10-Q 1 nflx-20220930.htm 10-Q nflx-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number: 001-35727
Netflix, Inc.
(Exact name of Registrant as specified in its charter)
Delaware77-0467272
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
100 Winchester Circle,Los Gatos,California95032
(Address of principal executive offices)(Zip Code)
(408) 540-3700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareNFLXNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  
As of September 30, 2022, there were 445,020,494 shares of the registrant’s common stock, par value $0.001, outstanding.



Table of Contents
 

2


NETFLIX, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Revenues
$7,925,589 $7,483,467 $23,763,497 $21,988,526 
Cost of revenues
4,788,665 4,206,589 13,764,125 12,093,108 
Marketing
567,954 635,948 1,698,892 1,752,433 
Technology and development
662,739 563,887 2,037,115 1,626,415 
General and administrative
373,213 321,790 1,180,438 953,831 
Operating income
1,533,018 1,755,253 5,082,927 5,562,739 
Other income (expense):
Interest expense
(172,575)(190,429)(535,609)(576,191)
Interest and other income
261,404 96,135 677,275 302,702 
Income before income taxes
1,621,847 1,660,959 5,224,593 5,289,250 
Provision for income taxes(223,605)(211,888)(787,953)(780,451)
Net income
$1,398,242 $1,449,071 $4,436,640 $4,508,799 
Earnings per share:
Basic
$3.14 $3.27 $9.98 $10.18 
Diluted
$3.10 $3.19 $9.83 $9.90 
Weighted-average shares of common stock outstanding:
Basic
444,878 442,778 444,529 443,052 
Diluted
450,344 454,925 451,168 455,230 










See accompanying notes to the consolidated financial statements.
3

NETFLIX, INC.
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Net income$1,398,242 $1,449,071 $4,436,640 $4,508,799 
Other comprehensive loss:
Foreign currency translation adjustments
(103,167)(29,610)(207,148)(64,233)
Comprehensive income$1,295,075 $1,419,461 $4,229,492 $4,444,566 
























See accompanying notes to the consolidated financial statements.
4

NETFLIX, INC.

Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
   
Three Months EndedNine Months Ended
   
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Cash flows from operating activities:
Net income$1,398,242 $1,449,071 $4,436,640 $4,508,799 
Adjustments to reconcile net income to net cash provided by operating activities:
Additions to content assets(4,582,671)(4,666,237)(12,853,846)(12,047,563)
Change in content liabilities60,867 (29,246)(95,054)(607,494)
Amortization of content assets3,653,592 2,963,051 10,081,305 8,489,050 
Depreciation and amortization of property, equipment and intangibles85,188 70,253 243,295 144,428 
Stock-based compensation expense152,062 95,078 421,663 303,891 
Foreign currency remeasurement gain on debt(348,458)(136,488)(814,792)(326,744)
Other non-cash items102,513 102,211 409,855 282,971 
Deferred income taxes(57,797)50,967 (242,523)261,827 
Changes in operating assets and liabilities:
Other current assets(120,071)(95,145)44,485 (369,073)
Accounts payable53,875 24,836 (283,617)(40,164)
Accrued expenses and other liabilities212,072 269,774 324,116 276,241 
Deferred revenue(48,420)(4,732)(42,053)64,640 
Other non-current assets and liabilities(4,184)(11,014)(47,075)(144,925)
Net cash provided by operating activities556,810 82,379 1,582,399 795,884 
Cash flows from investing activities:
Purchases of property and equipment(84,960)(167,327)(296,136)(358,606)
Change in other assets (21,304) (26,919)
Acquisitions  (193,397) 
Net cash used in investing activities(84,960)(188,631)(489,533)(385,525)
Cash flows from financing activities:
Repayments of debt  (700,000)(500,000)
Proceeds from issuance of common stock4,113 18,445 29,041 86,265 
Repurchases of common stock (100,000) (600,022)
Net cash provided by (used in) financing activities4,113 (81,555)(670,959)(1,013,757)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (180,058)(63,843)(336,704)(82,504)
Net increase (decrease) in cash, cash equivalents and restricted cash295,905 (251,650)85,203 (685,902)
Cash, cash equivalents and restricted cash at beginning of period 5,844,409 7,804,618 6,055,111 8,238,870 
Cash, cash equivalents and restricted cash at end of period $6,140,314 $7,552,968 $6,140,314 $7,552,968 
See accompanying notes to the consolidated financial statements.
5

NETFLIX, INC.
Consolidated Balance Sheets
(in thousands, except share and par value data)

As of
   
September 30,
2022
December 31,
2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$6,113,733 $6,027,804 
Other current assets
2,703,170 2,042,021 
Total current assets
8,816,903 8,069,825 
Content assets, net
32,777,340 30,919,539 
Property and equipment, net
1,372,754 1,323,453 
Other non-current assets
4,595,190 4,271,846 
Total assets
$47,562,187 $44,584,663 
Liabilities and Stockholders’ Equity
Current liabilities:
Current content liabilities
$4,225,890 $4,292,967 
Accounts payable
560,156 837,483 
Accrued expenses and other liabilities
1,803,555 1,449,351 
Deferred revenue
1,176,323 1,209,342 
Short-term debt
 699,823 
Total current liabilities
7,765,924 8,488,966 
Non-current content liabilities
2,955,368 3,094,213 
Long-term debt
13,888,117 14,693,072 
Other non-current liabilities
2,424,637 2,459,164 
Total liabilities
27,034,046 28,735,415 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.001 par value; 4,990,000,000 shares authorized at September 30, 2022 and December 31, 2021; 445,020,494 and 443,963,107 issued and outstanding at September 30, 2022 and December 31, 2021, respectively
4,473,962 4,024,561 
Treasury stock at cost (1,564,478 shares at September 30, 2022)
(824,190)(824,190)
Accumulated other comprehensive loss(247,643)(40,495)
Retained earnings
17,126,012 12,689,372 
Total stockholders’ equity
20,528,141 15,849,248 
Total liabilities and stockholders’ equity
$47,562,187 $44,584,663 




See accompanying notes to the consolidated financial statements.
6

NETFLIX, INC.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands)
Three Months EndedNine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Total stockholders' equity, beginning balances$19,075,974 $13,863,871 $15,849,248 $11,065,240 
Common stock and additional paid-in capital:
Beginning balances
$4,316,870 $3,721,246 $4,024,561 $3,447,698 
Issuance of common stock upon exercise of options
5,030 36,207 27,738 100,942 
Stock-based compensation expense152,062 95,078 421,663 303,891 
Ending balances$4,473,962 $3,852,531 $4,473,962 $3,852,531 
Treasury stock:
Beginning balances
$(824,190)$(500,022)$(824,190)$ 
Repurchases of common stock to be held as treasury stock— (100,000)— (600,022)
Ending balances$(824,190)$(600,022)$(824,190)$(600,022)
Accumulated other comprehensive loss
Beginning balances
$(144,476)$9,775 $(40,495)$44,398 
Other comprehensive loss(103,167)(29,610)(207,148)(64,233)
Ending balances$(247,643)$(19,835)$(247,643)$(19,835)
Retained earnings:
Beginning balances$15,727,770 $10,632,872 $12,689,372 $7,573,144 
Net income
1,398,242 1,449,071 4,436,640 4,508,799 
Ending balances$17,126,012 $12,081,943 $17,126,012 $12,081,943 
Total stockholders' equity, ending balances
$20,528,141 $15,314,617 $20,528,141 $15,314,617 





















See accompanying notes to the consolidated financial statements.
7

NETFLIX, INC.
Notes to Consolidated Financial Statements
(unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying interim consolidated financial statements of Netflix, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on January 27, 2022. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the content asset amortization policy and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Interim results are not necessarily indicative of the results for a full year.
There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Recently adopted accounting pronouncements
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2021-08 in the first quarter of 2022 and the adoption had no material impact to the Company’s consolidated financial statements.


2. Revenue Recognition
The Company's primary source of revenues is from monthly membership fees. Members are billed in advance of the start of their monthly membership and revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities. The Company is the principal in all its relationships where partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”), provide access to the service as the Company retains control over service delivery to its members. Typically, payments made to the partners, such as for marketing, are expensed. However, if there is no distinct service provided in exchange for the payments made to the partners or if the price that the member pays is established by the partners and there is no standalone price for the Netflix service (for instance, in a bundle), these payments are recognized as a reduction of revenues.
The following tables summarize streaming revenues, paid net membership additions, and paid memberships at end of period by region for the three and nine months ended September 30, 2022 and 2021, respectively:

United States and Canada (UCAN)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
 (in thousands)
Revenues$3,601,565 $3,257,697 $10,489,852 $9,663,312 
Paid net membership additions (losses)104 73 (1,828)88 
Paid memberships at end of period (1)73,387 74,024 73,387 74,024 


8

Europe, Middle East, and Africa (EMEA)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
 (in thousands)
Revenues$2,375,814 $2,432,239 $7,394,880 $7,176,393 
Paid net membership additions (losses)568 1,804 (502)3,802 
Paid memberships at end of period (1)73,534 70,500 73,534 70,500 

Latin America (LATAM)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
 (in thousands)
Revenues$1,023,945 $915,297 $3,053,127 $2,612,826 
Paid net membership additions (losses)312 330 (25)1,451 
Paid memberships at end of period (1)39,936 38,988 39,936 38,988 

Asia-Pacific (APAC)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
 (in thousands)
Revenues$889,037 $834,002 $2,713,510 $2,395,896 
Paid net membership additions1,429 2,176 3,596 4,559 
Paid memberships at end of period (1)36,228 30,051 36,228 30,051 
(1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellations, as a result of a failed method of payment, become effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.
Total U.S. revenues, inclusive of DVD revenues not reported in the tables above, were $3.3 billion and $9.7 billion, respectively, for the three and nine months ended September 30, 2022 and $3.0 billion and $9.0 billion, respectively, for the three and nine months ended September 30, 2021. DVD revenues were $35 million and $112 million, respectively, for the three and nine months ended September 30, 2022 and $44 million and $140 million, respectively, for three and nine months ended September 30, 2021.
Deferred revenue consists of membership fees billed that have not been recognized, as well as gift cards and other prepaid memberships that have not been fully redeemed. As of September 30, 2022, total deferred revenue was $1,176 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. The $33 million decrease in deferred revenue as compared to the balance of $1,209 million as of December 31, 2021 is primarily due to a decrease in the purchase of gift cards, partially offset by an increase in average monthly revenue per paying member.

9


3. Earnings Per Share

Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the period. Potential shares of common stock consist of incremental shares issuable upon the assumed exercise of stock options. The computation of earnings per share is as follows:
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands, except per share data)
Basic earnings per share:
Net income
$1,398,242 $1,449,071 $4,436,640 $4,508,799 
Shares used in computation:
Weighted-average shares of common stock outstanding444,878 442,778 444,529 443,052 
Basic earnings per share$3.14 $3.27 $9.98 $10.18 
Diluted earnings per share:
Net income
$1,398,242 $1,449,071 $4,436,640 $4,508,799 
Shares used in computation:
Weighted-average shares of common stock outstanding444,878 442,778 444,529 443,052 
Employee stock options5,466 12,147 6,639 12,178 
Weighted-average number of shares
450,344 454,925 451,168 455,230 
Diluted earnings per share$3.10 $3.19 $9.83 $9.90 

Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential shares of common stock excluded from the diluted calculation:
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Employee stock options8,536 279 6,487 441 
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4. Cash, Cash Equivalents and Restricted Cash

The following tables summarize the Company's cash, cash equivalents, and restricted cash as of September 30, 2022 and December 31, 2021:

 As of September 30, 2022
 Cash and cash equivalentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$5,363,669 $2,819 $23,641 $5,390,129 
Level 1 securities:
Money market funds750,064  121 750,185 
$6,113,733 $2,819 $23,762 $6,140,314 

 As of December 31, 2021
 Cash and cash equivalentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$4,103,613 $3,189 $23,972 $4,130,774 
Level 1 securities:
Money market funds1,924,191  146 1,924,337 
$6,027,804 $3,189 $24,118 $6,055,111 
Other current assets include restricted cash for deposits related to self insurance. Non-current assets include restricted cash related to letter of credit agreements.
There were no material gross realized gains or losses in the three and nine months ended September 30, 2022 or 2021.

5. Balance Sheet Components

Content Assets, Net
Content assets consisted of the following:
As of
September 30,
2022
December 31,
2021
(in thousands)
Licensed content, net
$12,571,064 $13,799,221 
Produced content, net
Released, less amortization
7,936,197 6,877,743 
In production
11,484,835 9,235,975 
In development and pre-production
785,244 1,006,600 
20,206,276 17,120,318 

Content assets, net
$32,777,340 $30,919,539 

As of September 30, 2022, approximately $5,500 million, $2,836 million, and $1,865 million of the $12,571 million unamortized cost of the licensed content is expected to be amortized in each of the next three years, respectively.  As of September 30, 2022, approximately $3,131
11


million, $2,058 million, and $1,363 million of the $7,936 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years, respectively.
As of September 30, 2022, the amount of accrued participations and residuals was not material.
The following tables represent the amortization of content assets:
Three Months Ended
 September 30,
2022
September 30,
2021
(in thousands)
Licensed content$1,967,720 $1,965,514 
Produced content1,685,872 997,537 
Total$3,653,592 $2,963,051 

Nine Months Ended
 September 30,
2022
September 30,
2021
(in thousands)
Licensed content$5,751,940 $5,679,398 
Produced content4,329,365 2,809,652 
Total$10,081,305 $8,489,050 
Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
As of
September 30,
2022
December 31,
2021
Estimated Useful Lives
(in thousands)
Land
$84,726 $82,381 
Buildings
50,026 48,123 30 years
Leasehold improvements
1,037,193 863,342 Over life of lease
Furniture and fixtures
154,980 139,809 
3 years
Information technology
427,223 380,452 3 years
Corporate aircraft
110,978 110,978 8 years
Machinery and equipment
27,277 32,426 
3-5 years
Capital work-in-progress
190,373 282,248 
Property and equipment, gross
2,082,776 1,939,759 
Less: Accumulated depreciation
(710,022)(616,306)
Property and equipment, net
$1,372,754 $1,323,453 


Leases
The Company has entered into operating leases primarily for real estate. Operating leases are included in "Other non-current assets" on the Company's Consolidated Balance Sheets, and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to make lease payments are included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Company's Consolidated Balance Sheets. The Company has also entered into various short-term operating leases, primarily for marketing billboards, with an initial term of twelve months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.
Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows:
12


Three Months Ended
September 30,
2022
September 30,
2021
(in thousands)
Cash paid for operating lease liabilities$105,848 $89,916 
Right-of-use assets obtained in exchange for new operating lease obligations2,938 252,377 

Nine Months Ended
September 30, 2022September 30, 2021
(in thousands)
Cash paid for operating lease liabilities$308,747 $251,827 
Right-of-use assets obtained in exchange for new operating lease obligations183,540 485,173 
As of
September 30,
2022
December 31,
2021
(in thousands)
Operating lease right-of-use assets, net$2,211,507 $2,446,573 
Current operating lease liabilities334,339 315,189 
Non-current operating lease liabilities2,209,725 2,408,486 
Total operating lease liabilities$2,544,064 $2,723,675 

Other Current Assets
Other current assets consisted of the following:
As of
September 30,
2022
December 31,
2021
(in thousands)
Trade receivables
$875,042 $804,320 
Prepaid expenses
391,832 323,818 
Other
1,436,296 913,883 
Total other current assets
$2,703,170 $2,042,021 

The increase in Other was primarily due to a modification of a content licensing arrangement.
13


6. Debt
As of September 30, 2022, the Company had aggregate outstanding notes of $13,888 million, net of $82 million of issuance costs, with varying maturities (the "Notes"). As of December 31, 2021, the Company had aggregate outstanding notes of $15,393 million, net of $92 million of issuance costs. Each of the Notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates. A portion of the outstanding Notes is denominated in foreign currency (comprised of €5,170 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement gain totaling $348 million and $815 million, respectively, for the three and nine months ended September 30, 2022).
The following table provides a summary of the Company's outstanding debt and the fair values based on quoted market prices in less active markets as of September 30, 2022 and December 31, 2021:
Principal Amount at ParLevel 2 Fair Value as of
September 30,
2022
December 31,
2021
Issuance DateMaturitySeptember 30,
2022
December 31,
2021
(in millions)(in millions)
5.500% Senior Notes
 700 February 2015February 2022 704 
5.750% Senior Notes
400 400 February 2014March 2024407 437 
5.875% Senior Notes
800 800 February 2015February 2025805 899 
3.000% Senior Notes (1)
460 535 April 2020June 2025447 581 
3.625% Senior Notes
500 500 April 2020June 2025473 529 
4.375% Senior Notes
1,000 1,000 October 2016November 2026948 1,111 
3.625% Senior Notes (1)
1,275 1,480 May 2017May 20271,206 1,702 
4.875% Senior Notes
1,600 1,600 October 2017April 20281,501 1,829 
5.875% Senior Notes
1,900 1,900 April 2018November 20281,847 2,293 
4.625% Senior Notes (1)
1,079 1,252 October 2018May 20291,011 1,565 
6.375% Senior Notes
800 800 October 2018May 2029798 999 
3.875% Senior Notes (1)
1,177 1,366 April 2019November 20291,041 1,651 
5.375% Senior Notes
900 900 April 2019November 2029850 1,068 
3.625% Senior Notes (1)
1,079 1,252 October 2019June 2030927 1,493 
4.875% Senior Notes
1,000 1,000 October 2019June 2030914 1,169 
$13,970 $15,485 $13,175 $18,030 
(1) The following Senior Notes have a principal amount denominated in euro: 3.000% Senior Notes for €470 million, 3.625% Senior Notes for €1,300 million, 4.625% Senior Notes for €1,100 million, 3.875% Senior Notes for €1,200 million, and 3.625% Senior Notes for €1,100 million.

In February 2022, the Company repaid upon maturity the $700 million aggregate principal amount of its 5.500% Senior Notes.

Each of the Notes are repayable in whole or in part upon the occurrence of a change of control, at the option of the holders, at a purchase price in cash equal to 101% of the principal plus accrued interest. The Company may redeem the Notes prior to maturity in whole or in part at an amount equal to the principal amount thereof plus accrued and unpaid interest and an applicable premium. The Notes include, among other terms and conditions, limitations on the Company's ability to create, incur or allow certain liens; enter into sale and lease-back transactions; create, assume, incur or guarantee additional indebtedness of certain of the Company's subsidiaries; and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company's and its subsidiaries assets, to another person. As of September 30, 2022 and December 31, 2021, the Company was in compliance with all related covenants.
Revolving Credit Facility
On June 17, 2021, the Company amended its unsecured revolving credit facility ("Revolving Credit Agreement") to, among other things, extend the maturity date from March 29, 2024 to June 17, 2026 and to increase the size of the facility from $750 million to $1 billion. Revolving loans may be borrowed, repaid and reborrowed until June 17, 2026, at which time all amounts borrowed must be repaid. The Company may use the proceeds of future borrowings under the Revolving Credit Agreement for working capital and general corporate purposes. As of September 30, 2022, no amounts have been borrowed under the Revolving Credit Agreement.
14

Borrowings under the Revolving Credit Agreement bear interest, at the Company’s option, of either (i) a floating rate equal to a base rate (the “Alternate Base Rate”) or (ii) a rate equal to an adjusted London interbank offered rate (the “Adjusted LIBO Rate”), plus a margin of 0.75%. The Alternate Base Rate is defined as the greatest of (A) the rate of interest published by the Wall Street Journal, from time to time, as the prime rate, (B) the federal funds rate, plus 0.500% and (C) the Adjusted LIBO Rate for a one-month interest period, plus 1.00%. The Adjusted LIBO Rate is defined as the London interbank offered rate for deposits in U.S. dollars, for the relevant interest period, adjusted for statutory reserve requirements, but in no event shall the Adjusted LIBO Rate be less than 0.00% per annum. Regulatory authorities that oversee financial markets have announced that publication of the Adjusted LIBO Rate based upon U.S. Dollars is expected to cease on June 30, 2023. The Revolving Credit Agreement contains customary provisions for the replacement of the Adjusted LIBO Rate with an alternate benchmark rate, including a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York, as the Adjusted LIBO Rate is phased out in the lending market. The Company does not anticipate that the replacement of the Adjusted LIBO Rate with such alternative benchmark rate, as provided in the Revolving Credit Agreement, will materially impact its liquidity or financial position.
The Company is also obligated to pay a commitment fee on the undrawn amounts of the Revolving Credit Agreement at an annual rate of 0.10%. The Revolving Credit Agreement requires the Company to comply with certain covenants, including covenants that limit or restrict the ability of the Company’s subsidiaries to incur debt and limit or restrict the ability of the Company and its subsidiaries to grant liens and enter into sale and leaseback transactions; and, in the case of the Company or a guarantor, merge, consolidate, liquidate, dissolve or sell, transfer, lease or otherwise dispose of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole. As of September 30, 2022 and December 31, 2021, the Company was in compliance with all related covenants.


7. Commitments and Contingencies

Content
As of September 30, 2022, the Company had $21.6 billion of obligations comprised of $4.2 billion included in "Current content liabilities" and $3.0 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.4 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.
As of December 31, 2021, the Company had $23.2 billion of obligations comprised of $4.3 billion included in "Current content liabilities" and $3.1 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $15.8 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.
The expected timing of payments for these content obligations is as follows:
As of 
September 30,
2022
December 31,
2021
(in thousands)
Less than one year
$9,667,326 $10,019,306 
Due after one year and through three years
8,961,147 9,238,315 
Due after three years and through five years
2,639,608 3,238,977 
Due after five years
304,664 664,762 
Total content obligations
$21,572,745 $23,161,360 
Content obligations include amounts related to the acquisition, licensing and production of content. Obligations that are in non-U.S. dollar currencies are translated to the U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements as well as other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant.
Legal Proceedings
From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company's view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An
15

unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position, liquidity or results of operations.
The Company is involved in litigation matters not listed herein but does not consider the matters to be material either individually or in the aggregate at this time. The Company's view of the matters not listed may change in the future as the litigation and events related thereto unfold.
Indemnification
In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.
The Company's obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.
It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.


8. Stockholders’ Equity
Stock Option Plan
In June 2020, the Company's stockholders approved the 2020 Stock Plan, which was adopted by the Company’s Board of Directors in March 2020 subject to stockholder approval. The 2020 Stock Plan is the successor to the 2011 Stock Plan and provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants.
A summary of the activities related to the Company’s stock option plans is as follows:
Options Outstanding
Shares
Available
for Grant
Number of
Shares
Weighted-
Average
Exercise Price
(per share)
Balances as of December 31, 202120,145,360 17,595,851 $219.83 
Granted
(2,812,627)2,812,627 265.11
Exercised
— (1,057,387)26.26 
Expired
— (4,871)11.35 
Balances as of September 30, 202217,332,733 19,346,220 $237.05 

The aggregate intrinsic value of the Company's outstanding stock options as of September 30, 2022 was $1,329 million and represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the third quarter of 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of the third quarter of 2022. This amount changes based on the fair market value of the Company’s common stock. The weighted-average remaining contractual term of the Company's outstanding stock options as of September 30, 2022 included in the table above was 5.58 years. All options outstanding are vested and exercisable.
16

A summary of the amounts related to option exercises, is as follows:
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Total intrinsic value of options exercised$65,087 $263,507 $262,879 $581,817 
Cash received from options exercised4,113 18,445