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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, 2023
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)
121 Albright Way,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, 2023, there were 437,679,669 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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Revenues
$8,541,668 $7,925,589 $24,890,472 $23,763,497 
Cost of revenues
4,930,788 4,788,665 14,407,883 13,764,125 
Marketing
558,736 567,954 1,741,266 1,698,892 
Technology and development
657,159 662,739 2,002,417 2,037,115 
General and administrative
478,591 373,213 1,281,012 1,180,438 
Operating income
1,916,394 1,533,018 5,457,894 5,082,927 
Other income (expense):
Interest expense
(175,563)(172,575)(524,614)(535,609)
Interest and other income
168,218 261,404 123,975 677,275 
Income before income taxes
1,909,049 1,621,847 5,057,255 5,224,593 
Provision for income taxes(231,627)(223,605)(587,103)(787,953)
Net income
$1,677,422 $1,398,242 $4,470,152 $4,436,640 
Earnings per share:
Basic
$3.80 $3.14 $10.08 $9.98 
Diluted
$3.73 $3.10 $9.90 $9.83 
Weighted-average shares of common stock outstanding:
Basic
441,537 444,878 443,540 444,529 
Diluted
450,011 450,344 451,319 451,168 










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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Net income$1,677,422 $1,398,242 $4,470,152 $4,436,640 
Other comprehensive income (loss):
Foreign currency translation adjustments
(94,157)(103,167)(16,117)(207,148)
Cash flow hedges:
Net unrealized gains (losses), net of tax effect of $(23) million, $0, $(23) million, and $0, respectively
77,852  77,852  
Total other comprehensive income (loss)(16,305)(103,167)61,735 (207,148)
Comprehensive income$1,661,117 $1,295,075 $4,531,887 $4,229,492 
























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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Cash flows from operating activities:
Net income$1,677,422 $1,398,242 $4,470,152 $4,436,640 
Adjustments to reconcile net income to net cash provided by operating activities:
Additions to content assets(2,883,839)(4,582,671)(9,025,512)(12,853,846)
Change in content liabilities(325,989)60,867 (634,661)(95,054)
Amortization of content assets3,573,353 3,653,592 10,443,358 10,081,305 
Depreciation and amortization of property, equipment and intangibles90,660 85,188 270,380 243,295 
Stock-based compensation expense79,720 152,062 256,849 421,663 
Foreign currency remeasurement gain on debt(172,678)(348,458)(63,075)(814,792)
Other non-cash items115,688 102,513 357,179 409,855 
Deferred income taxes(86,277)(57,797)(288,231)(242,523)
Changes in operating assets and liabilities:
Other current assets103,766 (120,071)(167,805)44,485 
Accounts payable(68,390)53,875 (119,726)(283,617)
Accrued expenses and other liabilities(65,029)212,072 298,101 324,116 
Deferred revenue(5,733)(48,420)41,524 (42,053)
Other non-current assets and liabilities(40,359)(4,184)(227,246)(47,075)
Net cash provided by operating activities1,992,315 556,810 5,611,287 1,582,399 
Cash flows from investing activities:
Purchases of property and equipment(103,929)(84,960)(266,920)(296,136)
Acquisitions   (193,397)
Purchases of short-term investments  (504,862) 
Proceeds from maturities of short-term investments400,000  901,937  
Net cash provided by (used in) investing activities296,071 (84,960)130,155 (489,533)
Cash flows from financing activities:
Repayments of debt   (700,000)
Proceeds from issuance of common stock57,818 4,113 118,563 29,041 
Repurchases of common stock(2,500,100) (3,545,347) 
Other financing activities(32,826) (71,746) 
Net cash provided by (used in) financing activities(2,475,108)4,113 (3,498,530)(670,959)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (122,707)(180,058)(56,658)(336,704)
Net increase (decrease) in cash, cash equivalents and restricted cash(309,429)295,905 2,186,254 85,203 
Cash, cash equivalents and restricted cash at beginning of period 7,666,265 5,844,409 5,170,582 6,055,111 
Cash, cash equivalents and restricted cash at end of period $7,356,836 $6,140,314 $7,356,836 $6,140,314 
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,
2023
December 31,
2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$7,353,245 $5,147,176 
Short-term investments514,201 911,276 
Other current assets
2,912,028 3,208,021 
Total current assets
10,779,474 9,266,473 
Content assets, net
31,749,861 32,736,713 
Property and equipment, net
1,498,391 1,398,257 
Other non-current assets
5,474,060 5,193,325 
Total assets
$49,501,786 $48,594,768 
Liabilities and Stockholders’ Equity
Current liabilities:
Current content liabilities
$4,259,582 $4,480,150 
Accounts payable
534,429 671,513 
Accrued expenses and other liabilities
1,838,908 1,514,650 
Deferred revenue
1,306,185 1,264,661 
Short-term debt
399,614  
Total current liabilities
8,338,718 7,930,974 
Non-current content liabilities
2,668,472 3,081,277 
Long-term debt
13,900,754 14,353,076 
Other non-current liabilities
2,486,215 2,452,040 
Total liabilities
27,394,159 27,817,367 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.001 par value; 4,990,000,000 shares authorized at September 30, 2023 and December 31, 2022; 437,679,669 and 445,346,776 issued and outstanding at September 30, 2023 and December 31, 2022, respectively
5,011,427 4,637,601 
Treasury stock at cost (10,600,660 and 1,564,478 shares at September 30, 2023 and December 31, 2022, respectively)
(4,399,677)(824,190)
Accumulated other comprehensive loss(155,571)(217,306)
Retained earnings
21,651,448 17,181,296 
Total stockholders’ equity
22,107,627 20,777,401 
Total liabilities and stockholders’ equity
$49,501,786 $48,594,768 




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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Total stockholders' equity, beginning balances$22,832,215 $19,075,974 $20,777,401 $15,849,248 
Common stock and additional paid-in capital:
Beginning balances
$4,874,208 $4,316,870 $4,637,601 $4,024,561 
Issuance of common stock upon exercise of options
57,499 5,030 116,977 27,738 
Stock-based compensation expense79,720 152,062 256,849 421,663 
Ending balances$5,011,427 $4,473,962 $5,011,427 $4,473,962 
Treasury stock:
Beginning balances
$(1,876,753)$(824,190)$(824,190)$(824,190)
Repurchases of common stock to be held as treasury stock(2,522,924)— (3,575,487)— 
Ending balances$(4,399,677)$(824,190)$(4,399,677)$(824,190)
Accumulated other comprehensive loss:
Beginning balances
$(139,266)$(144,476)$(217,306)$(40,495)
Other comprehensive income (loss)(16,305)(103,167)61,735 (207,148)
Ending balances$(155,571)$(247,643)$(155,571)$(247,643)
Retained earnings:
Beginning balances$19,974,026 $15,727,770 $17,181,296 $12,689,372 
Net income
1,677,422 1,398,242 4,470,152 4,436,640 
Ending balances$21,651,448 $17,126,012 $21,651,448 $17,126,012 
Total stockholders' equity, ending balances
$22,107,627 $20,528,141 $22,107,627 $20,528,141 





















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, 2022 filed with the Securities and Exchange Commission (the “SEC”) on January 26, 2023. 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 amortization of content assets 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, 2022. Interim results are not necessarily indicative of the results for a full year.
The following is provided to update the Company’s significant accounting policies previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Derivative Financial Instruments

The Company uses derivative instruments to manage foreign exchange risk related to its ongoing business operations with the primary objective of reducing operating income and cash flow volatility associated with fluctuations in foreign exchange rates.
The Company enters into forward contracts to manage the foreign exchange risk on forecasted revenue transactions denominated in currencies other than the U.S. dollar, as well as the foreign exchange risk on forecasted transactions and firm commitments related to the licensing and production of foreign currency-denominated content assets. These forward contracts are designated as cash flow hedges of foreign currency firm commitments and forecasted transactions and generally have maturities of 24 months or less. The hedging contracts may reduce, but do not entirely eliminate, the effect of foreign currency exchange movements, and the Company may choose not to hedge certain exposures.
The Company recognizes derivative instruments at fair value as either assets (presented in “Other current assets” and “Other non-current assets”) or liabilities (presented in “Accrued expenses and other liabilities'' and “Other non-current liabilities”) on the Company’s Consolidated Balance Sheets. The Company classifies derivative instruments in the Level 2 category within the fair value hierarchy.
The gain or loss on derivative instruments designated as cash flow hedges of forecasted foreign currency revenue is initially reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into “Revenues” on the Consolidated Statements of Operations in the same period the forecasted transaction affects earnings. The gain or loss on derivative instruments designated as cash flow hedges of firmly committed or forecasted transactions related to the licensing and production of content assets is initially reported as a component of AOCI and reclassified into “Cost of Revenues” on the Consolidated Statements of Operations in the same period the hedged transaction affects earnings, which occurs as the underlying hedged content assets are amortized. Cash flows from hedging activities are classified in the same category as the cash flows for the underlying item being hedged within "Net cash provided by (used in) operating activities" on the Consolidated Statements of Cash Flows.
In the event that the likelihood of occurrence of the underlying forecasted transactions is determined to be probable not to occur, the gains or losses on the related cash flow hedges are reclassified from AOCI to “Interest and other income (expense)” in the Consolidated Statements of Operations in the period of dedesignation.
See Note 7 Derivative Financial Instruments to the consolidated financial statements for further information regarding the Company’s derivative financial instruments.


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
8

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 Company also earns revenue from advertisements presented on its streaming service, consumer products and various other sources. Revenues earned from sources other than monthly membership fees were not material for the three and nine months ended September 30, 2023 and September 30, 2022.
The following tables summarize revenues, paid net membership additions (losses), and ending paid memberships by region for the three and nine months ended September 30, 2023 and September 30, 2022, respectively:

United States and Canada (UCAN)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
 (in thousands)
Revenues$3,735,133 $3,601,565 $10,943,226 $10,489,852 
Paid net membership additions (losses)1,750 104 3,025 (1,828)
Paid memberships at end of period (1)77,321 73,387 77,321 73,387 

Europe, Middle East, and Africa (EMEA)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
 (in thousands)
Revenues$2,693,146 $2,375,814 $7,772,957 $7,394,880 
Paid net membership additions (losses)3,953 568 7,031 (502)
Paid memberships at end of period (1)83,760 73,534 83,760 73,534 

Latin America (LATAM)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
 (in thousands)
Revenues$1,142,811 $1,023,945 $3,290,438 $3,053,127 
Paid net membership additions (losses)1,179 312 1,946 (25)
Paid memberships at end of period (1)43,645 39,936 43,645 39,936 

Asia-Pacific (APAC)
As of/ Three Months EndedAs of/ Nine Months Ended
 September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
 (in thousands)
Revenues$948,216 $889,037 $2,801,012 $2,713,510 
Paid net membership additions (losses)1,881 1,429 4,404 3,596 
Paid memberships at end of period (1)42,427 36,228 42,427 36,228 
9

(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. Certain members have the option to add extra member sub accounts. These extra member sub accounts are not included in paid memberships. 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 $3.5 billion and $10.1 billion, respectively, for the three and nine months ended September 30, 2023 and $3.3 billion and $9.7 billion, respectively, for the three and nine months ended September 30, 2022. DVD revenues were $22 million and $83 million, respectively, for the three and nine months ended September 30, 2023 and $35 million and $112 million, respectively, for the three and nine months ended September 30, 2022.
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, 2023, total deferred revenue was $1,306 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 $42 million increase in deferred revenue as compared to the balance of $1,265 million as of December 31, 2022 is a result of the increase in membership fees billed due to increased memberships.

10


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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands, except per share data)
Basic earnings per share:
Net income
$1,677,422 $1,398,242 $4,470,152 $4,436,640 
Shares used in computation:
Weighted-average shares of common stock outstanding441,537 444,878 443,540 444,529 
Basic earnings per share$3.80 $3.14 $10.08 $9.98 
Diluted earnings per share:
Net income
$1,677,422 $1,398,242 $4,470,152 $4,436,640 
Shares used in computation:
Weighted-average shares of common stock outstanding441,537 444,878 443,540 444,529 
Employee stock options8,474 5,466 7,779 6,639 
Weighted-average number of shares
450,011 450,344 451,319 451,168 
Diluted earnings per share$3.73 $3.10 $9.90 $9.83 

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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands)
Employee stock options3,147 8,536 4,447 6,487 
11

4. Cash, Cash Equivalents, Restricted Cash, and Short-term Investments
The Company’s investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. The following tables summarize the Company's cash, cash equivalents, restricted cash and short-term investments as of September 30, 2023 and December 31, 2022:

 As of September 30, 2023
 Cash and cash equivalentsShort-term investmentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$5,241,192 $ $1,933 $1,604 $5,244,729 
Level 1 securities:
Money market funds1,592,131   54 1,592,185 
Level 2 securities:
Time Deposits (1)519,922 514,201   1,034,123 
$7,353,245 $514,201 $1,933 $1,658 $7,871,037 


 As of December 31, 2022
 Cash and cash equivalentsShort-term investmentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$4,071,584 $ $3,410 $19,874 $4,094,868 
Level 1 securities:
Money market funds569,826   122 569,948 
Level 2 securities:
Time Deposits (1)505,766 911,276   1,417,042 
$5,147,176 $911,276 $3,410 $19,996 $6,081,858 
(1) The majority of the Company's time deposits are domestic deposits, which mature within one year.
Other current assets include restricted cash for deposits related to self insurance and letter of credit agreements. Non-current assets include restricted cash related to letter of credit agreements. The fair value of cash equivalents and short-term investments included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.
See Note 6 Debt to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes.
There were no material gross realized gains or losses in the three and nine months ended September 30, 2023 and 2022, respectively.

12


5. Balance Sheet Components

Content Assets, Net
Content assets consisted of the following:
As of
September 30,
2023
December 31,
2022
(in thousands)
Licensed content, net
$12,459,413 $12,732,549 
Produced content, net
Released, less amortization
9,433,878 9,110,518 
In production
9,052,140 10,255,940 
In development and pre-production
804,430 637,706 
19,290,448 20,004,164 

Content assets, net
$31,749,861 $32,736,713 

As of September 30, 2023, approximately $5,575 million, $2,812 million, and $1,888 million of the $12,459 million unamortized cost of the licensed content is expected to be amortized in each of the next three years.  As of September 30, 2023, approximately $3,594 million, $2,493 million, and $1,744 million of the $9,434 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years.
As of September 30, 2023, the amount of accrued participations and residuals was not material.
The following tables represent the amortization of content assets:
Three Months Ended
 September 30,
2023
September 30,
2022
(in thousands)
Licensed content$1,777,701 $1,967,720 
Produced content1,795,652 1,685,872 
Total$3,573,353 $3,653,592 

Nine Months Ended
 September 30,
2023
September 30,
2022
(in thousands)
Licensed content$5,280,700 $5,751,940 
Produced content5,162,658 4,329,365 
Total$10,443,358 $10,081,305 


13


Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
As of
September 30,
2023
December 31,
2022
Estimated Useful Lives
(in thousands)
Land
$86,662 $85,005 
Buildings
104,593 52,106 30 years
Leasehold improvements
1,053,681 1,040,570 Over life of lease
Furniture and fixtures
155,184 153,682 
3 years
Information technology
462,303 442,681 3 years
Corporate aircraft
133,998 115,578 
8-10 years
Machinery and equipment
27,362 26,821 
3-5 years
Capital work-in-progress
377,299 235,555 
Property and equipment, gross
2,401,082 2,151,998 
Less: Accumulated depreciation
(902,691)(753,741)
Property and equipment, net
$1,498,391 $1,398,257 


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.
Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows:
Three Months Ended
September 30,
2023
September 30,
2022
(in thousands)
Cash paid for operating lease liabilities$110,959 $105,848 
Right-of-use assets obtained in exchange for new operating lease obligations49,238 2,938 

Nine Months Ended
September 30,
2023
September 30,
2022
(in thousands)
Cash paid for operating lease liabilities$339,126 $308,747 
Right-of-use assets obtained in exchange for new operating lease obligations161,704 183,540 
As of
September 30,
2023
December 31,
2022
(in thousands)
Operating lease right-of-use assets, net$2,124,501 $2,227,122 
Current operating lease liabilities377,400 355,985 
Non-current operating lease liabilities2,086,480 2,222,503 
Total operating lease liabilities$2,463,880 $2,578,488 

14


Other Current Assets
Other current assets consisted of the following:
As of
September 30,
2023
December 31,
2022
(in thousands)
Trade receivables
$1,139,974 $988,898 
Prepaid expenses
482,375 392,735 
Other
1,289,679 1,826,388 
Total other current assets
$2,912,028 $3,208,021 
The decrease in Other was primarily driven by receipt of amounts due under a modified content licensing arrangement.


6. Debt
As of September 30, 2023, the Company had aggregate outstanding notes of $14,300 million, net of $68 million of issuance costs, with varying maturities (the "Notes"). Of the outstanding balance, $400 million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, 2022, the Company had aggregate outstanding notes of $14,353 million, net of $79 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 $173 million and $63 million, respectively, for the three and nine months ended September 30, 2023).
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, 2023 and December 31, 2022:
Principal Amount at ParLevel 2 Fair Value as of
September 30,
2023
December 31,
2022
Issuance DateMaturitySeptember 30,
2023
December 31,
2022
(in millions)(in millions)
5.750% Senior Notes
$400 $400 February 2014March 2024$400 $404 
5.875% Senior Notes
800 800 February 2015February 2025799 811 
3.000% Senior Notes (1)
497 503 April 2020June 2025489 495 
3.625% Senior Notes
500 500 April 2020June 2025482 479 
4.375% Senior Notes
1,000 1,000 October 2016November 2026965 980 
3.625% Senior Notes (1)
1,375 1,391 May 2017May 20271,347 1,338 
4.875% Senior Notes
1,600 1,600 October 2017April 20281,552 1,557 
5.875% Senior Notes
1,900 1,900 April 2018November 20281,919 1,930 
4.625% Senior Notes (1)
1,163 1,177 October 2018May 20291,175 1,151 
6.375% Senior Notes
800 800 October 2018May 2029827 830 
3.875% Senior Notes (1)
1,269 1,284 April 2019November 20291,233 1,201 
5.375% Senior Notes
900 900 April 2019November 2029879 885 
3.625% Senior Notes (1)
1,164 1,177 October 2019June 20301,106 1,078 
4.875% Senior Notes
1,000 1,000 October 2019June 2030946 944 
$14,368 $14,432 $14,119 $14,083 
(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.
15

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, 2023 and December 31, 2022, the Company was in compliance with all related covenants.
Revolving Credit Facility
On March 6, 2023, the Company amended its $1 billion unsecured revolving credit facility ("Revolving Credit Agreement") to replace the London interbank offered rate to a variable secured overnight financing rate (the “Term SOFR Rate”) as the rate to which interest payments are indexed, among other things. The Revolving Credit Agreement matures on June 17, 2026. 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, 2023, no amounts have been borrowed under the Revolving Credit Agreement.
The 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 the Term SOFR Rate (or the applicable benchmark replacement), 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 Term SOFR Rate for a one-month tenor, plus 1.00%. The Term SOFR Rate is the forward-looking secured overnight financing rate administered by the Federal Reserve Bank of New York or a successor administrator, for the relevant interest period, but in no event shall the Term SOFR Rate be less than 0.00% per annum.
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, 2023 and December 31, 2022, the Company was in compliance with all related covenants.


7. Derivative Financial Instruments
In the third quarter of 2023, the Company began using derivative financial instruments to manage foreign exchange risk related to its ongoing business operations with the primary objective of reducing operating income and cash flow volatility associated with fluctuations in foreign exchange rates. The Company did not use any derivative instruments prior to the third quarter of 2023.

Notional Amount of Derivative Contracts
The net notional amounts of the Company’s outstanding derivative instruments were as follows:
As of 
September 30,
2023
December 31,
2022
(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts
Cash flow hedges
$3,571,367 $ 
Total
$3,571,367 $ 
Fair Value of Derivative Contracts
The fair value of the Company’s outstanding derivative instruments were as follows:

16

 As of September 30, 2023
Derivative AssetsDerivative Liabilities
 Other current assetsOther non-current assetsAccrued expenses and other liabilitiesOther non-current liabilities
 (in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts$74,541 $35,182 $6,525 $2,029 
Total$74,541 $35,182 $6,525 $2,029 
The Company classifies derivative instruments in the Level 2 category within the fair value hierarchy. These instruments are valued using industry standard valuation models that use observable inputs such as interest rate yield curves, and forward and spot prices for currencies.
As of September 30, 2023, the pre-tax net accumulated gain on our foreign currency cash flow hedges included in AOCI on the Consolidated Balance Sheets expected to be recognized in earnings within the next 12 months is $74 million.
Master Netting Agreements
In order to mitigate counterparty credit risk, the Company enters into master netting agreements with its counterparties for its foreign currency exchange contracts which permit the parties to settle amounts on a net basis under certain conditions. The Company has elected to present its derivative assets and liabilities on a gross basis on its Consolidated Balance Sheets.
The Company also enters into collateral security arrangements with its counterparties that require the parties to post cash collateral when certain contractual thresholds are met. No cash collateral was received or posted by the Company as of September 30, 2023.
The potential offsetting effect to the Company’s derivative assets and liabilities under its master netting agreements and collateral security agreements were as follows:

 As of September 30, 2023
Gross Amount Not Offset in the Consolidated Balance Sheets
 Gross Amount Recognized in the Consolidated Balance SheetsGross Amount Offset in the Consolidated Balance SheetsNet Amount Presented in the Consolidated Balance SheetsFinancial InstrumentsCollateral Received and PostedNet Amount
 (in thousands)
Derivative assets$109,723 $ $109,723 $(8,463)$ $101,260 
Derivative liabilities8,554  8,554 (8,463) 91 

Effect of Derivative Instruments on Consolidated Financial Statements
The pre-tax gains (losses) on the Company’s cash flow hedges recognized in AOCI were as follows:
Three Months EndedNine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands)
Cash flow hedges:
Foreign exchange contracts (1)
Amount included in the assessment of effectiveness$101,169 $ $101,169 $ 
Total$101,169 $ $101,169 $ 
(1) No amounts were excluded from the assessment of effectiveness.
No gains or losses on derivative instruments were reclassified from AOCI into the Consolidated Statements of Operations in the three and nine months ended September 30, 2023.

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8. Commitments and Contingencies

Content
As of September 30, 2023, the Company had $19.7 billion of obligations comprised of $4.3 billion included in "Current content liabilities" and $2.7 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $12.7 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition.
As of December 31, 2022, the Company had $21.8 billion of obligations comprised of $4.5 billion included in "Current content liabilities" and $3.1 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $14.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition.
The expected timing of payments for these content obligations is as follows:
As of 
September 30,
2023
December 31,
2022
(in thousands)
Less than one year
$9,512,081 $10,038,483 
Due after one year and through three years
8,470,469 9,425,551 
Due after three years and through five years
1,449,676 2,124,307 
Due after five years
217,823 243,606 
Total content obligations
$19,650,049 $21,831,947 
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 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.
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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.


9. 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 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)
Weighted-Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic Value
(in thousands)
Balances as of December 31, 202216,454,103 19,896,861 $242.22 
Granted
(1,372,702)1,372,702 360.44
Exercised
— (1,369,075)85.43 
Expired
— (3,314)32.04 
Balances as of September 30, 202315,081,401 19,897,174 $261.20 5.41$2,780,062 
Vested and expected to vest as of September 30, 202319,897,174 $261.20 5.41$2,780,062 
Exercisable as of September 30, 202319,709,179 $260.11 5.37$2,775,752 

The aggregate intrinsic value in the table above 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 2023 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 2023. This amount changes based on the fair market value of the Company’s common stock.
A summary of the amounts related to option exercises, is as follows:
Three Months EndedNine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
(in thousands)
Total intrinsic value of options exercised$160,031 $65,087 $414,132 $262,879 
Cash received from options exercised57,818 4,113 118,563 29,041 
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Stock-based Compensation
Stock options are generally vested in full upon grant date and exercisable for the full ten year contractual term regardless of employment status. Stock options granted to certain named executive officers vest on the one-year anniversary of the grant date, subject to the employee’s continuous employment or service with the Company through the vesting date. The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:
Three Months EndedNine Months Ended
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Dividend yield % % % %
Expected volatility40 %50 %
40% - 46%
38% - 50%
Risk-free interest rate3.95 %2.98 %
3.57% - 3.95%
1.71% - 2.98%
Suboptimal exercise factor4.27 4.73 
4.22 - 4.27
4.71 - 4.73
Weighted-average fair value (per share)$244 $127 $205 $150 
Total stock-based compensation expense (in thousands)$79,720 $152,062 $256,849 $421,663 
Total income tax impact on provision (in thousands)$17,452 $33,724 $56,311 $93,472 
Stock Repurchases
In March 2021, the Company’s Board of Directors authorized the repurchase of up to $5 billion of its common stock, with no expiration date, and in September 2023, the Board of Directors increased the share repurchase authorization by an additional $10 billion, also with no expiration date. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or other similar purchase techniques and in such amounts as management deems appropriate. The Company is not obligated to repurchase any specific number of shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, general economic, business and market conditions, and alternative investment opportunities. The Company may discontinue any repurchases of its common stock at any time without prior notice. During the three and nine months ended September 30, 2023, the Company repurchased 5,964,802 and 9,036,182 shares, respectively, for an aggregate amount of $2,500 million and $3,545 million, respectively. As of September 30, 2023, $10.9 billion remain available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of September 30, 2023, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax:
Foreign Currency Translation
Adjustments
Change in Unrealized Gains (Losses) on Cash Flow HedgesTotal
(in thousands)
Balances as of December 31, 2022$(217,306)$ $(217,306)
Other comprehensive income (loss) before reclassifications
(16,117)77,852 61,735 
Balances as of September 30, 2023$(233,423)$77,852 $(155,571)
Foreign Currency Translation
Adjustments
Change in Unrealized Gains (Losses) on Cash Flow HedgesTotal
(in thousands)
Balances as of December 31, 2021$(40,495)$ $(40,495)
Other comprehensive income (loss) before reclassifications
(207,148) (207,148)
Balances as of September 30, 2022$(247,643)$ $(247,643)

20


10. Income Taxes
 Three Months EndedNine Months Ended
 September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
 (in thousands, except percentages)
Provision for income taxes$231,627 $223,605 $587,103 $787,953 
Effective tax rate12 %14 %12 %15 %
The effective tax rates for the three and nine months ended September 30, 2023 and 2022, differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act, research and development credits, and the recognition of excess tax benefits of stock-based compensation.
The decrease in the effective tax rates for the three and nine months ended September 30, 2023, as compared to the same period in 2022 was primarily due to the impact of foreign taxes and the recognition of excess tax benefits of stock-based compensation. For the three and nine months ended September 30, 2023, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of $28 million and $80 million, compared to the three and nine months ended September 30, 2022 of $14 million and $57 million.
Gross unrecognized tax benefits were $213 million and $227 million as of September 30, 2023 and December 31, 2022, respectively. The gross unrecognized tax benefits as of September 30, 2023, if recognized by the Company, will result in a reduction of approximately $134 million to the provision for income taxes thereby favorably impacting the Company’s effective tax rate.
The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for the years 2016 through 2018 and is subject to examination for 2019 through 2022. The foreign and state tax returns for the years 2016 through 2022 are subject to examination by various states and foreign jurisdictions. While the Company is in various stages of inquiries and examinations by federal, state and foreign taxing authorities, we believe that our tax positions will more likely than not be sustained. Nonetheless, it is possible that future obligations related to these matters could arise.
Given the potential outcome of the current examinations as well as the impact of the current examinations on the potential expiration of the statute of limitations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, an estimate of the range of reasonably possible adjustments cannot be made at this time.

11. Segment and Geographic Information

The Company operates as one operating segment. The Company's chief operating decision maker ("CODM") is its co-chief executive officers, who review financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources.
Total U.S. revenues were $3.5 billion and $10.1 billion, respectively, for the three and nine months ended September 30, 2023, and $3.3 billion and $9.7 billion, respectively, for the three and nine months ended September 30, 2022. See Note 2 Revenue Recognition for additional information about streaming revenue by region.
The Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, were located as follows:
As of
September 30,
2023
December 31,
2022
(in thousands)
United States$2,799,543 $2,745,071 
International823,349 880,308 



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding: our core strategy; our ability to improve our content offerings and service; our future financial performance, including expectations regarding revenues, deferred revenue, operating income and margin, net income, expenses, and profitability; liquidity, including the sufficiency of our capital resources, net cash provided by (used in) operating
21

activities, access to financing sources, and free cash flows; capital allocation strategies, including any stock repurchases or repurchase programs; seasonality; stock price volatility; impact of foreign exchange rate fluctuations, including on net income, revenues and average revenues per paying member; impact of interest rate fluctuations; adequacy of existing facilities; future regulatory changes and their impact on our business; intellectual property; price changes and testing; accounting treatment for changes related to content assets; acquisitions; membership growth, including impact of content and pricing changes on membership growth; partnerships; member viewing patterns; dividends; future contractual obligations, including unknown content obligations and timing of payments; our global content and marketing investments, including investments in original programming; impact of work stoppages; content amortization; resolution of tax examinations; tax expense; unrecognized tax benefits; deferred tax assets; and our ability to effectively manage change and growth. These forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those included in forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on January 26, 2023, in particular the risk factors discussed under the heading “Risk Factors” in Part I, Item 1A. 
We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.
Investors and others should note that we announce material financial information to our investors using our investor relations website (ir.netflix.net), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media and blogs to communicate with our members and the public about our company, our services and other issues. It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels and blogs listed on our investor relations website.


Overview
We are one of the world’s leading entertainment services with over 247 million paid memberships in over 190 countries enjoying TV series, films and games across a wide variety of genres and languages. Members can play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time.
Our core strategy is to grow our business globally within the parameters of our operating margin target. We strive to continuously improve our members’ experience by offering compelling content that delights them and attracts new members. We seek to drive conversation around our content to further enhance member joy, and we are continuously enhancing our user interface to help our members more easily choose content that they will find enjoyable.
Our membership growth exhibits a seasonal pattern that reflects variations when consumers buy internet-connected screens and when they tend to increase their viewing. Historically, the fourth quarter represents our greatest streaming membership growth. In addition, our membership growth can be impacted by our content release schedule and changes to pricing.

22

Results of Operations

The following represents our consolidated performance highlights:
As of/ Three Months EndedChange
September 30,
2023
September 30,
2022
Q3'23 vs. Q3'22
(in thousands, except revenue per membership and percentages)
Financial Results:
Streaming revenues
$8,519,306 $7,890,361 $628,945 %
DVD revenues (1)22,362 35,228 (12,866)(37)%
Total revenues$8,541,668 $7,925,589 $616,079 %
Operating income$1,916,394 $1,533,018 $383,376 25 %
Operating margin22 %19 %%
Global Streaming Memberships:
Paid net membership additions8,763 2,413 6,350 263 %
Paid memberships at end of period247,153 223,085 24,068 11 %
Average paying memberships
242,772 221,879 20,893 %
Average monthly revenue per paying membership
$11.70 $11.85 $(0.15)(1)%

(1) In April 2023, we announced our plans to discontinue our DVD-by-mail service, and we ceased providing our mailing services to customers on September 29, 2023. The discontinuance of our DVD business had an immaterial impact on our operations and financial results.
Consolidated revenues for the three months ended September 30, 2023 increased 8% as compared to the three months ended September 30, 2022. Operating margin for the three months ended September 30, 2023 increased three percentage points, primarily due to revenues growing at a faster rate as compared to the growth in cost of revenues and decreased marketing and technology and development expenses, partially offset by higher growth in general and administrative expenses as compared to the growth in revenues.

Streaming Revenues
We primarily derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming membership plans, the price of which varies by country and the features of the plan. As of September 30, 2023, pricing on our paid plans ranged from the U.S. dollar equivalent of $1 to $28 per month, and pricing on our extra member sub accounts ranged from the U.S. dollar equivalent of $2 to $8 per month. 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.
Three months ended September 30, 2023 as compared to the three months ended September 30, 2022
Three Months Ended
Change
 September 30,
2023
September 30,
2022
Q3'23 vs. Q3'22
 
(in thousands, except percentages)
Streaming revenues
$8,519,306 $7,890,361 $628,945 %
Nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022
Nine Months Ended
Change
 September 30,
2023
September 30,
2022
YTD'23 vs. YTD'22
 
(in thousands, except percentages)
Streaming revenues
$24,807,633 $23,651,369 $1,156,264 %

23

Streaming revenues for the three months ended September 30, 2023 increased 8% as compared to the three months ended September 30, 2022, primarily due to the 9% growth in average paying memberships, partially offset by a 1% decrease in average monthly revenue per paying membership. The decrease in average monthly revenue per paying membership was primarily due to higher membership growth in regions with lower average monthly revenue per paying membership, changes in plan mix, and limited price increases. Streaming revenues for the nine months ended September 30, 2023 increased 5% as compared to the nine months ended September 30, 2022, primarily due to the 7% growth in average paying memberships, partially offset by a 2% decrease in average monthly revenue per paying membership. The decrease in average monthly revenue per paying membership was primarily due to higher membership growth in regions with lower average monthly revenue per paying membership and changes in plan mix. Additionally, streaming revenues for the nine months ended September 30, 2023 were further impacted by unfavorable fluctuations in foreign exchange rates. We also earn revenue from advertisements presented on our streaming service, consumer products and various other sources. Revenues earned from sources other than monthly membership fees were not material for the three and nine months ended September 30, 2023 and September 30, 2022.
The following tables summarize streaming revenue and other streaming membership information by region for the three and nine months ended September 30, 2023 and 2022.

United States and Canada (UCAN)
Three months ended September 30, 2023 as compared to the three months ended September 30, 2022
As of/ Three Months EndedChange
 September 30,
2023
September 30,
2022
Q3'23 vs. Q3'22
 (in thousands, except revenue per membership and percentages)
Revenues$3,735,133 $3,601,565 $133,568