Financial Analysis

"Acquisitions In December 2025, the Company completed an acquisition which was accounted for as a business combination for a total purchase price of approximately $28 million, consisting of cash consideration. On December 4, 2025, the Company entered into a definitive agreement and plan of merger with Warner Bros. Discovery, Inc. (WBD), to acquire WBD's streaming and studios businesses, including its film and television studios, HBO Max and HBO (such transaction, the ""WBD transaction""), which was then amended by the parties thereto on January 19, 2026 (as so amended and restated, the ""Amended and Restated Merger Agreement""). WBD is a leading global media and entertainment company and will separate its Global Linear Networks business, Discovery Global, into a new publicly-traded company prior to the closing of the WBD transaction. See Note 9 Commitments and Contingencies for further details."

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Commitments and Contingencies Content At December 31, 2025, the Company had $24.0 billion of obligations comprised of $4.1 billion included in Current content liabilities and $1.6 billion of Non-current content liabilities on the Consolidated Balance Sheets and $18.4 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition. At December 31, 2024, the Company had $23.2 billion of obligations comprised of $4.4 billion included in Current content liabilities and $1.8 billion of Non-current content liabilities on the Consolidated Balance Sheets and $17.0 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 December 31, 2025 2024 (in thousands) Less than one year $ 11,528,030 $ 11,424,696 Due after one year and through three years 8,376,160 8,113,910 Due after three years and through five years 3,041,538 2,809,834 Due after five years 1,093,500 900,491 Total content obligations $ 24,039,228 $ 23,248,931 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 …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Income before provision for income taxes was as follows: Year Ended December 31, 2025 2024 2023 (in thousands) United States $ 12,198,273 $ 9,101,391 $ 5,602,762 Foreign 524,279 864,266 602,643 Income before income taxes $ 12,722,552 $ 9,965,657 $ 6,205,405 The components of provision for income taxes for all periods presented were as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Current tax provision: Federal $ 1,317,011 $ 1,093,667 $ 854,170 State 311,863 214,814 181,684 Foreign 561,577 536,915 304,539 Total current 2,190,451 1,845,396 1,340,393 Deferred tax provision: Federal (155,477) (520,510) (412,760) State (34,115) (41,700) (55,475) Foreign (259,508) (29,160) (74,743) Total deferred (449,100) (591,370) (542,978) Provision for income taxes $ 1,741,351 $ 1,254,026 $ 797,415 A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows: Year Ended December 31, 2025 (in thousands) Percent Tax at U.S. Statutory Rate $ 2,671,734 21.0 % State and Local Income Taxes (1) 191,271 1.5 % Foreign Tax Effects Brazil Withholding tax on services 238,233 1.9 % Others (77,189) (0.6) % Other foreign jurisdictions 23,290 0.2 % Effect of Cross-Border Tax Laws Foreign-derived intangible income (656,828) (5.2) % Foreign tax credit for withholding taxes (292,148) (2.3) % Other 32,815 0.3 % Tax Credits Research and d …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Debt As of December 31, 2025, the Company had aggregate outstanding notes of $14,463 million, net of $56 million of issuance costs and discounts, with varying maturities (the Notes). As of December 31, 2024, the Company had aggregate outstanding notes of $15,583 million, net of $70 million of issuance costs and discounts. Each of the Notes 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 4,700 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement loss, net of hedging impacts, totaling $72 million for the year ended December 31, 2025). See Note 8 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Companys derivative and non-derivative financial instruments. 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 December 31, 2025 and December 31, 2024: Principal Amount at Par Level 2 Fair Value as of December 31, 2025 December 31, 2024 Issuance Date Maturity December 31, 2025 December 31, 2024 (in millions) (in millions) 5.875% Senior Notes 800 February 2015 February 2025 801 3.000% Senior Notes (1) 487 April 2020 June 2025 487 3.625% Senior Notes 500 April 2020 June 2025 497 4.375% Senior Notes 1,000 1,000 October 2016 November 20 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recently issued accounting pronouncements not yet adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities , which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the assets cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions …

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Employee Benefit Plan The Company maintains a 401(k) savings plan covering substantially all of its employees. Eligible employees may contribute up to 80% of their annual salary through payroll deductions, but not more than the statutory limits set by the Internal Revenue Service. The Company matches employee contributions at the discretion of the Board. During the years ended December 31, 2025, 2024 and 2023, the Companys matching contributions totaled $144 million, $128 million and $114 million, respectively. Multiemployer Benefit Plans The Company contributes to various multiemployer defined pension plans under the terms of collective bargaining agreements that cover our union-represented employees. The risks of participating in multiemployer pension plans are different from single-employer plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in the multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan; and (iii) if a company stops contributing to the multiemployer pension plan, the unfunded obligations of the plan may become the obligation of the remaining participating employers. The Company also contributes to various other multiemployer benefit plans that provide health and welfare benefits to both active and retired participants. The Compan …

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Revenue Recognition The following table summarizes streaming revenues by region for the years ended December 31, 2025, 2024 and 2023. Total streaming revenues are inclusive of hedging gains (losses) of $(91) million and $124 million for the years ended December 31, 2025 and 2024, respectively. No hedging gains and losses were recognized in total streaming revenues for the year ended December 31, 2023. See Note 8 Derivative Financial Instruments and Hedging Activities for further information. Year Ended December 31, 2025 2024 2023 (in thousands) United States and Canada (UCAN) $ 19,957,152 $ 17,359,369 $ 14,873,783 Europe, Middle East, and Africa (EMEA) 14,514,646 12,387,035 10,556,487 Latin America (LATAM) 5,357,521 4,839,816 4,446,461 Asia-Pacific (APAC) 5,353,717 4,414,746 3,763,727 Total Streaming Revenues $ 45,183,036 $ 39,000,966 $ 33,640,458 Deferred revenue consists of membership fees billed that have not been recognized, as well as gift and other prepaid memberships that have not been fully redeemed. As of December 31, 2025, total deferred revenue was $1,776 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. Deferred revenue increased $255 million from …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

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. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow global operating margin and the allocation of budget between cost of revenues, sales and marketing, technology and development, and general and administrative expenses. The following table presents selected financial information with respect to the Companys single operating segment for the years ended December 31, 2025, 2024 and 2023: 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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Event On January 19, 2026, the Company entered into the Amended and Restated Merger Agreement, which amended and restated in its entirety the agreement and plan of merger entered into with WBD and the other parties thereto on December 4, 2025. See Note 6 Acquisitions and Note 9 Commitments and Contingencies for further information. Also on January 19, 2026, in connection with the Amended and Restated Merger Agreement, the Company entered into a bridge facility incremental commitments agreement (the Incremental Commitments Agreement). The Incremental Commitments Agreement increased the existing commitments under the Companys bridge commitment letter, dated as of December 4, 2025, from $34 billion to $42.2 billion of senior unsecured bridge term loan commitments for the purpose of financing the purchase price under the Amended and Restated Merger Agreement, paying certain other fees, costs and expenses incurred in connection with the transaction with WBD and, at the Companys option, refinancing certain indebtedness. …

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Acquisitions In March 2026, the Company completed an acquisition which was accounted for as a business combination for a total purchase price of approximately $587 million, consisting of cash consideration. On December 4, 2025, the Company entered into a definitive agreement and plan of merger with Warner Bros. Discovery, Inc. (WBD), to acquire WBDs streaming and studios businesses, including its film and television studios, HBO Max and HBO (such transaction, the WBD transaction), which was then amended by the parties thereto on January 19, 2026 (as so amended and restated, the Amended and Restated Merger Agreement). On February 27, 2026, WBD provided notice to the Company that it had terminated the Amended and Restated Merger Agreement in accordance with its terms in order to enter into an Agreement and Plan of Merger with Paramount Skydance Corporation (PSKY). Concurrently with the termination of the Amended and Restated Merger Agreement and entry into such agreement between WBD and PSKY, PSKY, on behalf of WBD, paid a $2.8 billion termination fee owed to Netflix in accordance with the terms of the Amended and Restated Merger Agreement. The $2.8 billion termination fee received was recorded in Interest and other income (expense) in the Companys Consolidated Statements of Operations during the first quarter of 2026. …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Content As of June 30, 2026, the Company had $25.1 billion of obligations 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 yet meet the criteria for recognition. As of December 31, 2025, the Company had $24.0 billion of obligations comprised of $4.1 billion included in Current content liabilities and $1.6 billion of Non-current content liabilities on the Consolidated Balance Sheets and $18.4 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 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. 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 …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Three Months Ended Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands, except percentages) Provision for income taxes $ 667,172 $ 506,262 $ 1,931,467 $ 829,637 Effective tax rate 16 % 14 % 18 % 12 % The effective tax rates for the three and six months ended June 30, 2026 differed from the Federal statutory rate primarily due to the foreign-derived income deduction and excess tax benefits on stock-based compensation.

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Debt As of June 30, 2026, the Company had aggregate outstanding notes of $14,309 million, net of $49 million of issuance costs and discounts and $14 million of fair value hedging adjustments, with varying maturities (the Notes). Of the outstanding balance, $2,484 million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, 2025, the Company had aggregate outstanding notes of $14,463 million, net of $56 million of issuance costs and discounts. Each of the Notes 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 4,700 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement gain, net of hedging impacts, totaling $9 million and $19 million for the three and six months ended June 30, 2026, respectively). See Note 8 Derivative Financial Instruments and Hedging Activities to the consolidated financial statements for further information regarding the Companys derivative and non-derivative financial instruments. The following table provides a summary of the Companys outstanding debt and the fair values based on quoted market prices in less active markets as of June 30, 2026 and December 31, 2025: Principal Amount at Par Level 2 Fair Value as of June 30, 2026 December 31, 2025 Issuance Date Maturity June 30, 2026 December 31, 2025 (in millions) (in millions) 4.37 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recently issued accounting pronouncements not yet adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities , which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the assets cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Revenue Recognition The following table summarizes revenues by region for the three and six months ended June 30, 2026 and June 30, 2025. Total revenues are inclusive of hedging gains (losses) of $(48) million and $(180) million for the three and six months ended June 30, 2026, respectively, and $(37) million and $127 million for the three and six months ended June 30, 2025, respectively. See Note 8 Derivative Financial Instruments and Hedging Activities for further information. Three Months Ended Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands) United States and Canada (UCAN) $ 5,431,667 $ 4,929,003 $ 10,676,965 $ 9,546,101 Europe, Middle East, and Africa (EMEA) 4,033,515 3,538,175 8,031,934 6,942,851 Latin America (LATAM) 1,584,290 1,306,735 3,081,348 2,568,669 Asia-Pacific (APAC) 1,510,466 1,305,253 3,019,448 2,564,346 Total Revenues $ 12,559,938 $ 11,079,166 $ 24,809,695 $ 21,621,967 Deferred revenue consists primarily 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 June 30, 2026, total deferred revenue was $1,797 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. Deferred revenue balances 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 ov …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment and Geographic Information The Company operates as one operating segment. The Companys chief operating decision maker (CODM) is its co-chief executive officers, who review financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow global operating margin and the allocation of budget between cost of revenues, sales and marketing, technology and development, and general and administrative expenses. The following table presents selected financial information with respect to the Companys single operating segment for the three and six months ended June 30, 2026 and 2025: Three Months Ended Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands) Revenues $ 12,559,938 $ 11,079,166 $ 24,809,695 $ 21,621,967 Less: Content amortization 4,311,309 3,832,074 8,529,209 7,655,186 Other cost of revenues 1,725,656 1,493,237 3,395,994 2,933,272 Sales and marketing 823,838 713,265 1,666,055 1,401,635 Technology and development 1,007,675 824,683 1,967,371 1,647,506 General and administrative 498,850 441,213 1,101,459 862,675 Operating income 4,192,610 3,774,694 8,149,607 7,121,693 Operating margin 33.4 % 34.1 % 32.8 % 32.9 % Other income (expense) Interest expense (175,685) (182,649) (437,762) (36 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing