Netflix (NFLX) Corporate presentation summary

Content accounting standards and methodology

• Uses ASC 920 for licensed content and ASC 926 for produced content, with both standards updated by ASU 2019-2, resulting in no material impact due to pre-existing compliance.

• Licensed content includes both Netflix originals and second-run titles, while produced content is self-owned, offering cost and rights advantages.

• Amortization of content assets is based on historical and estimated viewing patterns, with over 90% amortized within four years of launch.

• First-run topical programs are expensed upon airing, while other content is amortized over the shorter of window of availability, estimated use, or 10 years.

Financial statement impact

• Content assets, net of tax incentives, are recorded as non-current assets on the balance sheet, with unpaid costs as current or non-current liabilities.

• Content amortization expense is included in cost of revenues on the income statement.

• Cash flow statement reflects additions to content assets, changes in content liabilities, and amortization as key adjustments.

• As of December 31, 2025, content assets, net, totaled $32.8 billion, with content liabilities and obligations detailed by maturity.

Cash flow and content obligations

• Cash spending on content is typically more front-loaded, especially for produced originals, with payments often made years before release.

• Content obligations as of December 31, 2025, were $24.0 billion, with significant additional unknown obligations expected over the next three years.

• Cash spending on content in FY25 was approximately $17.7 billion, with a 1.1x ratio to content amortization.