Document And Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2017 |
Jan. 25, 2018 |
Jun. 30, 2017 |
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Document And Entity Information [Abstract] | |||
Entity Registrant Name | NETFLIX INC | ||
Entity Central Index Key | 0001065280 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 433,948,461 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 54,917,149,461 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Income Statement [Abstract] | |||
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 (in USD per share) | $ 1.29 | $ 0.44 | $ 0.29 |
Diluted (in USD per share) | $ 1.25 | $ 0.43 | $ 0.28 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 431,885 | 428,822 | 425,889 |
Diluted (in shares) | 446,814 | 438,652 | 436,456 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Statement of Comprehensive Income [Abstract] | |||
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 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Statement of Comprehensive Income [Abstract] | |||
Change in unrealized gains (losses) on available for sale securities, tax | $ 378 | $ 126 | $ (598) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 4,990,000,000 | 4,990,000,000 |
Common stock, shares issued | 433,392,686 | 430,054,212 |
Common stock, shares outstanding | 433,392,686 | 430,054,212 |
Organization and Summary of Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Description of Business Netflix, Inc. (the “Company”) was incorporated on August 29, 1997 and began operations on April 14, 1998. The Company is the world’s leading internet television network with over 117 million streaming memberships in over 190 countries enjoying more than 140 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Additionally, in the United States ("U.S."), members can receive DVDs. The Company has three reportable segments: Domestic streaming, International streaming and Domestic DVD, all of which derive revenue from monthly membership fees. See Note 11 to the consolidated financial statements for further detail on the Company's segments. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the streaming content asset amortization policy 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 an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results may differ from these estimates. Recently adopted accounting pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits on the Statement of Cash Flows as an operating activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted ASU 2016-09 in fiscal year 2017 and elected to apply this adoption prospectively. Prior periods have not been adjusted. See Note 9 to the consolidated financial statements for information regarding the impact on the Company’s financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. ASU 2017-01 is effective for fiscal periods beginning after December 15, 2017 (including interim periods within those periods) with early adoption permitted. The Company early adopted the standard in the third quarter of 2017 on a prospective basis and the impact on its consolidated financial statements was not material. Recently issued accounting pronouncements not yet adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of 2018 and apply the modified retrospective approach. Because the Company's primary source of revenues is from monthly membership fees which are recognized ratably over each monthly membership period, the Company does not expect the impact on its consolidated financial statements to be material. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company will adopt ASU 2016-02 in the first quarter of 2019. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on the Company's balance sheet for real estate operating leases. In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company will adopt ASU 2016-18 in the first quarter of 2018 and does not expect the impact on its consolidated financial statements to be material. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Cuts and Jobs Act (the "Act"). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, the Company will elect to treat any potential GILTI inclusions as a period cost as we are not projecting any material impact from GILTI inclusions and any deferred taxes related to any inclusion would be immaterial. Cash Equivalents and Short-term Investments The Company considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents. In July 2017, the Company sold all short-term investments. The Company classified short-term investments, which consisted of marketable securities with original maturities in excess of 90 days as available-for-sale. Short-term investments were reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive loss” within Stockholders’ equity in the Consolidated Balance Sheets. The amortization of premiums and discounts on the investments, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in “Interest and other income (expense)” in the Consolidated Statements of Operations. The Company used the specific identification method to determine cost in calculating realized gains and losses upon the sale of short-term investments. Short-term investments were reviewed periodically to identify possible other-than-temporary impairment. When evaluating the investments, the Company reviewed factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the Company’s intent to sell, or whether it would be more likely than not that the Company would be required to sell the investments before the recovery of their amortized cost basis. Streaming Content The Company acquires, licenses and produces content, including original programming, in order to offer members unlimited viewing of TV shows and films. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to streaming assets and the changes in related liabilities, are classified within "Net cash used in operating activities" on the Consolidated Statements of Cash Flows. For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. The portion available for streaming within one year is recognized as “Current content assets, net” and the remaining portion as “Non-current content assets, net” on the Consolidated Balance Sheets. For productions, the Company capitalizes costs associated with the production, including development costs, direct costs and production overhead. These amounts are included in "Non-current content assets, net" on the Consolidated Balance Sheets. Participations and residuals are expensed in line with the amortization of production costs. Based on factors including historical and estimated viewing patterns, the Company amortizes the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use or 10 years, beginning with the month of first availability. The amortization is on an accelerated basis, as the Company typically expects more upfront viewing, for instance due to additional merchandising and marketing efforts. The Company reviews factors impacting the amortization of the content assets on an ongoing basis. The Company's estimates related to these factors require considerable management judgment. The Company's business model is subscription based as opposed to a model generating revenues at a specific title level. Therefore, content assets, both licensed and produced, are reviewed in aggregate at the operating segment level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the net realizable value or fair value may be less than amortized cost. To date, the Company has not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the lease term for leasehold improvements, if applicable. Leased buildings are capitalized and included in property and equipment when the Company was involved in the construction funding and did not meet the “sale-leaseback” criteria. Revenue Recognition The Company's primary source of revenues are 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. Deferred revenue consists of membership fees billed that have not been recognized and gift and other prepaid memberships that have not been redeemed. Marketing Marketing expenses consist primarily of advertising expenses and certain payments made to the Company’s partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”). Advertising expenses include promotional activities such as digital and television advertising. Advertising costs are expensed as incurred. Advertising expenses were $1,091.1 million, $842.4 million and $714.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Research and Development Research and development expenses are included within "Technology and Development" on the Company's Consolidated Statements of Operations and primarily consist of payroll and related costs incurred in making improvements to our service offerings. Research and development expenses were $981.3 million, $768.3 million and $570.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. Income Taxes The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. The Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. The Company may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. See Note 9 to the consolidated financial statements for further information regarding income taxes. Foreign Currency The functional currency for the Company's subsidiaries is determined based on the primary economic environment in which the subsidiary operates. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in cumulative translation adjustment included in "Accumulated other comprehensive loss" in Stockholders’ equity on the Consolidated Balance Sheets. Prior to January 1, 2015, the functional currency of certain of the Company's European entities was the British pound. The Company changed the functional currency of these entities to the euro effective January 1, 2015 following the redomiciliation of the European headquarters and the launch of the Netflix service in several significant European countries. The change in functional currency was applied prospectively from January 1, 2015. Monetary assets and liabilities have been remeasured to the euro at current exchange rates. Non-monetary assets and liabilities have been remeasured to the euro using the exchange rate effective for the period in which the balance arose. As a result of this change of functional currency, the Company recorded a $21.8 million cumulative translation adjustment included in other comprehensive loss for year ended December 31, 2015. The Company remeasures monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized in interest and other income (expense). Foreign currency transactions resulted in a loss of $127.9 million for the year ended December 31, 2017 and a gain of $22.8 million and a loss of $37.3 million for the years ended December 31, 2016 and 2015 respectively. Earnings Per Share In June 2015, the Company's Board of Directors declared a seven-for-one stock split in the form of a stock dividend that was paid on July 14, 2015 to all shareholders of record as of July 2, 2015 ("Stock Split"). Outstanding share and per-share amounts disclosed for all periods provided have been retroactively adjusted to reflect the effects of the Stock Split. 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 common shares outstanding during the period. Potential common shares consist of incremental shares issuable upon the assumed exercise of stock options. The computation of earnings per share is as follows:
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 common shares excluded from the diluted calculation:
Stock-Based Compensation The Company grants fully vested non-qualified stock options to its employees on a monthly basis. As a result of immediate vesting, stock-based compensation expense is fully recognized on the grant date, and no estimate is required for post-vesting option forfeitures. See Note 7 to the consolidated financial statements for further information regarding stock-based compensation. |
Short-term Investments |
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Short-term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Investments | Short-term Investments In July 2017, the Company sold all short-term investments. As of December 31, 2017, $449.7 million and $1.3 million of money market funds, classified as Level 1 securities, were included in Cash and cash equivalents and Non-current assets, respectively, on the Company's Consolidated Balance Sheet. Foreign time deposits of $300.8 million, classified as Level 2 securities, were included in Cash and cash equivalents on the Company's Consolidated Balance Sheet. Additionally, $4.4 million of restricted cash is included in Non-current assets on the Company's Consolidated Balance Sheet. Amounts included in Non-current assets are primarily related to workers compensation deposits and letter of credit agreements. The following table summarizes, by major security type, the Company’s assets that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets as of December 31, 2016.
(1) Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements. Fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy level assigned to each security in the Company’s available-for-sale portfolio and cash equivalents is based on its assessment of the transparency and reliability of the inputs used in the valuation of such instrument at the measurement date. The fair value of available-for-sale securities and cash equivalents included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market. The fair value of available-for-sale securities 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. These values were obtained from an independent pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers. The Company’s procedures include controls to ensure that appropriate fair values are recorded, such as comparing prices obtained from multiple independent sources. See Note 4 to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes. There were no material other-than-temporary impairments or credit losses related to available-for-sale securities in the years ended December 31, 2017, 2016 or 2015. There were no material gross realized gains or losses from the sale of available-for-sale investments in the years ended December 31, 2017, 2016 and 2015. Realized gains and losses and interest income are included in "Interest and other income (expense)" on the Consolidated Statements of Operations. |
Balance Sheet Components |
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Balance Sheet Components Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components Content Assets Content assets consisted of the following:
On average, over 90% of a licensed or produced streaming content asset is expected to be amortized within four years after its month of first availability. As of December 31, 2017, over 30% of the $14.7 billion unamortized cost is expected to be amortized within one year and 29%, 78% and over 80% of the $1.4 billion unamortized cost of the produced content that has been released is expected to be amortized within one year, three years and four years, respectively. As of December 31, 2017, the amount of accrued participations and residuals was not material. Property and Equipment, Net Property and equipment and accumulated depreciation consisted of the following:
The decrease in capital work-in-progress from December 31, 2016 is primarily due to leasehold improvements for the Company's expanded Los Gatos, California headquarters and the Company's new Los Angeles, California facility, both of which were placed into operation in the first quarter of 2017. |
Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term Debt As of December 31, 2017, the Company had aggregate outstanding long-term notes of $6,499.4 million, net of $61.9 million of issuance costs, with varying maturities (the "Notes"). Each of the Notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates. The following table provides a summary of the Company's outstanding long-term debt and the fair values based on quoted market prices in less active markets as of December 31, 2017 and December 31, 2016:
(1) Debt is denominated in euro with a €1,300 million aggregate principal amount and is remeasured into U.S. dollars at each balance sheet date. Total proceeds were $1,420.5 million and remeasurement loss on long-term debt was $140.8 million for the year ended December 31, 2017. 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 December 31, 2017 and December 31, 2016, the Company was in compliance with all related covenants. Revolving Credit Facility In July 2017, the Company entered into a $500.0 million unsecured revolving credit facility (“Revolving Credit Agreement”), with an uncommitted incremental facility to increase the amount of the revolving credit facility by up to an additional $250.0 million, subject to certain terms and conditions. Revolving loans may be borrowed, repaid and reborrowed until July 27, 2022, 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 December 31, 2017, 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 a floating rate equal to a base rate (the “Alternate Base Rate”) or (ii) a rate equal to an adjusted London interbank offered rate (the “Adjusted LIBO Rate”), 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 Adjusted LIBO Rate for a one-month interest period, plus 1.00%. The Adjusted LIBO Rate is defined as the London interbank offered rate for deposits in U.S. dollars, for the relevant interest period, adjusted for statutory reserve requirements, but in no event shall the Adjusted LIBO 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 a 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 December 31, 2017, the Company was in compliance with all related covenants. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Streaming Content At December 31, 2017, the Company had $17.7 billion of obligations comprised of $4.2 billion included in "Current content liabilities" and $3.3 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $10.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition. At December 31, 2016, the Company had $14.5 billion of obligations comprised of $3.6 billion included in "Current content liabilities" and $2.9 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $8.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition. The expected timing of payments for these streaming content obligations is as follows:
Streaming content obligations include amounts related to the acquisition, licensing and production of streaming content. Obligations that are in non-U.S. dollar currencies are translated to U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements. 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 generally 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. Lease obligations The Company leases facilities under non-cancelable operating leases with various expiration dates through 2027. Several lease agreements contain rent escalation clauses or rent holidays. For purposes of recognizing minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date of initial possession to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation for intended use. For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases in the Consolidated Statements of Operations. The Company has the option to extend or renew most of its leases which may increase the future minimum lease commitments. Because the terms of the Company’s facilities lease agreements for its original Los Gatos, California headquarters site required the Company’s involvement in the construction funding of the buildings, the Company is the “deemed owner” (for accounting purposes only) of these buildings. Accordingly, the Company recorded an asset of $40.7 million, representing the total costs of the buildings and improvements, including the costs paid by the lessor (the legal owner of the buildings), with corresponding liabilities. Upon completion of construction of each building, the Company did not meet the sale-leaseback criteria for de-recognition of the building assets and liabilities. Therefore the leases are accounted for as financing obligations. At December 31, 2017, the lease financing obligation balance was $29.5 million, the majority of which is recorded in “Other non-current liabilities,” on the Consolidated Balance Sheets. The remaining future minimum payments under the lease financing obligation are $15.6 million. The lease financing obligation balance at the end of the lease term will be approximately $21.8 million which approximates the net book value of the buildings to be relinquished to the lessor. In addition to the lease financing obligation, future minimum lease payments include $508.3 million as of December 31, 2017 related to non-cancelable operating leases for the expanded headquarters in Los Gatos, California and the new office space in Los Angeles, California. Future minimum payments under lease financing obligations and non-cancelable operating leases as of December 31, 2017 are as follows:
Rent expense associated with the operating leases was $75.3 million, $53.1 million and $34.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. 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. |
Guarantees—Indemnification Obligations |
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Guarantees [Abstract] | |
Guarantees—Indemnification Obligations | Guarantees—Indemnification Obligations 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. 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 financial statements with respect to these indemnification guarantees. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Stock Split In March 2015, the Company's Board of Directors adopted an amendment to the Company's Certificate of Incorporation, to increase the number of shares of capital stock the Company is authorized to issue from 170,000,000 (160,000,000 shares of common stock and 10,000,000 shares of preferred stock), par value $0.001 to 5,000,000,000 (4,990,000,000 shares of common stock and 10,000,000 shares of preferred stock), par value $0.001. This amendment to the Company's certificate of incorporation was approved by the Company's stockholders at the 2015 Annual Meeting held on June 9, 2015. On June 23, 2015, the Company's Board of Directors declared a seven-for-one stock split in the form of a stock dividend that was paid on July 14, 2015 to all shareholders of record as of July 2, 2015. Outstanding share and per-share amounts disclosed for all periods presented have been retroactively adjusted to reflect the effects of the Stock Split. Preferred Stock The Company has authorized 10,000,000 shares of undesignated preferred stock with a par value of $0.001 per share. None of the preferred shares were issued and outstanding at December 31, 2017 and 2016. Voting Rights The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted upon by the Company’s stockholders. Stock Option Plans In June 2011, the Company adopted the 2011 Stock Plan. The 2011 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. As of December 31, 2017, 10.7 million shares were reserved for future grants under the 2011 Stock Plan. A summary of the activities related to the Company’s stock option plans, as adjusted for the Stock Split, is as follows:
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 2017 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 2017. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised for the years ended December 31, 2017, 2016 and 2015 was $464.0 million, $189.2 million and $368.4 million, respectively. Cash received from option exercises for the years ended December 31, 2017, 2016 and 2015 was $88.4 million, $37.0 million and $78.0 million, respectively. Stock-Based Compensation Stock options granted are exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:
The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior. The Company calculates expected volatility based solely on implied volatility. The Company believes that implied volatility of publicly traded options in its common stock is more reflective of market conditions, and given consistently high trade volumes of the options, can reasonably be expected to be a better indicator of expected volatility than historical volatility of its common stock. In valuing shares issued under the Company’s employee stock option plans, the Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with terms similar to the contractual term of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully vested upon grant date. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:
The amounts reclassified from accumulated other comprehensive loss were immaterial for the years ended December 31, 2017 and 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income before provision for income taxes was as follows:
The components of provision for income taxes for all periods presented were as follows:
At the beginning of 2017, the Company underwent a corporate restructuring that better aligns its corporate structure with how its business operates. As a result of this restructuring and the Company's increasing international income, there is now significantly more income being taxed at rates lower than the U.S. tax rate. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the Act in its year end income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing and as a result has recorded $79.1 million as an additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $46.9 million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $32.2 million based on cumulative foreign earnings of $484.9 million. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the $46.9 million of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $32.2 million of current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate at December 31, 2017. Additional work is necessary to do a more detailed analysis of historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The Company recorded a $66.5 million benefit related to foreign taxes expensed in prior years that may now be claimed as a Foreign Tax Credit. The Company has determined there is sufficient foreign source income projected to utilize these credits. Due to the adoption of ASU 2016-09 in 2017, all excess tax benefits and deficiencies are recognized as income tax expense in the Company’s Consolidated Statement of Operations. This will result in increased volatility in the Company’s effective tax rate. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate to income before income taxes is as follows:
The components of deferred tax assets and liabilities were as follows:
All deferred tax assets are classified as “Other non-current assets” on the Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of December 31, 2017, the valuation allowance of $49.4 million related to certain foreign tax credits that are not likely to be realized. The Company remeasured these non-current assets and liabilities at the applicable tax rate of 21% in accordance with the Tax Cuts and Jobs Act of 2017. The remeasurement resulted in a total decrease in these assets of $46.9 million. As of December 31, 2017, the Company's Federal R&D tax credit and state tax credit carryforwards for tax return purposes were $133.4 million, and $119.2 million, respectively. The Federal R&D tax credit carryforwards expire through 2037. State tax credit carryforwards can be carried forward indefinitely. As of December 31, 2017, the Company's Federal foreign tax credit carryforwards for tax return purposes were $102.2 million. The Federal foreign tax credit carryovers expire through 2026. As of December 31, 2017, the Company’s net operating loss carryforwards for state tax return purposes was $80.9 million which expire in 2035. As a result of the adoption of ASU 2016-09 in fiscal 2017, the Company recorded a cumulative effect adjustment to increase retained earnings by $43.6 million with a corresponding increase to deferred tax assets from stock-based compensation which had not been previously recognized. The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “Other non-current liabilities” and a reduction of deferred tax assets which is classified as "Other non-current assets" in the Consolidated Balance Sheets. As of December 31, 2017, the total amount of gross unrecognized tax benefits was $42.9 million, of which $37.9 million, if recognized, would favorably impact the Company’s effective tax rate. As of December 31, 2016, the total amount of gross unrecognized tax benefits was $19.7 million, of which $17.0 million, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes and in “Other non-current liabilities” in the Consolidated Balance Sheets. Interest and penalties included in the Company's provision for income taxes were not material in all the periods presented. The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS and the state of California for the years 2014 and 2015. The 2016 Federal tax return remains subject to examination by the IRS. The years 2010 through 2013 and 2016 remain subject to examination by the state of California. The Company has no significant foreign jurisdiction audits underway. The years 2012 through 2016 remain subject to examination by foreign jurisdictions. 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. |
Employee Benefit Plan |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company maintains a 401(k) savings plan covering substantially all of its employees. Eligible employees may contribute up to 60% 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 2017, 2016 and 2015, the Company’s matching contributions totaled $20.2 million, $15.7 million and $11.2 million, respectively. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has three reportable segments: Domestic streaming, International streaming and Domestic DVD. Segment information is presented in the same manner that the Company’s chief operating decision maker (“CODM”) reviews the operating results in assessing performance and allocating resources. The Company’s CODM reviews revenue and contribution profit (loss) for each of the reportable segments. Contribution profit (loss) is defined as revenues less cost of revenues and marketing expenses incurred by the segment. The Company has aggregated the results of the International operating segments into one reportable segment because these operating segments share similar long-term economic and other qualitative characteristics. The Domestic streaming segment derives revenues from monthly membership fees for services consisting solely of streaming content to the members in the United States. The International streaming segment derives revenues from monthly membership fees for services consisting solely of streaming content to members outside of the United States. The Domestic DVD segment derives revenues from monthly membership fees for services consisting solely of DVD-by-mail. Revenues and the related payment card fees are attributed to the operating segment based on the nature of the underlying membership (streaming or DVD) and the geographic region from which the membership originates. There are no internal revenue transactions between the Company’s segments. Amortization of streaming content assets makes up the vast majority of cost of revenues. The Company obtains multi-territory or global rights for its streaming content and allocates these rights between Domestic and International streaming segments based on estimated fair market value. Amortization of content assets and other expenses associated with the acquisition, licensing, and production of streaming content for each streaming segment thus includes both expenses directly incurred by the segment as well as an allocation of expenses incurred for global or multi-territory rights. Other costs of revenues such as delivery costs are primarily attributed to the operating segment based on amounts directly incurred by the segment. Marketing expenses consist primarily of advertising expenses and certain payments made to marketing partners, including CE manufacturers, MVPDs, mobile operators and ISPs, which are generally included in the segment in which the expenditures are directly incurred. The Company's long-lived tangible assets were located as follows:
The following tables represent segment information for the year ended December 31, 2017:
The following tables represent segment information for the year ended December 31, 2016:
The following tables represent segment information for the year ended December 31, 2015:
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Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited)
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Organization and Summary of Significant Accounting Policies (Policy) |
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Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the streaming content asset amortization policy 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 an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results may differ from these estimates. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits on the Statement of Cash Flows as an operating activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted ASU 2016-09 in fiscal year 2017 and elected to apply this adoption prospectively. Prior periods have not been adjusted. See Note 9 to the consolidated financial statements for information regarding the impact on the Company’s financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. ASU 2017-01 is effective for fiscal periods beginning after December 15, 2017 (including interim periods within those periods) with early adoption permitted. The Company early adopted the standard in the third quarter of 2017 on a prospective basis and the impact on its consolidated financial statements was not material. Recently issued accounting pronouncements not yet adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of 2018 and apply the modified retrospective approach. Because the Company's primary source of revenues is from monthly membership fees which are recognized ratably over each monthly membership period, the Company does not expect the impact on its consolidated financial statements to be material. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company will adopt ASU 2016-02 in the first quarter of 2019. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on the Company's balance sheet for real estate operating leases. In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company will adopt ASU 2016-18 in the first quarter of 2018 and does not expect the impact on its consolidated financial statements to be material. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Cuts and Jobs Act (the "Act"). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, the Company will elect to treat any potential GILTI inclusions as a period cost as we are not projecting any material impact from GILTI inclusions and any deferred taxes related to any i |
Cash Equivalents and Short-Term Investments | Cash Equivalents and Short-term Investments The Company considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents. In July 2017, the Company sold all short-term investments. The Company classified short-term investments, which consisted of marketable securities with original maturities in excess of 90 days as available-for-sale. Short-term investments were reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive loss” within Stockholders’ equity in the Consolidated Balance Sheets. The amortization of premiums and discounts on the investments, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in “Interest and other income (expense)” in the Consolidated Statements of Operations. The Company used the specific identification method to determine cost in calculating realized gains and losses upon the sale of short-term investments. Short-term investments were reviewed periodically to identify possible other-than-temporary impairment. When evaluating the investments, the Company reviewed factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the Company’s intent to sell, or whether it would be more likely than not that the Company would be required to sell the investments before the recovery of their amortized cost basis. |
Streaming Content | Streaming Content The Company acquires, licenses and produces content, including original programming, in order to offer members unlimited viewing of TV shows and films. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to streaming assets and the changes in related liabilities, are classified within "Net cash used in operating activities" on the Consolidated Statements of Cash Flows. For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. The portion available for streaming within one year is recognized as “Current content assets, net” and the remaining portion as “Non-current content assets, net” on the Consolidated Balance Sheets. For productions, the Company capitalizes costs associated with the production, including development costs, direct costs and production overhead. These amounts are included in "Non-current content assets, net" on the Consolidated Balance Sheets. Participations and residuals are expensed in line with the amortization of production costs. Based on factors including historical and estimated viewing patterns, the Company amortizes the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use or 10 years, beginning with the month of first availability. The amortization is on an accelerated basis, as the Company typically expects more upfront viewing, for instance due to additional merchandising and marketing efforts. The Company reviews factors impacting the amortization of the content assets on an ongoing basis. The Company's estimates related to these factors require considerable management judgment. The Company's business model is subscription based as opposed to a model generating revenues at a specific title level. Therefore, content assets, both licensed and produced, are reviewed in aggregate at the operating segment level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the net realizable value or fair value may be less than amortized cost. To date, the Company has not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the lease term for leasehold improvements, if applicable. Leased buildings are capitalized and included in property and equipment when the Company was involved in the construction funding and did not meet the “sale-leaseback” criteria. |
Revenue Recognition | Revenue Recognition The Company's primary source of revenues are 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. Deferred revenue consists of membership fees billed that have not been recognized and gift and other prepaid memberships that have not been redeemed. |
Marketing | Marketing Marketing expenses consist primarily of advertising expenses and certain payments made to the Company’s partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”). Advertising expenses include promotional activities such as digital and television advertising. Advertising costs are expensed as incurred. |
Research and Development | Research and Development Research and development expenses are included within "Technology and Development" on the Company's Consolidated Statements of Operations and primarily consist of payroll and related costs incurred in making improvements to our service offerings. |
Income Taxes | Income Taxes The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. The Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. The Company may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. |
Foreign Currency | Foreign Currency The functional currency for the Company's subsidiaries is determined based on the primary economic environment in which the subsidiary operates. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in cumulative translation adjustment included in "Accumulated other comprehensive loss" in Stockholders’ equity on the Consolidated Balance Sheets. Prior to January 1, 2015, the functional currency of certain of the Company's European entities was the British pound. The Company changed the functional currency of these entities to the euro effective January 1, 2015 following the redomiciliation of the European headquarters and the launch of the Netflix service in several significant European countries. The change in functional currency was applied prospectively from January 1, 2015. Monetary assets and liabilities have been remeasured to the euro at current exchange rates. Non-monetary assets and liabilities have been remeasured to the euro using the exchange rate effective for the period in which the balance arose. As a result of this change of functional currency, the Company recorded a $21.8 million cumulative translation adjustment included in other comprehensive loss for year ended December 31, 2015. The Company remeasures monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized in interest and other income (expense). |
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 common shares outstanding during the period. Potential common shares consist of incremental shares issuable upon the assumed exercise of stock options. |
Stock-Based Compensation | Stock-Based Compensation The Company grants fully vested non-qualified stock options to its employees on a monthly basis. As a result of immediate vesting, stock-based compensation expense is fully recognized on the grant date, and no estimate is required for post-vesting option forfeitures. |
Organization and Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Net Income Per Share | The computation of earnings per share is as follows:
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Summary of Potential Common Shares Excluded from Diluted Calculation | The following table summarizes the potential common shares excluded from the diluted calculation:
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Short-term Investments (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-For-Sale Securities Reported at Fair Value | The following table summarizes, by major security type, the Company’s assets that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets as of December 31, 2016.
(1) Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements. |
Balance Sheet Components (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Content Library | Content assets consisted of the following:
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Property and Equipment and Accumulated Depreciation | Property and equipment and accumulated depreciation consisted of the following:
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Long-term Debt (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The following table provides a summary of the Company's outstanding long-term debt and the fair values based on quoted market prices in less active markets as of December 31, 2017 and December 31, 2016:
(1) Debt is denominated in euro with a €1,300 million aggregate principal amount and is remeasured into U.S. dollars at each balance sheet date. Total proceeds were $1,420.5 million and remeasurement loss on long-term debt was $140.8 million for the year ended December 31, 2017. |
Commitments and Contingencies (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected timing of payments for streaming content obligations | The expected timing of payments for these streaming content obligations is as follows:
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Future minimum payments under lease financing obligations and non-cancelable operating leases | Future minimum payments under lease financing obligations and non-cancelable operating leases as of December 31, 2017 are as follows:
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Future minimum payments under capital leases | Future minimum payments under lease financing obligations and non-cancelable operating leases as of December 31, 2017 are as follows:
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Stockholders' Equity (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity Related to Stock Option Plans | A summary of the activities related to the Company’s stock option plans, as adjusted for the Stock Split, is as follows:
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Summary of Assumptions Used to Value Stock Option Grants Using Lattice-Binomial Model | The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income | The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Taxes | Income before provision for income taxes was as follows:
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Components of Provision for Income Taxes | The components of provision for income taxes for all periods presented were as follows:
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Reconciliation of Provision for Income Taxes | A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate to income before income taxes is as follows:
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Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities were as follows:
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Summary of Changes in Unrecognized Tax Benefits | The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets by Geographic Areas | The Company's long-lived tangible assets were located as follows:
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Information on Reportable Segments and Reconciliation to Consolidated Net Income | The following tables represent segment information for the year ended December 31, 2017:
The following tables represent segment information for the year ended December 31, 2016:
The following tables represent segment information for the year ended December 31, 2015:
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Selected Quarterly Financial Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data |
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Organization and Summary of Significant Accounting Policies (Computation of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Basic earnings per share: | |||||||||||
Net income | $ 185,517 | $ 129,590 | $ 65,600 | $ 178,222 | $ 66,748 | $ 51,517 | $ 40,755 | $ 27,658 | $ 558,929 | $ 186,678 | $ 122,641 |
Weighted-average common shares outstanding | 431,885 | 428,822 | 425,889 | ||||||||
Basic earnings per share (in USD per share) | $ 0.43 | $ 0.30 | $ 0.15 | $ 0.41 | $ 0.16 | $ 0.12 | $ 0.10 | $ 0.06 | $ 1.29 | $ 0.44 | $ 0.29 |
Diluted earnings per share: | |||||||||||
Net income | $ 185,517 | $ 129,590 | $ 65,600 | $ 178,222 | $ 66,748 | $ 51,517 | $ 40,755 | $ 27,658 | $ 558,929 | $ 186,678 | $ 122,641 |
Shares used in computation: | |||||||||||
Weighted-average common shares outstanding | 431,885 | 428,822 | 425,889 | ||||||||
Employee stock options | 14,929 | 9,830 | 10,567 | ||||||||
Weighted-average number of shares | 446,814 | 438,652 | 436,456 | ||||||||
Diluted earnings per share (in USD per share) | $ 0.41 | $ 0.29 | $ 0.15 | $ 0.40 | $ 0.15 | $ 0.12 | $ 0.09 | $ 0.06 | $ 1.25 | $ 0.43 | $ 0.28 |
Organization And Summary Of Significant Accounting Policies (Summary of Potential Common Shares Excluded From Diluted Calculation) (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Equity Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Employee stock options | 189 | 1,545 | 517 |
Long-term Debt (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | ||
Aggregate outstanding principal | $ 6,499,432 | $ 3,364,311 |
Debt issuance cost | $ 61,900 | |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price, percent of outstanding principal | 101.00% |
Long-term Debt (Revolving Credit Facility) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Jul. 31, 2017 |
|
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 500,000,000.0 | |
Line of credit facility, additional maximum borrowing capacity | $ 250,000,000.0 | |
Commitment fee percentage | 0.10% | |
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.75% | |
Federal Funds Rate [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.50% | |
One-Month LIBOR Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.00% | |
One-Month LIBOR Rate [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 1.00% |
Commitments and Contingencies (Streaming Content) (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Contractual Obligation [Line Items] | ||
Total streaming content obligations | $ 17,694,642 | $ 14,479,487 |
Current content liabilities | 4,173,041 | 3,632,711 |
Non-current content liabilities | 3,329,796 | 2,894,654 |
Unrecorded streaming obligations | 10,200,000 | 8,000,000 |
Current Content Liabilities [Member] | ||
Contractual Obligation [Line Items] | ||
Current content liabilities | 4,200,000 | 3,600,000 |
Non-current Content Liabilities [Member] | ||
Contractual Obligation [Line Items] | ||
Non-current content liabilities | $ 3,300,000 | $ 2,900,000 |
Commitments and Contingencies (Expected Timing of Payments for Commitments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Less than one year | $ 7,446,947 | $ 6,200,611 |
Due after one year and through 3 years | 8,210,159 | 6,731,336 |
Due after 3 years and through 5 years | 1,894,001 | 1,386,934 |
Due after 5 years | 143,535 | 160,606 |
Total streaming content obligations | $ 17,694,642 | $ 14,479,487 |
Commitments and Contingencies (Lease Obligations) (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Capital Leased Assets [Line Items] | |||
Rent expense | $ 75.3 | $ 53.1 | $ 34.7 |
Land, Buildings and Improvements [Member] | Los Gatos Buildings [Member] | |||
Capital Leased Assets [Line Items] | |||
Total costs of buildings and improvements | 40.7 | ||
Capital lease obligations | 29.5 | ||
Capital leases, future minimum payments due | 15.6 | ||
Capital lease financing obligation under extended lease term | 21.8 | ||
Land, Buildings and Improvements [Member] | Los Gatos Buildings Expanded Site and Los Angeles [Member] | |||
Capital Leased Assets [Line Items] | |||
Operating leases, future minimum payments due | $ 508.3 |
Commitments and Contingencies (Future Minimum Payments Under Lease Financing Obligations and Non-Cancelable Operating Leases) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 101,987 |
2019 | 97,560 |
2020 | 96,255 |
2021 | 85,188 |
2022 | 77,418 |
Thereafter | 278,970 |
Total minimum payments | $ 737,378 |
Stockholders' Equity (Stock Split) (Narrative) (Details) |
Jul. 14, 2015 |
Jun. 30, 2015 |
Dec. 31, 2017
$ / shares
shares
|
Dec. 31, 2016
$ / shares
shares
|
Mar. 31, 2015
$ / shares
shares
|
Feb. 28, 2015
$ / shares
shares
|
---|---|---|---|---|---|---|
Stockholders' Equity Note [Abstract] | ||||||
Capital units, authorized | 5,000,000,000 | 170,000,000 | ||||
Common stock, shares authorized | 4,990,000,000 | 4,990,000,000 | 4,990,000,000 | 160,000,000 | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||
Common stock, par value (in USD per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||
Stock split, conversion ratio | 7 | 7 |
Stockholders' Equity (Preferred Stock and Voting Rights) (Narrative) (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017
vote
$ / shares
shares
|
Dec. 31, 2016
$ / shares
shares
|
Mar. 31, 2015
shares
|
Feb. 28, 2015
shares
|
|
Stockholders' Equity Note [Abstract] | ||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, par value (in USD per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Number of voting rights per share | vote | 1 |
Stockholders' Equity (Stock Option Plans) (Narrative) (Details) - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of options exercised | $ 464.0 | $ 189.2 | $ 368.4 |
Cash received from option exercised | $ 88.4 | $ 37.0 | $ 78.0 |
2011 Stock Plan [Member] | Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for future issuance | 10.7 |
Stockholders' Equity (Summary of Assumptions Used to Value Stock Option Grants) (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
$ / shares
|
Dec. 31, 2016
USD ($)
$ / shares
|
Dec. 31, 2015
USD ($)
$ / shares
|
|
Stockholders' Equity Note [Abstract] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility, minimum | 34.00% | 40.00% | 36.00% |
Expected volatility, maximum | 37.00% | 50.00% | 53.00% |
Risk-free interest rate, minimum | 2.24% | 1.57% | 2.03% |
Risk-free interest rate, maximum | 2.45% | 2.04% | 2.29% |
Suboptimal exercise factor, minimum | 2.48 | 2.48 | 2.47 |
Suboptimal exercise factor, maximum | 2.63 | 2.48 | 2.48 |
Valuation data: | |||
Weighted-average fair value (in USD per share) | $ / shares | $ 71.45 | $ 48.85 | $ 39.22 |
Total stock-based compensation expense (in thousands) | $ 182,209 | $ 173,675 | $ 124,725 |
Total income tax impact on provision (in thousands) | $ 61,842 | $ 65,173 | $ 47,125 |
Income Taxes (Schedule of Income before Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ 144,100 | $ 188,078 | $ 95,644 |
Foreign | 341,221 | 72,429 | 46,241 |
Income before income taxes | $ 485,321 | $ 260,507 | $ 141,885 |
Income Taxes (Components of Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current tax provision: | ||||
Federal | $ 54,245 | $ 54,315 | $ 52,557 | |
State | (7,601) | 5,790 | (1,576) | |
Foreign | 88,436 | 60,571 | 26,918 | |
Total current | 135,080 | 120,676 | 77,899 | |
Deferred tax provision: | ||||
Federal | (153,963) | (24,383) | (37,669) | |
State | (52,695) | (14,080) | (17,635) | |
Foreign | (2,030) | (8,384) | (3,351) | |
Total deferred | (208,688) | (46,847) | (58,655) | |
Provision for income taxes | $ 79,100 | $ (73,608) | $ 73,829 | $ 19,244 |
Income Taxes (Reconciliation of Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Federal statutory income tax rate, percent | 35.00% | 35.00% | 35.00% | |
Expected tax expense at U.S. Federal statutory rate of 35% | $ 169,860 | $ 91,179 | $ 49,658 | |
State income taxes, net of Federal income tax effect | 6,404 | 7,261 | 4,783 | |
Foreign earnings at other than U.S. rates | (87,514) | 14,639 | 5,310 | |
Federal and California R&D tax credits | (79,868) | (41,144) | (29,363) | |
Excess tax benefits on stock-based compensation | (157,888) | 0 | 0 | |
Tax Cuts and Jobs Act of 2017 | 79,077 | 0 | 0 | |
Release of tax reserves on previously unrecognized tax benefits | 0 | 0 | (13,438) | |
Other | (3,679) | 1,894 | 2,294 | |
Provision for income taxes | $ 79,100 | $ (73,608) | $ 73,829 | $ 19,244 |
Effective Tax Rate | (15.00%) | 28.00% | 14.00% |
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets (liabilities): | ||
Stock-based compensation | $ 149,367 | $ 188,458 |
Accruals and reserves | 34,170 | 29,231 |
Depreciation and amortization | (70,382) | (93,760) |
Federal and California tax R&D credits | 260,686 | 107,283 |
Federal foreign tax credits | 102,242 | 0 |
Other | (2,363) | |
Other | 51,614 | |
Gross deferred tax assets | 527,697 | 228,849 |
Valuation allowance | (49,431) | (1,601) |
Net deferred tax assets | $ 478,266 | $ 227,248 |
Income Taxes (Summary of Changes in Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning Balance | $ 19,739 | $ 17,117 |
Increases related to tax positions taken during prior periods | 0 | 1,047 |
Decreases related to tax positions taken during prior periods | (3,226) | (7,105) |
Increases related to tax positions taken during the current period | 26,389 | 8,713 |
Decreases related to settlements with taxing authorities | (33) | |
Decreases related to expiration of statute of limitations | 0 | |
Ending Balance | $ 42,902 | $ 19,739 |
Employee Benefit Plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Retirement Benefits [Abstract] | |||
Eligible employees maximum contribution percentage | 60.00% | ||
Contributions by employer | $ 20.2 | $ 15.7 | $ 11.2 |
Segment Information (Narrative) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information (Long-lived Assets by Geographic Areas) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 289,875 | $ 236,977 |
International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 29,529 | $ 13,418 |
Segment Information (Information on Reportable Segments and Reconciliation to Consolidated Net Income) (Details) subscription in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017
USD ($)
subscription
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
subscription
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2017
USD ($)
subscription
|
Dec. 31, 2016
USD ($)
subscription
|
Dec. 31, 2015
USD ($)
subscription
|
|
Segment Reporting Information [Line Items] | |||||||||||
Total members at end of period | subscription | 0 | 0 | 0 | ||||||||
Revenues | $ 3,285,755 | $ 2,984,859 | $ 2,785,464 | $ 2,636,635 | $ 2,477,541 | $ 2,290,188 | $ 2,105,204 | $ 1,957,736 | $ 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 | ||||||||
Contribution profit (loss) | 2,755,025 | 1,809,690 | 1,363,943 | ||||||||
Other operating expenses | 1,916,346 | 1,429,897 | 1,058,117 | ||||||||
Operating income | 838,679 | 379,793 | 305,826 | ||||||||
Other income (expense) | (353,358) | (119,286) | (163,941) | ||||||||
Provision for income taxes | 79,100 | (73,608) | 73,829 | 19,244 | |||||||
Net income | $ 185,517 | $ 129,590 | $ 65,600 | $ 178,222 | $ 66,748 | $ 51,517 | $ 40,755 | $ 27,658 | 558,929 | 186,678 | 122,641 |
Amortization of content assets | $ 6,258,474 | $ 4,867,450 | $ 3,484,762 | ||||||||
Domestic Streaming [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total members at end of period | subscription | 54,750 | 49,431 | 54,750 | 49,431 | 44,738 | ||||||
Revenues | $ 6,153,025 | $ 5,077,307 | $ 4,180,339 | ||||||||
Cost of revenues | 3,319,230 | 2,855,789 | 2,487,193 | ||||||||
Marketing | 553,331 | 382,832 | 317,646 | ||||||||
Contribution profit (loss) | 2,280,464 | 1,838,686 | 1,375,500 | ||||||||
Amortization of content assets | $ 2,756,947 | $ 2,337,950 | $ 1,905,069 | ||||||||
International Streaming [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total members at end of period | subscription | 62,832 | 44,365 | 62,832 | 44,365 | 30,024 | ||||||
Revenues | $ 5,089,191 | $ 3,211,095 | $ 1,953,435 | ||||||||
Cost of revenues | 4,137,911 | 2,911,370 | 1,780,375 | ||||||||
Marketing | 724,691 | 608,246 | 506,446 | ||||||||
Contribution profit (loss) | 226,589 | (308,521) | (333,386) | ||||||||
Amortization of content assets | $ 3,440,870 | $ 2,450,548 | $ 1,500,313 | ||||||||
Domestic DVD [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total members at end of period | subscription | 3,383 | 4,114 | 3,383 | 4,114 | 4,904 | ||||||
Revenues | $ 450,497 | $ 542,267 | $ 645,737 | ||||||||
Cost of revenues | 202,525 | 262,742 | 323,908 | ||||||||
Marketing | 0 | 0 | 0 | ||||||||
Contribution profit (loss) | 247,972 | 279,525 | 321,829 | ||||||||
Amortization of content assets | $ 60,657 | $ 78,952 | $ 79,380 |
Selected Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 3,285,755 | $ 2,984,859 | $ 2,785,464 | $ 2,636,635 | $ 2,477,541 | $ 2,290,188 | $ 2,105,204 | $ 1,957,736 | $ 11,692,713 | $ 8,830,669 | $ 6,779,511 |
Gross profit | 1,178,401 | 991,879 | 883,156 | 979,611 | 823,122 | 757,344 | 632,106 | 588,196 | |||
Net income | $ 185,517 | $ 129,590 | $ 65,600 | $ 178,222 | $ 66,748 | $ 51,517 | $ 40,755 | $ 27,658 | $ 558,929 | $ 186,678 | $ 122,641 |
Earnings (loss) per share: | |||||||||||
Basic (in USD per share) | $ 0.43 | $ 0.30 | $ 0.15 | $ 0.41 | $ 0.16 | $ 0.12 | $ 0.10 | $ 0.06 | $ 1.29 | $ 0.44 | $ 0.29 |
Diluted (in USD per share) | $ 0.41 | $ 0.29 | $ 0.15 | $ 0.40 | $ 0.15 | $ 0.12 | $ 0.09 | $ 0.06 | $ 1.25 | $ 0.43 | $ 0.28 |