Netflix(NFLX) - 2025 Q1 - Quarterly Report

Financial Performance - Revenues for the three months ended March 31, 2025, increased by 13% to $10,542,801, compared to$9,370,440 for the same period in 2024[93] - Operating income rose by 27% to $3,346,999, up from$2,632,534 year-over-year[93] - Net income increased by 24% to $2,890,351, compared to$2,332,209 in the prior year[93] - The operating margin improved to 31.7%, up from 28.1% in the previous year, reflecting faster revenue growth relative to expenses[94] - Revenue growth was supported by higher pricing and membership growth, despite unfavorable foreign exchange impacts[99] - Constant currency revenue growth was 16%, indicating strong underlying performance despite currency fluctuations[102] Expenses - Cost of revenues increased by 6% to $5,263,147, primarily due to a$152 million rise in content amortization[108] - Sales and marketing expenses grew by 5% to $688,370, driven by increased personnel-related costs and advertising expenses[110] - Technology and development expenses increased by$120.35 million, or 17%, to $822.82 million for Q1 2025 compared to Q1 2024, primarily due to a$116 million increase in personnel-related costs[112] - General and administrative expenses rose by $17.44 million, or 4$421.46 million for Q1 2025, mainly due to a $25 million increase in third-party expenses[114] Income and Taxes - Interest expense decreased by$10.86 million, or 6%, to $173.31 million for Q1 2025, attributed to an increase in debt obligations[116] - Interest and other income decreased by$104.46 million, or 67%, to $50.90 million for Q1 2025, primarily due to foreign exchange losses of$36 million[118] - Provision for income taxes increased by $41.01 million, or 15$323.38 million for Q1 2025, with an effective tax rate of 10%[120] Cash Flow and Debt - Cash, cash equivalents, restricted cash, and short-term investments decreased by $1.21 billion, or 13$8.38 billion as of March 31, 2025, mainly due to stock repurchases and debt repayment[121] - Total debt decreased by $566 million, or 4$15.02 billion, primarily due to the repayment of $800 million in Senior Notes[122] - Net cash provided by operating activities increased by$576.68 million, or 26%, to $2.79 billion for Q1 2025, driven by a$558 million increase in net income[129] - Net cash used in financing activities increased by $1.90 billion, or 89$4.03 billion for Q1 2025, primarily due to a $1.54 billion increase in stock repurchases[132] - The company repurchased 3,713,828 shares of common stock for an aggregate amount of$3.5 billion during Q1 2025, with $13.6 billion remaining available for repurchases[124] - As of March 31, 2025, the company had$15.1 billion in debt, consisting of fixed-rate unsecured debt due between 2025 and 2054[138] Foreign Exchange Impact - For the three months ended March 31, 2025, currencies other than the U.S. dollar accounted for 55% of revenue and 29% of operating expenses[139] - If foreign currency exchange rates had remained constant with the same period of 2024, revenues for the three months ended March 31, 2025 would have been approximately $311 million higher[140] - A 10$1,908 million in accumulated other comprehensive income (AOCI) related to foreign exchange contracts[141] - A 10% strengthening of the U.S. dollar as of March 31, 2025 would have resulted in a decrease of approximately $201 million in AOCI related to foreign exchange contracts[142] - An adverse change in exchange rates of 10$46 million in income before income taxes as of March 31, 2025[146] Strategic Focus - The company has discontinued reporting membership numbers, focusing instead on revenue and operating margin as key performance metrics[93] - The company aims to enhance user experience through improved content offerings and a range of pricing plans, including an ad-supported subscription[92]