AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Over 325 million paid memberships combined with content payments independent of membership size demonstrate a substantial base over which to spread fixed costs. Revenue growth alongside price increases corroborates demand. Rival cost comparisons remain missing.
durability · 2/4 · Multi-year commitments and growth across the supplied periods support persistence, but content must continually earn demand and fixed commitments also create downside exposure. Exceptional long-term durability is unproven.
customer dependency · 1/4 · Membership growth demonstrates demand, but broad leisure substitutes and the need to compete for discretionary time indicate fragile dependency. No contractual lock-in, essential workflow integration or demonstrated switching friction is supplied.
erosion resilience · 2/4 · Continued revenue and operating income growth show resilience, while Q2 margin compression and rising content commitments show ongoing spending pressure. These outcomes support a mixed assessment rather than either demonstrated collapse or exceptional protection.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Both 2025 and first-half 2026 disclosures identify realized price increases alongside membership growth as revenue drivers. This demonstrates pricing acceptance at the aggregate level, although price contribution, mix and elasticity are not isolated.
retention · 2/4 · A large paying base and continued membership growth during price increases indirectly support repeat demand. Net growth does not establish existing-customer retention, and no churn or cohort evidence is supplied.
margin resilience · 3/4 · Operating margin increased from 20.6% in 2023 to 29.5% in 2025, and Q2 2026 retained a 33.4% margin despite declining from 34.1% a year earlier. This demonstrates substantial resilience with recent expense pressure; margins alone do not establish the moat.
contractual freedom · 2/4 · Actual price changes and disclosed plans to change and test prices support practical repricing discretion. Complete subscription terms, notice requirements and jurisdictional restrictions are not supplied, preventing a stronger contractual conclusion.
Predictability87
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.60
- Positive FCF years (%)
- 80.00
- FCF margin volatility (pp)
- 8.77
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 34.86
- Interest coverage (x)
- 17.16
- Current ratio (x)
- 1.19
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.50
- 3-year average SBC / revenue (%)
- 0.84
- cashConversionGrade
- 92.86
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation, repurchases and a declining share count demonstrate capital deployment and dilution control. However, first-half 2026 operating cash flow includes a $2.8 billion termination fee, while content payments, acquisitions and commitments increased. Buyback value creation and normalized funding coverage are not established.
incentive alignment · 3/4 · Disclosed bonus metrics, certified payouts, granted multi-year PSUs and actual performance-based vesting demonstrate implemented performance linkage. This supports strong alignment without assuming future vesting, executive ownership or exceptional incentive design.
execution · 3/4 · Multi-year revenue and operating income growth, membership growth alongside price increases, and continued Q2 2026 growth demonstrate execution through operating outcomes. Customer execution is assessed indirectly; the termination fee is excluded as evidence of recurring operating achievement.
governance · 2/4 · Implemented equal voting rights, annual elections, majority voting and special-meeting rights support accountability. The disclosed rejection of Jay Hoag's resignation provides a counterweight, although its circumstances are missing. The evidence supports mixed governance rather than exceptional oversight.
Evidence
We met or exceeded all of our financial objectives, closing the year with over 325 million paid memberships, increasing revenue by 16% to approximately $45.2 billion, expanding our operating margin by 3 points to 29.5% and more than doubling ad revenue to over $1.5 billion.
Lead independent director letter / 2025 memberships and financial achievements · Filed 16/04/2026
In connection with licensing streaming content, we typically enter into multi-year commitments with studios and other content providers.
Risk factors / multi-year content licensing commitments · Filed 23/01/2026
The payment terms of these agreements are not tied to member usage or the size of our membership base (“fixed cost”) but may be determined by costs of production or tied to such factors as titles licensed and/or theatrical exhibition receipts.
Risk factors / content payments independent of membership and usage · Filed 23/01/2026
2024 (in thousands, except percentages) Revenues $ 45,183,036 $ 39,000,966 $ 33,723,297 $ 6,182,070 16 % Revenues for the year ended December 31, 2025 increased 16% as compared to the year ended December 31, 2024, primarily due to the growth in memberships, price increases, and increased advertising revenue, partially offset by unfavorable changes in foreign exchange rates, net of hedging.
MD&A / 2025 revenue growth and price increases · Filed 23/01/2026
YTD’25 (in thousands, except percentages) Revenues $ 24,809,695 $ 21,621,967 $ 3,187,728 15 % Revenues for the three and six months ended June 30, 2026 increased 13% and 15% as compared to the three and six months ended June 30, 2025, respectively, primarily due to the growth in memberships, price increases, and increased advertising revenue.
MD&A / Q2 and first-half 2026 revenue growth drivers · Filed 17/07/2026
The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2025, 2024 and 2023: 68 Table of Contents Year Ended December 31, 2025 2024 2023 (in thousands) Revenues $ 45,183,036 $ 39,000,966 $ 33,723,297 Less: Content amortization 16,422,166 15,301,517 14,197,437 Other cost of revenues 6,853,163 5,736,947 5,517,931 Sales and marketing 3,301,306 2,917,554 2,657,883 Technology and development 3,391,390 2,925,295 2,675,758 General and administrative 1,888,408 1,702,039 1,720,285 Operating income 13,326,603 10,417,614 6,954,003 Operating margin 29.5 % 26.7 % 20.6 % Other income (expense) Interest expense (776,510) (718,733) (699,826) Interest and other income (expense)(1) 172,459 266,776 (48,772) Income before income taxes 12,722,552 9,965,657 6,205,405 Provision for income taxes (1,741,351) (1,254,026) (797,415) Net income $ 10,981,201 $ 8,711,631 $ 5,407,990 (1) Includes interest income of $295 million, $294 million and $281 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Segment financial information / 2023–2025 revenue, expenses and operating income · Filed 23/01/2026
Given the multiple-year duration and largely fixed cost nature of content commitments, if business performance does not meet our expectations, our margins may be adversely impacted.
Risk factors / fixed content commitments and downside exposure · Filed 23/01/2026
We compete with a broad set of activities for consumers’ leisure time including other entertainment video providers, such as linear television, streaming entertainment providers (including those that provide pirated content), video gaming providers, open content platform providers, which provide access to user-generated and professionally produced content, and more broadly against other sources of entertainment, such as social media, that our members could choose in their moments of free time, and we expect our industry to remain highly competitive as this dynamic market continues to evolve and entertainment companies all around the world develop their own streaming offering.
Governance discussion / competition for consumer leisure time · Filed 16/04/2026
The expected timing of payments for these content obligations is as follows: As of June 30, 2026 December 31, 2025 (in thousands) Less than one year $ 11,939,734 $ 11,528,030 Due after one year and through three years 9,546,875 8,376,160 Due after three years and through five years 2,996,885 3,041,538 Due after five years 623,211 1,093,500 Total content obligations $ 25,106,705 $ 24,039,228 Content obligations include amounts related to the acquisition, licensing and production of content.
Commitments / June 2026 content obligations · Filed 17/07/2026
The decrease in operating margin was primarily driven by technology and development expenses and sales and marketing expenses growing at a faster rate than revenue.
MD&A / drivers of Q2 2026 operating margin decline · Filed 17/07/2026
Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Cash flows from operating activities: Net income $ 3,401,414 $ 3,125,413 $ 8,684,205 $ 6,015,764 Adjustments to reconcile net income to net cash provided by operating activities: Additions to content assets (4,927,523) (3,835,813) (9,774,440) (7,385,470) Change in content liabilities (181,794) (214,052) (136,578) (625,305) Amortization of content assets 4,311,309 3,832,074 8,529,209 7,655,186 Depreciation and amortization of property, equipment and intangibles 100,530 80,013 199,105 160,080 Stock-based compensation expense 131,312 80,862 271,717 152,839 Foreign currency remeasurement loss (gain) on debt (8,813) 55,238 (18,923) 83,785 Other non-cash items 141,356 120,139 339,583 234,869 Deferred income taxes 81,260 (135,755) 140,079 (299,683) Changes in operating assets and liabilities: Other current assets 111,713 (176,683) (592,927) (308,050) Accounts payable (157,397) 11,046 (157,243) (265,380) Accrued expenses and other liabilities (1,249,793) (267,235) 46,111 39,178 Deferred revenue 54,008 118,635 21,726 207,548 Other non-current assets and liabilities (63,770) (370,624) (517,607) (452,904) Net cash provided by operating activities 1,743,812 2,423,258 7,034,017 5,212,457 Cash flows from investing activities: Purchases of property and equipment (218,644) (155,889) (414,774) (284,166) Acquisitions — — (585,744) — Purchases of investments — (1,650) — (157,665) Proceeds from maturities and sales of investments — 962,413 — 1,732,367 Other investing activities — (36,190) — (36,190) Net cash provided by (used in) investing activities (218,644) 768,684 (1,000,518) 1,254,346 Cash flows from financing activities: Repayments of debt — (1,033,450) — (1,833,450) Proceeds from issuance of common stock 59,980 169,066 109,290 520,668 Repurchases of common stock (4,714,403) (1,654,327) (5,984,991) (5,190,723) Taxes paid related to net share settlement of equity awards (6,631) (6,114) (35,861) (33,984) Other financing activities (8,573) 21,957 11,121 6,305 Net cash used in financing activities (4,669,627) (2,502,868) (5,900,441) (6,531,184) Effect of exchange rate changes on cash, cash equivalents and restricted cash (19,628) 287,471 (69,466) 437,617 Net increase (decrease) in cash, cash equivalents and restricted cash (3,164,087) 976,545 63,592 373,236 Cash, cash equivalents and restricted cash at beginning of period 12,266,873 7,204,028 9,039,194 7,807,337 Cash, cash equivalents and restricted cash at end of period $ 9,102,786 $ 8,180,573 $ 9,102,786 $ 8,180,573 See accompanying notes to the consolidated financial statements.
Unaudited cash flow statements / content investment, cash generation, acquisitions and repurchases · Filed 17/07/2026
Q2’25 (in thousands, except percentages) Financial Results: Revenues $ 12,559,938 $ 11,079,166 $ 1,480,772 13 % Constant currency change in revenues(1) 12 % Operating income $ 4,192,610 $ 3,774,694 $ 417,916 11 % Operating margin 33.4 % 34.1 % (0.7) % Net income $ 3,401,414 $ 3,125,413 $ 276,001 9 % (1) See the “Non-GAAP Constant Currency Information” section below for additional details on our use of constant currency revenue.
MD&A / Q2 2026 operating results and margin comparison · Filed 17/07/2026
We expect that from time to time the prices of our membership plans in each country may change and we may test other plan and price variations.
MD&A / anticipated membership price changes and plan testing · Filed 17/07/2026
YTD’25 (in thousands, except percentages) Net cash provided by operating activities $ 7,034,017 $ 5,212,457 $ 1,821,560 35 % Net cash provided by (used in) investing activities (1,000,518) 1,254,346 (2,254,864) (180) % Net cash used in financing activities (5,900,441) (6,531,184) (630,743) (10) % Net cash provided by operating activities for the six months ended June 30, 2026 increased $1,822 million as compared to the corresponding period in 2025, primarily driven by a $2,668 million increase in net income which was largely attributable to an increase in interest and other income (expense) due to a $2.8 billion termination fee received in connection with the termination of the WBD transaction in the first quarter of 2026, a $1,474 million increase in adjustments for non-cash expenses, partially offset by a $1,900 million increase in payments for content assets and $420 million in unfavorable changes in working capital.
Liquidity / operating cash flow growth and WBD transaction termination fee · Filed 17/07/2026
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) Common Stock and Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balances as of December 31, 2022 4,453,467,760 $ 4,637,601 $ (824,190) $ (217,306) $ 17,181,296 $ 20,777,401 Net income — — — — 5,407,990 5,407,990 Other comprehensive loss — — — (6,639) — (6,639) Issuance of common stock 19,265,980 168,203 — — — 168,203 Repurchases of common stock (145,137,900) — (6,098,010) — — (6,098,010) Stock-based compensation expense — 339,368 — — — 339,368 Balances as of December 31, 2023 4,327,595,840 $ 5,145,172 $ (6,922,200) $ (223,945) $ 22,589,286 $ 20,588,313 Net income — — — — 8,711,631 8,711,631 Other comprehensive income — — — 586,107 — 586,107 Issuance of common stock 48,727,080 834,366 — — — 834,366 Repurchases of common stock (98,619,350) — (6,241,153) — — (6,241,153) Shares withheld related to net share settlement of equity awards (132,570) — (8,285) — — (8,285) Stock-based compensation expense — 272,588 — — — 272,588 Balances as of December 31, 2024 4,277,571,000 $ 6,252,126 $ (13,171,638) $ 362,162 $ 31,300,917 $ 24,743,567 Net income — — — — 10,981,201 10,981,201 Other comprehensive loss — — — (942,544) — (942,544) Issuance of common stock 31,597,695 665,835 — — — 665,835 Repurchases of common stock (86,536,215) — (9,154,855) — — (9,154,855) Shares withheld related to net share settlement of equity awards (470,330) — (46,165) — — (46,165) Stock-based compensation expense — 368,449 — — — 368,449 Balances as of December 31, 2025 4,222,162,150 $ 7,286,410 $ (22,372,658) $ (580,382) $ 42,282,118 $ 26,615,488 See accompanying notes to consolidated financial statements.
Stockholders' equity statement / share issuance, compensation and repurchases · Filed 23/01/2026
The Compensation Committee used the following performance metrics: F/X Neutral Revenue and F/X Neutral Operating Margin, as they represent key performance indicators that are directly impacted by Named Executive Officers’ decision-making.
Compensation discussion / executive bonus performance metrics · Filed 16/04/2026
COMPENSATION DISCUSSION AND ANALYSIS | NETFLIX 2026 PROXY STATEMENT Table of Contents 44 Amounts earned were paid in 2026 following the completion of the 2025 performance period and the Compensation Committee’s certification of the 2025 Bonus Program’s results.
Compensation discussion / certified 2025 bonuses paid in 2026 · Filed 16/04/2026
PSU Awards Granted PSU awards (weighted 50% of long-term equity awards in 2025) promote pay-for-performance and alignment with stockholder interests.
Compensation discussion / PSU awards granted in 2025 · Filed 16/04/2026
The PSU awards granted in 2025 are eligible to vest based on relative TSR performance during a three-year performance period, from January 1, 2025 to December 31, 2027.
Compensation discussion / 2025 PSU three-year performance period · Filed 16/04/2026
The following table summarizes the activities related to the Company’s unvested RSUs and PSUs: Unvested Restricted Stock Units Number of Shares Weighted- Average Grant-Date Fair Value (per share) Balances as of December 31, 2025 1,585,260 $ 98.68 Granted(1) 1,245,383 82.91 Vested(1) (818,131) 78.78 Forfeited — — Balances as of June 30, 2026 2,012,512 $ 97.01 (1) Amounts include 264,300 PSU awards that were granted and 528,600 PSU awards that vested based on the achievement of market-based performance targets during the performance period ended December 31, 2025, but were settled in the first quarter of 2026.
Equity incentive plans / actual PSU vesting and settlement · Filed 17/07/2026
Corporate Governance Practices and Stockholder Rights We seek to implement corporate governance practices and stockholder rights to align with the long-term interests of stockholders and have adopted the following: • One share, one vote: We have a single class of shares with each share entitled to one vote.
Corporate governance / single share class and equal voting rights · Filed 16/04/2026
Specifically, the Company has declassified the Board, eliminated supermajority voting provisions, adopted a majority voting standard for uncontested director elections and implemented a right for stockholders holding at least 20% of the Company’s outstanding shares continuously for at least one year to call special meetings.
Corporate governance / implemented shareholder rights · Filed 16/04/2026
Discovery, Inc. Stockholders asked questions about our use and governance of generative AI, human capital management, climate strategy, board composition, the Board’s rejection of Jay Hoag’s resignation, executive compensation, data privacy, cybersecurity, as well as stockholder proposals.
Stockholder engagement / concerns including rejection of Jay Hoag's resignation · Filed 16/04/2026
Revenues earned from sources other than monthly membership fees were not a material component of revenues for the three and six months ended June 30, 2026 and June 30, 2025.
MD&A / limited contribution of non-membership revenue · Filed 17/07/2026
As of June 30, 2026, the expected timing of those payments are as follows: Payments due by Period Contractual obligations (in thousands): Total Next 12 Months Beyond 12 Months Content obligations(1) $ 25,106,705 $ 11,939,734 $ 13,166,971 Debt(2) 17,583,712 3,148,709 14,435,003 Operating lease obligations(3) 2,744,268 506,760 2,237,508 Total $ 45,434,685 $ 15,595,203 $ 29,839,482 (1)As of June 30, 2026, content obligations were comprised of $3.9 billion included in “Current content liabilities” and $1.6 billion of “Non-current content liabilities” on the Consolidated Balance Sheets and $19.6 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not then meet the criteria for recognition.
Material cash requirements / content, debt and lease commitments · Filed 17/07/2026
