6 million (3%) for the nine months ended September 30, 2024, compared to the same period in 2023, driven by a $27 million decrease in personnel-related costs[134] Interest and Taxes - Interest expense increased by$ 9.3 million (5%) in Q3 2024 compared to Q3 2023, primarily due to an increase in debt[136] - Interest and other income (expense) decreased by $189.9 million (113%) in Q3 2024 compared to Q3 2023, primarily due to foreign exchange losses of$ 91 million[139] - Interest and other income increased by $88.7 million (72%) for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to foreign exchange gains of$ 24 million[140][142] - Provision for income taxes increased by $107.8 million (47%) in Q3 2024 compared to Q3 2023, with an effective tax rate of 13%[144] - Provision for income taxes increased by$ 401.3 million (68%) for the nine months ended September 30, 2024, compared to the same period in 2023, with an effective tax rate of 13%[145] Cash Flow and Investments - Cash, cash equivalents, restricted cash, and short-term investments increased by $2.1 billion (29%) as of September 30, 2024, compared to December 31, 2023[146] - Short-term and long-term debt increased by$ 1.4 billion (10%) as of September 30, 2024, compared to December 31, 2023[146] - The company repurchased 8,696,108 shares of common stock for $5.3 billion during the nine months ended September 30, 2024, with$ 3.1 billion remaining available for repurchases[147] - Net cash provided by operating activities for Q3 2024 increased by $329 million (17%) compared to Q3 2023, driven by a$ 686 million (41%) increase in net income and favorable working capital changes[152] - Payments for content assets in Q3 2024 increased by $890 million (28%) to$ 4.1 billion compared to Q3 2023[152] - Net cash used in investing activities for Q3 2024 decreased by $2.165 billion (731%) compared to Q3 2023, primarily due to$ 1.7 billion in investment purchases[152] - Net cash provided by financing activities for Q3 2024 increased by $2.702 billion (109%) compared to Q3 2023, driven by$ 1.794 billion in debt issuance and an $800 million decrease in stock repurchases[152] - Net cash provided by operating activities for the nine months ended September 30, 2024 increased by$ 213 million (4%) compared to the same period in 2023, driven by a $2.373 billion (53%) increase in net income[154] - Payments for content assets for the nine months ended September 30, 2024 increased by$ 2.774 billion (29%) to $12.434 billion compared to the same period in 2023[154] - Net cash used in investing activities for the nine months ended September 30, 2024 decreased by$ 2.153 billion (1,654%) compared to the same period in 2023, primarily due to $1.7 billion in investment purchases[154] - Net cash used in financing activities for the nine months ended September 30, 2024 decreased by$ 103 million (3%) compared to the same period in 2023, driven by $1.794 billion in debt issuance and a$ 412 million increase in stock issuance[154] - As of September 30, 2024, the company had $16.1 billion of debt, consisting of fixed-rate unsecured debt in fifteen tranches due between 2025 and 2054[159] Foreign Exchange Impact and Hedging - Foreign exchange rate fluctuations negatively impacted revenues by approximately$ 476 million in Q3 2024[103] - Foreign currency-denominated revenues accounted for 56% of total revenue for the nine months ended September 30, 2024, with operating expenses in foreign currencies accounting for 30%[160] - Foreign currency-denominated revenue accounted for 56% of total revenue for the nine months ended September 30, 2024[160] - Foreign currency-denominated operating expenses accounted for 30% of total operating expenses for the nine months ended September 30, 2024[160] - Unfavorable foreign exchange rate impact reduced revenue by approximately $1,177 million for the nine months ended September 30, 2024[160] - A 10% weakening of the U.S. dollar would have decreased AOCI by approximately$ 1.9 billion as of September 30, 2024[160] - A 10% strengthening of the U.S. dollar would have decreased AOCI by approximately $133 million as of September 30, 2024[160] - A 10% adverse change in exchange rates would have decreased income before taxes by approximately$ 22 million as of September 30, 2024[163] - The company uses foreign exchange forward contracts to mitigate fluctuations in forecasted U.S. dollar-equivalent revenues[160] - The company designates foreign exchange forward contracts as cash flow hedges to offset foreign currency risks[160] - Non-derivative instruments are used to mitigate foreign exchange risk related to net investments in foreign subsidiaries[160] - The company began entering into foreign exchange forward contracts to mitigate foreign exchange risk on intercompany transactions in 2024[160] Discontinued Services - The company discontinued its DVD-by-mail service in September 2023, resulting in a $22.36 million revenue loss in Q3 2024[103]