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Table of Contents
NETFLIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
Year ended December 31, 2017 2016 2015 Revenues $ 11,692,713 $ 8,830,669 $ 6,779,511
Cost of revenues 7,659,666 6,029,901 4,591,476 Marketing 1,278,022 991,078 824,092 Technology and development 1,052,778 852,098 650,788 General and administrative 863,568 577,799 407,329
Operating income 838,679 379,793 305,826 Other income (expense):
Interest expense (238,204) (150,114) (132,716) Interest and other income (expense) (115,154) 30,828 (31,225)
Income before income taxes 485,321 260,507 141,885 Provision for (benefit from) income taxes (73,608) 73,829 19,244 Net income $ 558,929 $ 186,678 $ 122,641 Earnings per share:
Basic $ 1.29 $ 0.44 $ 0.29 Diluted $ 1.25 $ 0.43 $ 0.28
Weighted-average common shares outstanding: Basic 431,885 428,822 425,889 Diluted 446,814 438,652 436,456
See accompanying notes to consolidated financial statements.
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Table of Contents
NETFLIX, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)
Year ended December 31, 2017 2016 2015 Net income $ 558,929 $ 186,678 $ 122,641 Other comprehensive income (loss):
Foreign currency translation adjustments 27,409 (5,464) (37,887) Change in unrealized gains (losses) on available-for-sale securities, net of tax of
$378, $126, and $(598), respectively 599
207
(975)
Total other comprehensive income (loss) 28,008 (5,257) (38,862) Comprehensive income $ 586,937 $ 181,421 $ 83,779
See accompanying notes to consolidated financial statements.
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Table of Contents
NETFLIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 2017 2016 2015 Cash flows from operating activities: Net income $ 558,929 $ 186,678 $ 122,641 Adjustments to reconcile net income to net cash used in operating activities:
Additions to streaming content assets (9,805,763) (8,653,286) (5,771,652) Change in streaming content liabilities 900,006 1,772,650 1,162,413 Amortization of streaming content assets 6,197,817 4,788,498 3,405,382 Amortization of DVD content assets 60,657 78,952 79,380 Depreciation and amortization of property, equipment and intangibles 71,911 57,528 62,283 Stock-based compensation expense 182,209 173,675 124,725 Excess tax benefits from stock-based compensation — (65,121) (80,471) Other non-cash items 57,207 40,909 31,628 Foreign currency remeasurement loss on long-term debt 140,790 — — Deferred taxes (208,688) (46,847) (58,655) Changes in operating assets and liabilities:
Other current assets (234,090) 46,970 18,693 Accounts payable 74,559 32,247 51,615 Accrued expenses 114,337 68,706 48,810 Deferred revenue 177,974 96,751 72,135 Other non-current assets and liabilities (73,803) (52,294) (18,366)
Net cash used in operating activities (1,785,948) (1,473,984) (749,439) Cash flows from investing activities: Acquisitions of DVD content assets (53,720) (77,177) (77,958) Purchases of property and equipment (173,302) (107,653) (91,248) Other assets (6,689) (941) (1,912) Purchases of short-term investments (74,819) (187,193) (371,915) Proceeds from sale of short-term investments 320,154 282,484 259,079 Proceeds from maturities of short-term investments 22,705 140,245 104,762
Net cash provided by (used in) investing activities 34,329 49,765 (179,192) Cash flows from financing activities: Proceeds from issuance of debt 3,020,510 1,000,000 1,500,000 Issuance costs (32,153) (10,700) (17,629) Proceeds from issuance of common stock 88,378 36,979 77,980 Excess tax benefits from stock-based compensation — 65,121 80,471 Other financing activities 255 230 (545)
Net cash provided by financing activities 3,076,990 1,091,630 1,640,277 Effect of exchange rate changes on cash and cash equivalents 29,848 (9,165) (15,924) Net increase (decrease) in cash and cash equivalents 1,355,219 (341,754) 695,722 Cash and cash equivalents, beginning of year 1,467,576 1,809,330 1,113,608 Cash and cash equivalents, end of year $ 2,822,795 $ 1,467,576 $ 1,809,330 Supplemental disclosure: Income taxes paid $ 113,591 $ 26,806 $ 27,658
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Interest paid 213,313 138,566 111,761 Increase (decrease) in investing activities included in liabilities (32,643) 27,504 (4,978)
See accompanying notes to consolidated financial statements.
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NETFLIX, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data)
As of December 31, 2017 2016 Assets Current assets:
Cash and cash equivalents $ 2,822,795 $ 1,467,576 Short-term investments — 266,206 Current content assets, net 4,310,934 3,726,307 Other current assets 536,245 260,202
Total current assets 7,669,974 5,720,291 Non-current content assets, net 10,371,055 7,274,501 Property and equipment, net 319,404 250,395 Other non-current assets 652,309 341,423
Total assets $ 19,012,742 $ 13,586,610 Liabilities and Stockholders’ Equity Current liabilities:
Current content liabilities $ 4,173,041 $ 3,632,711 Accounts payable 359,555 312,842 Accrued expenses 315,094 197,632 Deferred revenue 618,622 443,472
Total current liabilities 5,466,312 4,586,657 Non-current content liabilities 3,329,796 2,894,654 Long-term debt 6,499,432 3,364,311 Other non-current liabilities 135,246 61,188
Total liabilities 15,430,786 10,906,810 Commitments and contingencies (Note 5) Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2017 and 2016; no shares issued and outstanding at December 31, 2017 and 2016 — — Common stock, $0.001 par value; 4,990,000,000 shares authorized at December 31, 2017 and December 31, 2016, respectively; 433,392,686 and 430,054,212 issued and outstanding at December 31, 2017 and December 31, 2016, respectively 1,871,396 1,599,762 Accumulated other comprehensive loss (20,557) (48,565) Retained earnings 1,731,117 1,128,603
Total stockholders’ equity 3,581,956 2,679,800 Total liabilities and stockholders’ equity $ 19,012,742 $ 13,586,610
See accompanying notes to consolidated financial statements.
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NETFLIX, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data)
Common Stock and Additional
Paid-in Capital
Accumulated Other
Comprehensive Income (Loss)
Retained Earnings
Total Stockholders’
Equity
Shares Amount Balances as of December 31, 2014 422,910,887 $ 1,042,870 $ (4,446) $ 819,284 $ 1,857,708
Net income — — — 122,641 122,641 Other comprehensive loss — — (38,862) — (38,862) Issuance of common stock upon exercise of options 5,029,553 77,334 — — 77,334 Stock-based compensation expense — 124,725 — — 124,725 Excess stock option income tax benefits — 79,880 — — 79,880
Balances as of December 31, 2015 427,940,440 $ 1,324,809 $ (43,308) $ 941,925 $ 2,223,426 Net income — — — 186,678 186,678 Other comprehensive loss — — (5,257) — (5,257) Issuance of common stock upon exercise of options 2,113,772 36,979 — — 36,979 Stock-based compensation expense — 173,675 — — 173,675 Excess stock option income tax benefits — 64,299 — — 64,299
Balances as of December 31, 2016 430,054,212 $ 1,599,762 $ (48,565) $ 1,128,603 $ 2,679,800 Net income — — — 558,929 558,929 Other comprehensive income — — 28,008 — 28,008 Issuance of common stock upon exercise of options 3,338,474 89,425 — — 89,425 Stock-based compensation expense — 182,209 — — 182,209 Cumulative Effect Adjustment of ASU 2016-09 (Note 1) — — — 43,585 43,585
Balances as of December 31, 2017 433,392,686 $ 1,871,396 $ (20,557) $ 1,731,117 $ 3,581,956
See accompanying notes to consolidated financial statements.
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