Netflix(NFLX) - 2025 Q4 - Annual Report

Debt and Financial Obligations - As of December 31, 2025, the company had $14.5 billion in senior notes outstanding and $5.7 billion in total content liabilities[77]. - The company expects to incur up to $42.2 billion in additional indebtedness related to the WBD transaction, which will materially increase its outstanding debt[78]. - The company has a $3 billion unsecured revolving credit facility, which has not been utilized as of December 31, 2025[77]. - The company has substantial indebtedness that may limit its ability to generate sufficient cash to service its debt and other obligations[76]. - The company has $14.5 billion in debt, consisting of fixed-rate unsecured debt due between 2026 and 2054[174]. - The company may seek additional capital, which could result in stockholder dilution and may have rights senior to those of common stockholders[75]. Liquidity and Operational Risks - The company may face significant liquidity risks due to long-term fixed cost commitments for content, which could adversely affect margins if business performance does not meet expectations[73]. - The company faces potential labor disputes as major collective bargaining agreements expire in 2026, which could lead to production delays[85]. - The company relies on key employees, and high turnover could disrupt operations and adversely affect results[84]. - The company may face operational challenges and unforeseen expenses associated with the WBD transaction, impacting financial results[93]. Market and Currency Risks - The company's stock price is volatile, influenced by various factors including operating results and market conditions[88]. - 56% of the company's revenue and 31% of operating expenses for the year ended December 31, 2025, were denominated in currencies other than the U.S. dollar[175]. - On a constant currency basis, revenues would have been approximately $271 million higher for the year ended December 31, 2025, compared to reported revenues of $45,183 million[176]. - If the U.S. dollar weakened by 10% as of December 31, 2025, the amount recorded in accumulated other comprehensive income (AOCI) related to foreign exchange contracts would have been approximately $2,296 million lower[177]. - If the U.S. dollar strengthened by 10% as of December 31, 2025, the amount recorded in AOCI related to foreign exchange contracts would have been approximately $237 million lower[178]. - An adverse change in exchange rates of 10% would have resulted in income before income taxes being approximately $1 million lower as of December 31, 2025[181]. - The company is exposed to market risks related to interest rate changes, affecting the market values of investments and debt[172]. Regulatory and Transaction Risks - The success of the WBD transaction is contingent on obtaining necessary governmental and regulatory approvals, with a potential termination fee of $5.8 billion if conditions are not satisfied[92]. - The company enters into foreign exchange forward contracts to mitigate fluctuations in forecasted U.S. dollar-equivalent revenues from changes in foreign currency exchange rates[177].