Netflix, Inc.

Consolidated Balance Sheets

(unaudited)
(in thousands)

March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30,
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
Assets
Current assets:
Cash and cash equivalents $1,077,824 $1,918,777 $1,746,469 $ 2,822,795 $2,593,666 $3,906,357 $3,067,534 $ 3,794,483 $3,348,557 $5,004,247
Short-term investments 263,405 246,125 - - - - - - - -
Current content assets, net 4,026,615 4,149,111 4,223,387 4,310,934 4,626,522 4,803,663 4,987,916 5,151,186 - -
Other current assets 292,486 386,772 415,492 536,245 597,388 636,869 674,531 748,466 820,350 872,910
Total current assets 5,660,330 6,700,785 6,385,348 7,669,974 7,817,576 9,346,889 8,729,981 9,694,135 4,168,907 5,877,157
Non-current content assets, net 8,029,112 9,078,474 9,739,704 10,371,055 11,314,803 12,292,070 13,408,443 14,960,954 20,888,785 21,945,740
Property and equipment, net 275,083 309,831 322,421 319,404 341,932 349,646 371,152 418,281 434,372 452,399
Other non-current assets 394,571 428,133 504,067 652,309 678,486 674,932 856,653 901,030 1,726,568 1,896,043
Total assets $14,359,096 $16,517,223 $16,951,540 $19,012,742 $20,152,797 $22,663,537 $23,366,229 $25,974,400 $27,218,632 $ 30,171,339
Liabilities and Stockholders' Equity
Current liabilities:
Current content liabilities $3,861,447 $4,095,374 $4,142,086 $4,173,041 $4,466,081 $4,541,087 $4,613,011 $4,686,019 $4,863,351 $ 4,848,201
Accounts payable 294,831 273,398 301,443 359,555 436,183 448,219 441,427 562,985 439,496 442,194
Accrued expenses and other liabilities 296,258 248,871 331,723 315,094 429,431 392,595 527,079 477,417 746,268 750,812
Deferred revenue 458,693 505,302 535,425 618,622 673,892 697,740 716,723 760,899 808,692 892,777
Total current liabilities 4,911,229 5,122,945 5,310,677 5,466,312 6,005,587 6,079,641 6,298,240 6,487,320 6,857,807 6,933,984
Non-current content liabilities 3,035,430 3,356,090 3,296,504 3,329,796 3,444,476 3,604,158 3,593,823 3,759,026 3,560,364 3,564,440
Long-term debt 3,365,431 4,836,502 4,888,783 6,499,432 6,542,373 8,342,067 8,336,586 10,360,058 10,305,023 12,594,135
Other non-current liabilities 73,323 89,186 128,215 135,246 139,631 141,071 127,927 129,231 792,380 973,232
Total liabilities 11,385,413 13,404,723 13,624,179 15,430,786 16,132,067 18,166,937 18,356,576 20,735,635 21,515,574 24,065,791
Stockholders' equity:
Common stock 1,669,132 1,727,858 1,807,123 1,871,396 1,995,225 2,103,437 2,215,736 2,315,988 2,439,773 2,566,365
Accumulated other comprehensive income (loss) (45,859) (31,368) (25,362) (20,557) 4,264 (12,427) (14,508) (19,582) (25,600) (20,352)
Retained earnings 1,350,410 1,416,010 1,545,600 1,731,117 2,021,241 2,405,590 2,808,425 2,942,359 3,288,885 3,559,535
Total stockholders' equity 2,973,683 3,112,500 3,327,361 3,581,956 4,020,730 4,496,600 5,009,653 5,238,765 5,703,058 6,105,548
Total liabilities and stockholders' equity $14,359,096 $16,517,223 $16,951,540 $19,012,742 $20,152,797 $22,663,537 $23,366,229 $25,974,400 $27,218,632 $ 30,171,339
Netflix, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended Three Months Ended Six Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2019 2019 2019

Revenues $2,636,635 $2,785,464 $2,984,859 $3,285,755 $11,692,713 $3,700,856 $3,907,270 $3,999,374 $4,186,841 $15,794,341 $4,520,992 $4,923,116 $9,444,108
Cost of revenues 1,740,731 1,991,696 2,086,239 2,214,334 8,033,000 2,300,579 2,402,431 2,531,128 2,733,400 9,967,538 2,870,614 3,005,657 5,876,271
Marketing 306,148 311,160 352,446 466,527 1,436,281 536,777 592,007 510,330 730,355 2,369,469 616,578 603,150 1,219,728
Technology and development 233,871 242,484 230,223 247,132 953,710 282,310 299,095 308,620 331,789 1,221,814 372,764 383,233 755,997
General and administrative 98,943 112,317 107,324 112,459 431,043 134,612 151,524 168,628 175,530 630,294 201,952 224,657 426,609
Operating income 256,942 127,807 208,627 245,303 838,679 446,578 462,213 480,668 215,767 1,605,226 459,084 706,419 1,165,503
Other income (expense):
Interest expense (46,742) (55,482) (60,688) (75,292) (238,204) (81,219) (101,605) (108,862) (128,807) (420,493) (135,529) (152,033) (287,562)
Interest and other income (expense) 13,592 (58,363) (31,702) (38,681) (115,154) (65,743) 68,028 7,004 32,436 41,725 76,104 (53,470) 22,634
Income before income taxes 223,792 13,962 116,237 131,330 485,321 299,616 428,636 378,810 119,396 1,226,458 399,659 500,916 900,575
Provision for (benefit from) income taxes 45,570 (51,638) (13,353) (54,187) (73,608) 9,492 44,287 (24,025) (14,538) 15,216 55,607 230,266 285,873
Net income $ 178,222 $ 65,600 $ 129,590 $185,517 $558,929 $290,124 $384,349 $402,835 $133,934 $1,211,242 $344,052 $ 270,650 $ 614,702
Earnings per share:
Basic $ .41 $ .15 $ .30 $ .43 $ 1.29 $ .67 $ .88 $ .92 $ .31 $ 2.78 $ .79 $ .62 $ 1.41
Diluted $ .40 $ .15 $ .29 $ .41 $ 1.25 $ .64 $ .85 $ .89 $ .30 $ 2.68 $ .76 $ .60 $ 1.36
Weighted-average common shares outstanding:
Basic 430,600 431,396 432,404 433,108 431,885 434,174 435,097 435,809 436,385 435,374 436,947 437,587 437,271
Diluted 445,458 446,262 447,362 448,142 446,814 450,359 451,552 451,919 451,116 451,244 451,922 452,195 452,063
Netflix, Inc.
Segment Information
(unaudited)
(in thousands)

Twelve Months Twelve Months

As of / Three Months Ended Ended As of / Three Months Ended Ended As of / Three Months Ended Six Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2019 2019 2019

Domestic Streaming
Paid memberships at end of period 49,375 50,323 51,345 52,810 52,810 55,087 55,959 56,957 58,486 58,486 60,229 60,103 60,103
Paid net membership additions 1,470 948 1,022 1,465 4,905 2,277 872 998 1,529 5,676 1,743 (126) 1,617
Free trials 1,479 1,598 1,427 1,940 1,940 1,618 1,420 1,507 2,065 2,065 1,563 1,575 1,575
Revenues $ 1,470,042 $ 1,505,499 $ 1,547,210 $ 1,630,274 $ 6,153,025 $ 1,820,019 $ 1,893,222 $ 1,937,314 $1,996,092 $ 7,646,647 $2,073,555 $2,299,189 $ 4,372,744
Cost of revenues 783,954 868,530 902,275 916,100 3,470,859 936,480 969,995 1,038,473 1,093,446 4,038,394 1,139,535 1,196,420 2,335,955
Marketing 126,253 124,903 141,533 211,057 603,746 250,719 251,298 210,595 312,739 1,025,351 221,046 250,606 471,652
Contribution profit 559,835 512,066 503,402 503,117 2,078,420 632,820 671,929 688,246 589,907 2,582,902 712,974 852,163 1,565,137
Contribution margin 38.1% 34.0% 32.5% 30.9% 33.8% 34.8% 35.5% 35.5% 29.6% 33.8% 34.4% 37.1% 35.8%

International Streaming
Paid memberships at end of period 44,988 48,713 52,678 57,834 57,834 63,815 68,395 73,465 80,773 80,773 88,634 91,459 91,459
Paid net membership additions 3,803 3,725 3,965 5,156 16,649 5,981 4,580 5,070 7,308 22,939 7,861 2,825 10,686
Free trials 2,906 3,318 3,798 4,998 4,998 4,475 4,367 5,170 7,131 7,131 5,003 4,481 4,481

Revenues $ 1,046,199 $ 1,165,228 $ 1,327,435 $ 1,550,329 $ 5,089,191 $ 1,782,086 $ 1,921,144 $ 1,973,283 $2,105,592 $ 7,782,105 $2,366,749 $2,547,727 $ 4,914,476
Cost of revenues 896,558 1,070,432 1,136,877 1,255,749 4,359,616 1,321,706 1,392,512 1,455,554 1,606,275 5,776,047 1,697,121 1,778,890 3,476,011
Marketing 179,895 186,257 210,913 255,470 832,535 286,058 340,709 299,735 417,616 1,344,118 395,532 352,544 748,076
Contribution profit (loss) (30,254) (91,461) (20,355) 39,110 (102,960) 174,322 187,923 217,994 81,701 661,940 274,096 416,293 690,389
Contribution margin -2.9% -7.8% -1.5% 2.5% -2.0% 9.8% 9.8% 11.0% 3.9% 8.5% 11.6% 16.3% 14.0%

Total Streaming
Paid memberships at end of period 94,363 99,036 104,023 110,644 110,644 118,902 124,354 130,422 139,259 139,259 148,863 151,562 151,562
Paid net membership additions 5,273 4,673 4,987 6,621 21,554 8,258 5,452 6,068 8,837 28,615 9,604 2,699 12,303
Free trials 4,385 4,916 5,225 6,938 6,938 6,093 5,787 6,677 9,196 9,196 6,566 6,056 6,056
Revenue $ 2,516,241 $ 2,670,727 $ 2,874,645 $ 3,180,603 $ 11,242,216 $ 3,602,105 $ 3,814,366 $ 3,910,597 $ 4,101,684 $ 15,428,752 $ 4,440,304 $ 4,846,916 $ 9,287,220
Cost of revenues 1,680,512 1,938,962 2,039,152 2,171,849 7,830,475 2,258,186 2,362,507 2,494,027 2,699,721 9,814,441 2,836,656 2,975,310 5,811,966
Marketing 306,148 311,160 352,446 466,527 1,436,281 536,777 592,007 510,330 730,355 2,369,469 616,578 603,150 1,219,728
Contribution profit 529,581 420,605 483,047 542,227 1,975,460 807,142 859,852 906,240 671,608 3,244,842 987,070 1,268,456 2,255,526
Contribution margin 21.0% 15.7% 16.8% 17.0% 17.6% 22.4% 22.5% 23.2% 16.4% 21.0% 22.2% 26.2% 24.3%

Domestic DVD
Paid memberships at end of period 3,867 3,692 3,520 3,330 3,330 3,138 2,971 2,828 2,706 2,706 2,565 2,411 2,411
Free trials 77 66 49 53 53 29 28 24 25 25 22 17 17
Revenues $ 120,394 $ 114,737 $ 110,214 $ 105,152 $ 450,497 $ 98,751 $ 92,904 $ 88,777 $85,157 $ 365,589 $80,688 $76,200 $ 156,888
Cost of revenues 60,219 52,734 47,087 42,485 202,525 42,393 39,924 37,101 33,679 153,097 33,958 30,347 64,305
Contribution profit 60,175 62,003 63,127 62,667 247,972 56,358 52,980 51,676 51,478 212,492 46,730 45,853 92,583
Contribution margin 50.0% 54.0% 57.3% 59.6% 55.0% 57.1% 57.0% 58.2% 60.5% 58.1% 57.9% 60.2% 59.0%

Consolidated
Revenues $ 2,636,635 $ 2,785,464 $ 2,984,859 $ 3,285,755 $ 11,692,713 $ 3,700,856 $ 3,907,270 $ 3,999,374 $ 4,186,841 $ 15,794,341 $ 4,520,992 $ 4,923,116 $ 9,444,108
Cost of revenues 1,740,731 1,991,696 2,086,239 2,214,334 8,033,000 2,300,579 2,402,431 2,531,128 2,733,400 9,967,538 2,870,614 3,005,657 5,876,271
Marketing 306,148 311,160 352,446 466,527 1,436,281 536,777 592,007 510,330 730,355 2,369,469 616,578 603,150 1,219,728
Contribution profit $ 589,756 $ 482,608 $ 546,174 $ 604,894 $ 2,223,432 $ 863,500 $ 912,832 $ 957,916 $ 723,086 $ 3,457,334 $ 1,033,800 $ 1,314,309 $ 2,348,109
Other operating expenses 332,814 354,801 337,547 359,591 1,384,753 416,922 450,619 477,248 507,319 1,852,108 574,716 607,890 1,182,606
Operating income 256,942 127,807 208,627 245,303 838,679 446,578 462,213 480,668 215,767 1,605,226 459,084 706,419 1,165,503
Other expense (33,150) (113,845) (92,390) (113,973) (353,358) (146,962) (33,577) (101,858) (96,371) (378,768) (59,425) (205,503) (264,928)
Provision for (benefit from) income taxes 45,570 (51,638) (13,353) (54,187) (73,608) 9,492 44,287 (24,025) (14,538) 15,216 55,607 230,266 285,873
Net Income $ 178,222 $ 65,600 $ 129,590 $ 185,517 $ 558,929 $ 290,124 $ 384,349 $ 402,835 $ 133,934 $ 1,211,242 $ 344,052 $ 270,650 $ 614,702
Netflix, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended Three Months Ended Six Months Ended
March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2019 2019 2019
Cash flows from operating activities:
Net income $178,222 $65,600 $129,590 $185,517 $ 558,929 $290,124 $384,349 $402,835 $133,934 $ 1,211,242 $344,052 $270,650 $ 614,702
Adjustments to reconcile net income to net cash
used in operating activities:
Additions to streaming content assets (2,348,666) (2,664,421) (2,315,017) (2,477,659) (9,805,763) (2,986,747) (3,033,721) (3,238,717) (3,784,252) (13,043,437) (2,997,746) (3,325,103) (6,322,849)
Change in streaming content liabilities 366,257 514,890 (34,587) 53,446 900,006 378,885 288,474 65,868 266,653 999,880 (14,698) (12,414) (27,112)
Amortization of streaming content assets 1,305,683 1,550,794 1,627,477 1,713,863 6,197,817 1,748,844 1,817,817 1,911,767 2,053,660 7,532,088 2,124,686 2,231,915 4,356,601
Amortization of DVD content assets 18,598 16,511 13,259 12,289 60,657 11,134 11,154 9,959 8,965 41,212 8,509 7,656 16,165
Depreciation and amortization of property, equipment and intangibles 15,049 18,551 19,238 19,073 71,911 19,041 19,736 21,161 23,219 83,157 23,561 25,496 49,057
Stock-based compensation expense 44,888 44,028 44,763 48,530 182,209 68,395 81,232 82,316 88,714 320,657 101,200 103,848 205,048
Other non-cash items 21,666 11,519 9,896 14,126 57,207 8,209 13,921 8,962 9,336 40,428 37,199 53,039 90,238
Foreign currency remeasurement loss (gain) on long-term debt - 64,220 50,830 25,740 140,790 41,080 (85,410) (7,670) (21,953) (73,953) (57,600) 61,284 3,684
Deferred taxes (26,764) (20,702) (57,090) (104,132) (208,688) (22,049) (9,539) (39,453) (14,479) (85,520) 6,627 35,519 42,146
Changes in operating assets and liabilities:
Other current assets (25,402) (80,199) (41,399) (87,090) (234,090) (55,905) (25,564) (30,364) (88,359) (200,192) (32,076) (24,231) (56,307)
Accounts payable (11,000) (12,439) 34,029 63,969 74,559 74,083 7,733 (4,449) 121,831 199,198 (124,467) (2,674) (127,141)
Accrued expenses and other liabilities 93,542 (48,042) 74,006 (5,169) 114,337 119,049 (52,851) 134,000 (49,776) 150,422 157,647 (26,705) 130,942
Deferred revenue 15,221 46,609 32,947 83,197 177,974 55,270 23,848 18,983 44,176 142,277 47,793 84,085 131,878
Other non-current assets and liabilities 8,850 (41,447) (7,549) (33,657) (73,803) 13,830 40,582 (25,609) (26,741) 2,062 (4,486) (26,119) (30,605)
Net cash used in operating activities (343,856) (534,528) (419,607) (487,957) (1,785,948) (236,757) (518,239) (690,411) (1,235,072) (2,680,479) (379,799) (543,754) (923,553)
Cash flows from investing activities:
Acquisition of DVD content assets (25,372) (7,624) (10,217) (10,507) (53,720) (10,796) (12,552) (7,731) (7,507) (38,586) (9,170) (7,798) (16,968)
Purchases of property and equipment (52,523) (65,231) (33,963) (21,585) (173,302) (37,170) (27,323) (39,333) (70,120) (173,946) (60,381) (39,584) (99,965)
Change in other assets (769) (1,064) (1,107) (3,749) (6,689) (1,786) (441) (121,630) (2,731) (126,588) (10,552) (2,654) (13,206)
Purchases of short-term investments (57,774) (14,246) (2,799) - (74,819) - - - - - - - -
Proceeds from sale of short-term investments 55,748 14,128 250,278 - 320,154 - - - - - - - -
Proceeds from maturities of short-term investments 5,100 17,605 - - 22,705 - - - - - - - -
Net cash provided by (used in) investing activities (75,590) (56,432) 202,192 (35,841) 34,329 (49,752) (40,316) (168,694) (80,358) (339,120) (80,103) (50,036) (130,139)
Cash flows from financing activities:
Proceeds from issuance of debt - 1,420,510 - 1,600,000 3,020,510 - 1,900,000 - 2,061,852 3,961,852 - 2,243,196 2,243,196
Issuance costs - (15,013) (312) (16,828) (32,153) - (16,992) - (18,879) (35,871) - (18,192) (18,192)
Proceeds from issuance of common stock 24,178 14,826 34,669 14,705 88,378 56,335 26,936 29,781 11,450 124,502 22,972 21,896 44,868
Other financing activities 61 63 65 66 255 (321) (532) (544) (559) (1,956) - -
Net cash provided by financing activities 24,239 1,420,386 34,422 1,597,943 3,076,990 56,014 1,909,412 29,237 2,053,864 4,048,527 22,972 2,246,900 2,269,872

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 5,455 11,527 10,685 2,181 29,848 7,177 (36,340) (5,562) (4,957) (39,682) (5,014) 4,998 (16)
Net increase (decrease) in cash, cash equivalents, and restricted cash (389,752) 840,953 (172,308) 1,076,326 1,355,219 (223,318) 1,314,517 (835,430) 733,477 989,246 (441,944) 1,658,108 1,216,164
Cash, cash equivalents, and restricted cash beginning of period 1,467,576 1,077,824 1,918,777 1,746,469 1,467,576 2,822,795 2,599,477 3,913,994 3,078,564 2,822,795 3,812,041 3,370,097 3,812,041
Cash, cash equivalents, and restricted cash end of period $ 1,077,824 $ 1,918,777 $ 1,746,469 $ 2,822,795 $ 2,822,795 $ 2,599,477 $ 3,913,994 $ 3,078,564 $ 3,812,041 $ 3,812,041 $ 3,370,097 $ 5,028,205 $ 5,028,205

Non-GAAP free cash flow reconciliation:

Net cash used in operating activities $ (343,856) $ (534,528) $ (419,607) $ (487,957) (1,785,948) $ (236,757) $ (518,239) $ (690,411) $ (1,235,072) (2,680,479) $ (379,799) $ (543,754) (923,553)
Acquisition of DVD content assets (25,372) (7,624) (10,217) (10,507) (53,720) (10,796) (12,552) (7,731) (7,507) (38,586) (9,170) (7,798) (16,968)
Purchases of property and equipment (52,523) (65,231) (33,963) (21,585) (173,302) (37,170) (27,323) (39,333) (70,120) (173,946) (60,381) (39,584) (99,965)
Change in other assets (769) (1,064) (1,107) (3,749) (6,689) (1,786) (441) (121,630) (2,731) (126,588) (10,552) (2,654) (13,206)
Non-GAAP free cash flow $ (422,520) $ (608,447) $ (464,894) $ (523,798) $ (2,019,659) $ (286,509) $ (558,555) $ (859,105) $ (1,315,430) $ (3,019,599) $ (459,902) $ (593,790) $ (1,053,692)