Netflix(NFLX)2025-01-27 21:01Financial Position - As of December 31, 2024, the company had 6.2 billion in total content liabilities[84]. - The company has a 15.7 billion in debt, consisting of fixed-rate unsecured debt due between 2025 and 2054[176]. - The company’s short-term investments are primarily in government securities, which are classified as available-for-sale and recorded at fair value[175]. Debt and Capital Risks - The company faces risks related to its substantial indebtedness and obligations, which may limit its ability to generate sufficient cash to service its debt[83]. - The company may seek additional capital through equity or debt securities, which could result in stockholder dilution[81]. Operational Risks - The company is subject to various international operational risks, including compliance with local laws and economic instability[85]. - The company has significant content commitments that are largely fixed costs, which may adversely impact margins if business performance does not meet expectations[80]. - The company relies on key employees, and high turnover could disrupt operations and adversely affect results[91]. - The company is subject to tax risks in multiple jurisdictions, which may lead to increased tax obligations if laws change[90]. Currency and Foreign Exchange Risks - The company is exposed to fluctuations in currency exchange rates, which could impact revenues and expenses of its international operations[86]. - 56% of the company's revenue and 29% of operating expenses for the year ended December 31, 2024, were denominated in currencies other than the U.S. dollar[177]. - The unfavorable foreign exchange rate impact for the year ended December 31, 2024, was approximately 1.9 billion lower as of December 31, 2024[179]. - The company began entering into foreign exchange forward contracts to mitigate foreign exchange risk on intercompany transactions and monetary assets and liabilities not denominated in functional currencies[182]. - A hypothetical adverse change in exchange rates of 10% would have resulted in income before income taxes being approximately 516 million lower as of December 31, 2023[182]. Market and Interest Rate Risks - The company’s stock price is volatile and may be affected by various factors, including market conditions and competition[95]. - Changes in interest rates could adversely affect the market value of the company's securities[175]. - The fair value of the company's debt will fluctuate with movements of interest rates and foreign currency rates[176]. - The company uses non-derivative instruments to mitigate foreign exchange risk related to net investments in certain foreign subsidiaries[181].