Netflix Inc (NFLX) — Q1 2025 Earnings Call Transcript

Good afternoon, and welcome to the Netflix Q1 2025 Earnings Interview. I'm Spencer Wang, VP of Finance, IR and Corporate Development. Joining me today are Co-CEOs, Ted Sarandos and Greg Peters; and CFO, Spence Neumann. As a reminder, we will be making forward-looking statements, and actual results may vary. We'll now take questions from the analyst community and we will begin first with our results, outlook, and forecast. And our first question comes from Robert Fishman of MoffettNathanson. Robert's question is, the Wall Street Journal report this week discussed Netflix's internal goal of doubling revenue and tripling operating income by 2030. How should investors think about Netflix leaning into more content spending over the next five years?

I'll take this, and thanks, Robert. Look, we have a unique culture, and part of it is this open information operating style, and it has served us very, very well. On rare and very disappointing occasions, our confidential and internal discussions can leak into the press, and while we wouldn't normally comment about leaked internal information, we do want to be extra clear about this. We often have internal meetings and we talk about long-term aspirations, but it's important to note that this is not the same as forecast. Our operating plans is the same as our external forecast and guidance. We don't have a five-year forecast or five-year guidance, but you can assume that we are long-range thinking, and that we're working hard every day to build the most loved and valued entertainment company for all of our stakeholders.

We want to shift the discussion a bit. We are open to sharing and discussing the details. We have ambitious long-term goals, which are based on the growth potential we see in our business. Currently, we believe we have a solid operation with over $40 billion in revenue and more than 300 million paid households, translating to an audience of over 700 million people. We lead in streaming view share, but we believe we represent only a fraction of our total addressable market across various metrics. In terms of engagement, we capture less than 10% of TV hours based on audience and connected households. There are still hundreds of millions of potential users to attract, and in terms of revenue, we account for about 6% of consumer spending on ad revenue in the markets we serve. Hence, we see significant opportunities to enhance our engagement, revenue, and profits. As Ted mentioned, our aim is to become the most valued and beloved entertainment company for all our stakeholders.

Thanks, Ted and Greg. Our next question, or I should say, we have received several questions actually understandably, about the economic environment and consumer sentiment as well. For example, Jason Helfstein from Oppenheimer asks, this is the first time you are potentially entering a recession with a low-cost ad plan. How do you think about consumers downgrading plans relative to the behavior you've seen in prior recessions?

Yes. Given that we've got a bunch of questions on sort of the general economic environment. Maybe, just start with some comments on that. We're paying close attention, clearly, to the consumer sentiment and where the broader economy is moving. But based on what we are seeing by actually operating the business right now, there's nothing really significant to note. So, what are we looking at? Primary metrics and indicators would be our retention, that's stable and strong. We haven't seen any significant changes in planned mix or planned take rate, to part of that question. Our most recent price changes have been in line with expectations. Engagement remains strong and healthy. So, things generally look stable from that lens. Stepping back, we also take some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times. Netflix specifically also has been generally quite resilient, and we haven't seen any major impacts during those tougher times, albeit, of course, over a much shorter history. And then to the point of the specific question. I think that having the low-cost ads plan in our largest markets also gives us more resilience, and we think that we represent an incredible entertainment value starting at $7.99 in the U.S. and Canada, with that as planned. It's an accessible price point, and we really do expect the demand for entertainment to remain strong.

Yes. To expand on that, Greg, we are focused on the factors within our control, with the improvement of Netflix's value being a key priority. Historically, during challenging economic times, the value of home entertainment becomes crucial for households, and Netflix offers significant value both in absolute and competitive terms. There are international risks currently being discussed, but this has always been the case. We comply with taxes and local regulations worldwide, which has always been a part of our operations. However, our forecast remains unchanged. It's important to remember that while the U.S. is our largest market for content and workforce, we produce original content in 50 countries globally, contributing positively to many economies and cultures. In our letter, we emphasized our commitment to the U.K. and recently announced a $1 billion investment in Mexico for production. In 2023, we committed $2.5 billion to Korean content. These initiatives illustrate our global commitment. By producing in these countries, we generate and support jobs, provide training, collaborate with local producers and talent, and promote local stories and cultures worldwide. We even encourage tourism. Therefore, we believe we positively impact the local economies and cultures wherever we operate, potentially making us less exposed to risks.

Thanks, Ted. So, that sort of takes care of the question we got from Dan Salmon specifically on tariffs as well. So, I'll move us along to a question now from Rich Greenfield of LightShed Partners. Does your price increase cadence change due to the global economic uncertainty, or is that outweighed by the strength of your slate and increased time spent watching Netflix?

Yes. This ties back to our approach regarding price adjustments. As we have mentioned previously, we depend on our members to signal when we have invested sufficiently, enhanced the value of our offerings, and then assess when to modify pricing to reinvest in our service. We will continue to adhere to this philosophy instead of following a preset plan. Historically, we have encountered challenging economic periods in various countries, and we have generally managed to maintain a positive momentum even in those circumstances, which highlights the disparity between value and price. For many, we represent a strong value even as they are cautious about their spending. Additionally, we have broadened our range of price options, including a low-cost advertising plan in our advertising market, which enables us to provide suitable plans at appropriate prices for a wider audience. In summary, we are largely maintaining our previous approach while continually striving to enhance both value and accessibility.

Great. Thanks, Greg. Our next question is from John Hodulik of UBS. How has member retention been trending, given the Q4 strong paid net additions? Have you retained the bulk of these subscribers? And can you give us a sense of how churn has been trending?

Yes, sure. Spencer, why don't I take that one, give Greg and Ted a break for a sec. As Greg mentioned, we're seeing strong, stable acquisition and retention trends in the business generally that resulted in healthy member growth in Q1. Last quarter, we did provide some color on the retention characteristics for some of those bigger live events in Q4. Recall, we had the Paul Tyson fight, we had NFL on Christmas Day, we also had Squid Game, which was an event in and of itself. But we did mention at the time that those three big events were still a minority, a small minority of our net adds in Q4. But we also noted that the retention characteristics for the members that came in for those big events were similar to members that joined for other big titles, and that continues to be the case. So, really no meaningful changes to our retention story, which, no news on that front is good news from our perspective.

Thanks, Spence. We have another question about our outlook and forecast from Michael Morris of Guggenheim. Given the strength in operating margins in the first half of the year, can you discuss the key incremental costs that will drive lower margins in the second half? Do you expect these costs to be more heavily weighted to the third quarter or the fourth quarter? Spence?

Sure, I can reiterate that. Thank you, Michael. As mentioned in our letter, we are still projecting a full year operating margin of 29%. We primarily manage this margin on an annual basis. Our margins can fluctuate from quarter to quarter, typically due to the timing of our content releases, which is the main factor reflected in our forecast. We anticipate that content expenses will increase in the third and fourth quarters year-over-year, given when our titles are released. We expect our biggest titles to return in the latter half of the year, and Ted will discuss some of those later. Additionally, we usually see a heavier film slate in the fourth quarter. We also expect an increase in sales and marketing expenses in the second half of the year to support our content slate and advertising sales, which will impact our marketing and sales line. We are continuing to expand our sales operations and capabilities, contributing to that growth in the latter half. All of these elements are included in our guidance, and other than the typically heavier film slate in Q4, we do not foresee significant differences between Q3 and Q4.

I want to add that we surpassed expectations for operating income in Q1. This was mainly due to some timing on our spending, with minor contributions from revenue. We believe most of this expense will still be accounted for throughout the year. There is a lot of uncertainty in the macro environment, so this remains our best estimate for the year's outlook.

Great. Thanks, Spence. I'll move us along now to a set of questions around advertising from Dan Salmon of New Street Research. Does the current macro environment change your approach to the television upfronts? Any broad thoughts on how you're approaching upfront versus the scatter market would be great.

Sure. Similar to commentary on the consumer sentiment, we're keeping a close eye on the marketplace, but we aren't currently seeing any signs of softness from our direct interactions with buyers. Actually, to the opposite, we're seeing some positive indicators from clients as we approach our upfront event. I think worth noting perhaps that the fact that we're currently relatively small in ads and that sort of ads as a revenue contributor to Netflix, but probably more importantly, the amount of ad spend that we're seeking to win relative to the big ads pie, that smallness probably provides us some insulation to market shifts right now. And we are rolling out our proprietary ad tech suite. We've rolled that out in Canada and United States. We've got our remaining 10 markets coming. That offers a bunch of new capabilities that advertisers have told us they want. So, we're just starting to sell into those new capabilities that opens up new opportunities for us, opens up new demand for us as well. So, I would say, based on everything that we're seeing right now, we continue to expect that we will roughly double our advertising revenue in 2025 through a combination of both upfronts, programmatic expansion, and scatter.

Thanks, Greg. And that's a very good segue to our next question, which comes from Vikram of Baird. Could you provide an update on your first-party ad-tech platform? How has the rollout in Canada performed relative to your expectations? And do you have any observations so far in the U.S.?

Yes. It's a big milestone for us to roll out our own ad suite. We've been working on it for a while. We're still in the middle of that rollout, but our Canada and U.S. launches have gone well. They're consistent with our expectations. We're learning and improving quickly now, based on the feedback we're getting from having those live and operating them. Then we'll roll out across the remaining 10 ads markets in a few stages over the coming months. So, that's sort of all lined up and ready to go. The biggest initial benefit that we are seeing, again, as expected from being on our own ad servers, it just enables more flexibility for advertisers, more ways that they can buy. There's fewer activation hurdles. We have the ability to improve that overall buyer experience iteratively. It just makes it easier to transact with Netflix, and that, of course, drives increased sales, so we're seeing that. And then we expect over time that our first-party ad-tech platform will allow us to do other things, deliver more critical capabilities more quickly to advertisers. These are things like more programmatic availability, something we definitely hear demand for, enhanced targeting, something we're excited about. We can leverage more data sources, and of course, something we hear all the time, more measurement and reporting capabilities. So, those are all things that we've got in work. Some of those have been delivered already in some of the territories, and those will come over time. And then the other big space of benefit by being on our own ads tech stack is, it enables us to have more control to create a higher quality ad experience for our members. This is things that are really important like increasing ad relevance, which is just good for everybody in the whole ecosystem. So, just getting started, excited to get it out there. We got many years of building ahead of us, but we've got a clear roadmap. We know what we're committed to, and we'll just continually to iteratively improve and innovate in advertising, just like you've seen us do in all sorts of other areas.

Thanks, Greg. And speaking of ad relevance, Justin Patterson has a longer-term question on ads. Netflix has solved personalized content recommendations. What are the key steps to solving ad content recommendations or relevance, and which inning do you believe you're in?

Not sure I would characterize this completely solved. We hope that we can be even better day to day in recommending the main titles, but we do have an ambition to achieve that same level of sophistication and maturity capability that we did on the personalized recommendations in the ad space. That means matching the right ad with the right audience, the right viewer, and the right title. And we think putting those three things together drives superior campaign outcomes for advertisers. We think it's a better experience for members. So, it's win, win, win. Where are we at in that process? I would say that we are literally just beginning to get that going. So, the first stage of that is actually being on our own ads platform. We've launched that, as I said, in Canada and the U.S. We've got the remaining markets coming over the next months to come. And in doing that during this time, we've been able to significantly already expand our targeting capabilities. So, that now includes targeting features that are based on Netflix's unique data. So, think life stage, interest, viewing mood. In the U.S., we've also recently enabled advertisers to do more significant targeting. So, this is targeting on their own onboarded audiences, targeting on Netflix's modeled audiences, targeting against audience segments that are provided by a select set of third-party vendors. So, we've got a lot of exciting work going on in that space. And then looking ahead, in 2026, we'll do more of that. More data targeting capabilities. We'll move more of that globally. So, a lot of things we do, we start in the United States and expand across more territories. You'll see that. And then of course, more measurement functionality in all markets. And then in 2027, when we get to look to specific focused investments at a higher order in data capabilities, such as ML-based optimizations, we've got advanced measurement, advanced targeting, we'll be really opening a rich space there. Another big benefit we get on our own ad stack is we'll be able to innovate and develop more quickly new ad formats. So, we'll have more spaces that we can point all of that improved targeting capability against. So, just getting started in this space, we've got a lot of work to do for sure, but we think we'll be able to move very quickly. And frankly, more quickly than other streamers because we believe we're going to be able to leverage not only pre-existing tech that we have, data that we have, but also data science expertise and the rapid product innovation experience that we've got.

And just going via the inning analogy gives us a little more flexibility than crawl, walk, run, right? So, when you walk through all that, it's nice to have all those innings ahead of us. Nine options instead of three.

That's right. Stepping up to the plate, starting to swing. That'd be where we're at.

Thanks, Greg. I'll move us along to a series of content-related questions from analysts, beginning with Rich Greenfield from Light Shed. There are four major sports properties available right now. How should we think about the strategic fit for Netflix in terms of number one, the UFC, number two, WWE premium live events, number three, F1, and number four, Major League Baseball?

Thanks, Rich. Just, I do want to remind you that our live strategy is beyond just sports. So, I'm not going to comment on any of those specific opportunities at this time. But I will steer you back to the letter to show you that our live event strategy is unchanged and we remain really focused on the big breakthrough events. Our audiences love them. And so anything we chase in the event space or the sports space is a deal that'd have to make economic sense as well. So, live is a relatively small part of our content spend. We have about 200 billion view hours. So, small relative to view hours too. But that being said, all viewing is not equal. What we have seen with live is this very outsized positives around conversation and acquisition. And we suspect retention. And we're really excited to keep building on that. We have the Taylor-Serrano fight in July. That's a rematch from when they fought the first time on the Tyson-Paul fight night. It was the most watched women's sporting event in U.S. history. So, there's a lot of excitement around that. The NFL, of course, is a great property and we're happy to have the Christmas day game. So, we opted into the second NFL game for Christmas Day. So, we'll be presenting all day football again on December 25th, 2025, really exciting. And then today our live adventures have all been primarily in the U.S. but we intend to grow the capability to do it around the world in the years ahead. So, very pleased with the progress so far and excited about the future for live sports and non-sports.

Thanks, Ted. The next question is from Matt Thornton of FBN Securities. Do you think video podcasts could perform well as a category on Netflix?

So, we're constantly looking at all different types of content and content creators. The lines between podcast and talk shows are getting pretty blurry. We want to work with kind of great creators across all kinds of media that consumers love. And podcasts to your point have become a lot more video forward. And today we actually produce a lot of podcasts ourselves as part of our kind of publicity and publishing efforts. So, some are really show specific like Sweet Game and Diplomat. Some are genre focused, some are talent focused. We have a great one called You Can't Make This Up all about Netflix docs. And they live everywhere podcasts live today. But as the popularity of video podcasts grow, I suspect you'll see some of them find their way to Netflix.

Thanks, Ted. From Rich Greenfield again, how do you create iconic animated franchises? What does it really take to build out culturally relevant animated IP? Is the answer a different team, acquisitions, or something else entirely?

Thank you, Rich. It's important to remember that we are relatively new to this and it's a completely creative process. We've experienced some successes as well as some setbacks, indicating we have room for improvement. However, I want to highlight our notable successes with projects like Leo, Sea Beast, Guillermo Del Toro's Pinocchio, and Pierce Culture, which even won us the Oscar for Best Animated Feature. We're excited about this space because of the significant demand for animated films. In 2024, nine out of the top ten most-streamed movies were animated features. Just like our strategy for live action, we intend to create some animated films and also license others. Currently, we have better access to licensing than we did when we started in-house animation, thanks to output deals with Universal, Illumination, and Sony. Our animation team, led by Hannah and Dan, is diligently working on an exciting lineup of exclusive originals set to launch through 2027, including one titled In Your Dreams, coming out in Q4, which is really fun, entertaining, and beautifully produced, and I believe you'll really enjoy it. We have our work cut out for us, but the potential rewards are significant.

Thanks, Ted. Our next question comes from Robert Fishman of MoffettNathanson. As you think about the competitive landscape over the next five years, should investors expect Netflix to move into short-form or creator-led content to compete head-to-head with YouTube?

Sure, I'll kick this one off. I think just starting at the macro lens, we've always had very strong competitors, including YouTube, many others. We're all definitely competing hard for people's entertainment time. So, we absolutely have to earn every hour that we win. We don't take anything for granted. We don't do anything for free. We wake up every day eager to improve our service for our members and for our members-to-be. We also think in that broadest competitive lens that the biggest opportunity we've got is actually going after the roughly 80% share of TV time that neither Netflix nor YouTube have today. We think of that as a real immediate opportunity. And then when it comes to the specific head-to-head competition with YouTube or other platforms like YouTube, we believe we are a more competitive, better service for a certain class of creators and certain types of storytelling. And most importantly in that is that we lead monetization for those kinds of titles. And that means we can provide a better opportunity than YouTube or other services for those creators and those stories. And Ted, maybe you want to comment on the creator and content type expansion?

Yes, sure. We're looking for the next generation of great creators and we're looking everywhere. So, they're not just in film schools and certainly not just in Hollywood. Creators today have tools that were unimaginable a decade ago to tell stories, to reach audience. The question that's out there is that, is it premium? Well, some of it is. And we believe we have the best monetization model on the planet for premium storytelling. I think we can help those creators reach an audience. Our model can also support more ambitious efforts for them, can help de-risk them, unlike the kind of typical UGC models. Look at people, folks like Ms. Rachel. She's been in the top 10 every week since she launched on Netflix. Kill Tony right now is killing it with our standup fans. We're working with Sidemen. We just launched Pop the Balloon. So, we think it's really exciting when you put this all together. We believe it's the best place for premium content as defined by fans and the best home for storytellers wherever they're working on honing their skills today.

Thank you. From Ben Swinburne of Morgan Stanley, we are starting to see some of the fear around AI and content creation subside and major directors like the Russos, Jim Cameron, etc., begin embracing the technology. What is Netflix doing to leverage AI for its creative partners? How meaningful can this be? And are there any examples that you can share?

There is a lot of excitement about the potential of AI for content creators. I also read Jim Cameron's article about making movies 50% cheaper. I believe there is an even greater opportunity in making films 10% better. Our talent is currently utilizing AI tools for set references, previs, visual effects preparation, and shop planning, which all enhance the process. Historically, only high-budget projects could access advanced visual effects like de-aging. Now, AI-powered tools allow smaller budget projects to incorporate high-quality visual effects on screen. A recent example that stands out is Rodrigo Prieto, the director of photography for The Irishman just five years ago. At that time, we employed cutting-edge, expensive de-aging technology that had significant limitations and complicated the filming process for actors. It was a significant advancement, but it fell short of our needs for that film. Now, just five years later, Rodrigo is directing his first feature film for us, Pedro Paramo in Mexico. With AI tools, he was able to achieve de-aging visual effects for a fraction of the cost of those used in The Irishman. In fact, the entire budget for his film was roughly equivalent to the VFX costs for The Irishman. This same creator is using new and better tools to accomplish something that would have been impossible only five years ago. It’s truly exciting, and our goal is straightforward: find ways for AI to enhance the experience for both members and creators.

Thanks, Ted. Our next question is from David Joyce of Seaport Research Partners. The question is, with so much content in your library, what can you do for discovery to help drive further engagement with the platform? Is there anything further structural you can do with the recommendation engine, or is it going to require more marketing?

A surprising fact is that even our most popular titles, which generate a lot of buzz, still account for less than 1% of viewing. Therefore, enhancing our discovery and recommendation capabilities is vital to maximizing the returns on the investments made by Bella's team globally. We consistently observe, through quarterly testing, that there is potential for improving the discovery and recommendation experience. This could lead to greater value for our members and help us reach larger audiences worldwide. For instance, last year we started testing a new, simpler, and more intuitive TV homepage, something we haven’t significantly updated in over a decade. We believe this will greatly enhance the discovery experience on Netflix. We are fine-tuning this experience based on feedback from our members and plan to launch it later this year, which is very exciting and represents a substantial structural change that we expect will advance our services notably. Additionally, we are developing new features, such as interactive search using generative technologies, which we anticipate will enhance the discovery process for our members. There are many improvements in the works, and we foresee significant advancements in this area in the future.

Great, thanks, Greg. Michael Morris from Guggenheim has our next question. It's actually about extra member accounts. How is adoption of extra member accounts trended since launch? Can you share how this offer has contributed to revenue growth to date and whether you see it as additive to future growth?

We see extra member as a part of our plans and pricing model. So, it's an option that provides flexibility and choice for members. It allows them to tailor the Netflix offering to their needs. We know some members want to share Netflix with family or friends. An extra member gives them an easy way to do that. It's a lower cost way to do that as well. We see good retention and engagement on that plan, which is really important to us and says it's a sort of healthy part of the offering. But while we love it from a member convenience perspective, responding directly to the question, extra member isn't a major driver for our business, and we expect it'll remain relatively small in the foreseeable future.

Thanks, Greg.

I just say that to Greg's point, I agree with all that. It is, I think, part of the question. It is still growing, honestly, but it's a, so it's healthy for all those reasons, but it's just not a big driver in the business.

Thanks, Spence, for clarifying. Justin Patterson from KeyBanc with the next question. Alain, who leads our Netflix Games business, spoke recently at the Games Developer Conference about making gaming more accessible and achieving mass market appeal. What types of games have resonated on Netflix so far, and where do you see opportunities to improve the user experience and drive even more engagement for games?

Yes, we have learned quite a bit and made some decent progress since we launched games, but we continue to see this as a multi-year iterative journey much like we've seen and you've seen from us when we launch a new content category or we launch a new country and we develop product market fit and improve that over time. You asked what games have worked for us so far. You can see much of the answer to that question embedded in the genres that we're going after and focusing on right now. So, that starts with immersive narrative games based on our IP. Squid Game Unleashed is a really good example. We'll have an update for that game with the latest season of Squid Game that's coming. More recently, Thronglets, which is our Black Mirror-based Tamagotchi-style game that has a dark twist in the end, very consistent with Black Mirror. Another category that we're going after is mainstream established titles. This is Grand Theft Auto, which really worked for us, and you'll see us launch more titles like that in the future. There's also games for kids. Being able to give kids a game experience that's free of ads, it's free of any in-app purchases, safe for parents with a subscription. We just announced Peppa Pig, a Peppa Pig game, which is coming soon, so that's an example of that. And the fourth category, which I would say we don't have a lot of data points demonstrated in yet, but we're excited about, and we'll be delivering some to understand the space better is socially engaging party games. Think about this as either an evolution of the family board game or an evolution of the game show on TV that becomes interactive in your living room. So, lots of excitement there. And then you mentioned in terms of areas to improve, there's tons of areas to improve. Frankly, we can improve everything that we're doing from user experience and discovery, and getting to play, but also just in having more compelling games. So, that's a real top priority for us at this point. And maybe just a few comments with regard to how we think about investment and growth in this space. We've always said that we were in this to win. We want to invest enough to ensure that we are playing to win, but we also are coming knowing that we've got a lot to learn, and we still have a lot to learn despite all that we've learned so far. We don't want to grow our investment too much until we iteratively develop high confidence that we know how to translate that investment into member value, like the increased retention we see when members play our games. So, our investment by our scale is still relatively modest. It's a small fraction of our overall content budget. And as we continue to see incremental proof points, we'll ramp up that investment in a measured way. But we think this approach, this sort of measured growth and planned scarcity actually yields a better business in the long term. And the long-term opportunity is large. It's about $140 billion in consumer spend, ex-China, ex-Russia, not including ad revenue. We believe in our top-level strategic thesis, and we continue to learn into that executional capability to incrementally unlock that potential.

Thanks, Greg. I'm actually going to bring us back to a question on the results because we do have a late breaking question from Steve Cahill of Wells Fargo. Can you unpack the key drivers of the expected UCAN revenue growth reacceleration in Q2? Is it mainly pricing or are there other aspects like advertising or subscriber growth? Maybe, Spence, you want to take a stab at that one?

Yes, certainly. In our report, we indicated that our UCAN revenue grew by 9% year-over-year in Q1, which is a slowdown from the 15% year-over-year growth we experienced in Q4. This deceleration is primarily due to timing in pricing. There was a challenging comparison to the previous quarter because we benefited from advertising linked to NFL games in Q4, which had a positive impact. However, we expect to see a reacceleration in Q2, benefiting from a full quarter of pricing year-over-year. Additionally, while advertising remains a smaller segment of our business compared to subscriptions, it continues to grow throughout the year.

Thanks, Spence. And I will now close this out with our last question, which comes from Alan Gould of Loop Capital. His question is, you've been guiding to $8 billion of free cash flow in 2025. And one of your goals is to deliver growing free cash flow. You have historically not spent a lot on acquisitions. Should we assume most of the growing free cash flow is redeployed into share buybacks?

Yes, thanks, Alan. So, there's no change to our capital allocation policy. It's been consistent for years now. We prioritize profitable growth by reinvesting in the business. We maintain ample liquidity. Those are key for us, our top two priorities. And then we return excess cash to shareholders through share repurchase beyond several billion dollars of minimum cash that we keep on the balance sheet. And then anything we use for select M&A. So, that's kind of a long wind-up to the answer is yes. In the absence of any meaningful M&A, not MBA, any meaningful M&A, we would expect that our growing free cash flow will be redeployed to share repurchase.

Excellent. Well, before we close, first, thank you all for joining us. I would like to take a moment to recognize and to thank Tim Haley. For after more than 27 years on our Board of Directors, he is elected to not stand for reelection. For all of those 27 years, Tim Haley has been on this journey with us. His counsel and leadership has been a really valued part of our success. I'd like to say a special thank you to Tim for his long service and his many contributions to the Netflix Board of Directors. And let me say also as someone who's benefited greatly from our time with Tim and has been there with him for most of those years, that through so much change and so much growth, Tim has always offered sage advice and counsel and is an important part of the history of Netflix. Tim has helped shape Netflix into the Company that it is today. So, many thanks to Tim. And thank you very much for joining us.