Netflix Inc (NFLX) — Q2 2025 Earnings Call Transcript

Good afternoon, and welcome to the Netflix Q2 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'll be making forward-looking statements, and actual results may vary. We'll take questions submitted by the analyst community, and we will begin with our results and our forecast. The first question comes from Steve Cahall of Wells Fargo. The question is, since the revenue increase in your forecast is primarily FX-driven, we're curious about the components of the constant currency increase. Is this due to a better underlying revenue growth? Or are there specific expenses that are coming in better like content amortization?

I will take that one. Thanks, Steve. So as you saw on the letter, we increased our full year revenue guidance to $44.8 billion to $45.2 billion. That's up from the prior guide of $43.5 billion to $44.5 billion, so up about $1 billion at the midpoint of the range, and a tighter range. As you know, it primarily reflects the FX impact from the weakening dollar relative to most other currencies. But the good news is we're also seeing strength in our underlying business. We've got healthy member growth, and that even picked up nicely at the end of Q2, a bit more than we expected. And we think that will carry through with our strong back half slate. So we're reflecting that in our latest forecast. And we're also seeing nice momentum in ad sales. Still off a pretty small base, but good growth, and it's on pace to roughly double our revenue in the year, and it's a bit ahead of beginning of year expectations. So when we carry all that through to operating margin, our operating expenses are essentially unchanged, which is part of your question. So they're basically unchanged forecast to forecast. So we're largely flowing through the expected higher revenues to profit margins. So that's why our updated target full year reported margin is up 1 point from 29% to 30%, and that 50 basis point increase in FX neutral margin is really just that revenue lift from stronger membership growth in ads relative to prior forecast flowing through the margin.

Thank you, Spence. We'll take our next question from Barton Crockett of Rosenblatt Securities. Why is operating margin guidance for the full year only 30% after the upside in Q2 and a forecast of 31.5% for the third quarter? Is there a timing issue, FX issue?

Well, this is really mostly timing. So thanks, Barton. As a reminder, we primarily manage the full year margins, and we expect our content expenses will ramp in Q3 and Q4. We've got many of our biggest new and returning titles and live events in the back half of the year. Q4 is typically and generally almost always is a heavier film slate. I'm sure we'll talk about more of this on the call. We'll also be marketing to support that heavier slate, and we're continuing to aggressively build out our ad sales infrastructure and capabilities through the year. So all of that is to be expected. We can manage to, we will manage to those margins.

Great. Thanks, Spence. The next question comes from Tom Champion of Piper Sandler. How has your view of the consumer and the macro economy changed over the last 90 days?

Similar to last quarter, we're carefully watching consumer sentiment in the broader economy. But at this point, really nothing significant to note in the metrics and the indicators that we get directly through the business. Those are retention that remains stable and industry-leading. There have been no significant shifts in plan mix or planned take rate, and the price changes we've done since the last quarter have been in line with expectations. Engagement also remains healthy. So things all look stable from those indicators and big picture, entertainment in general, and Netflix specifically have been historically pretty resilient in tougher economic times. We also think that we are an incredible entertainment value, not only compared to traditional entertainment, but if you think about other streaming competitors, when we start at $7.99 in the United States and you think about all of the entertainment you get, we have a belief and expectation that the demand for not only entertainment, but for us specifically will remain strong.

Thanks, Greg. I think it's a nice follow-up to this question will be on advertising. So from Ben Swinburne of Morgan Stanley, can you share any data points around your upfront negotiations?

Yes. As we noted in the letter, our U.S. upfront, it's nearly complete. We've closed a large majority of deals with the major agencies. Those results have generally been in line or slightly better than our targets and consistent with our goal to roughly double the ads business this year. And what advertisers are excited about is growing scale, which is something we definitely hear. Also, a highly attentive and engaged audience. So bigger audience, but also an audience that's more engaged relative to our peers. The rollout of our own ad tech stack, which helps deliver a bunch of features and then our slate, which is generally amazing and includes a growing number of live events that advertisers are excited about.

Great. Follow-up question on advertising from Vikram of Baird. How have advertisers in the U.S. responded to the Netflix Ad Suite rollout since the April launch? What features and capabilities are attracting the most interest?

We've completed the rollout of our own ad tech stack, the Netflix ad suite, to all of our ad markets now. So we're fully on our own stack around the world at this point. That rollout was generally smooth across all countries. We see good performance metrics across all countries and the early results are in line with our expectations. Now we're in this phase of learning and improving quickly based on the fact that being live everywhere means that you get a bunch of feedback about what we can do better, which is great. As we mentioned before, the most immediate benefit from this rollout is just making it easier for advertisers to buy on Netflix. We hear that benefit from direct feedback talking to advertisers. They tell us that it's easier. We see it in our overall sales performance. We've seen an increased programmatic buying. So all of these are consistent with what we are expecting both qualitatively and from a metrics perspective. We're also, I guess, worth noting that we're going to roll out additional demand sources like Yahoo!, that will further open up the market for us. Long term, being on our own stack improves the speed of our execution to deliver this pretty significant roadmap of features that we have in front of us. It's things like improved targeting and measurement. There's also leveraging advertiser and third-party data sources, which we definitely hear demand for as well. And it will ultimately allow us to improve the ad experience for our members, which is critically important. So that means better ad personalization. So the ads that I see are increasingly different from the ads that, say, Ted would see, and they're more relevant for each of us, which is good for us as users and it's good for the brands. We're also going to be introducing interactivity in the second half of the year. So that's exciting. So that's all to say this is a pretty significant milestone for us, one we're super excited to get behind us because now we can shift into the steady release cycle where we're dropping new features all the time, both for advertisers and for members. And that's the development and release model that we have in other parts of the business. So it's fun to be able to get to that point.

Thanks, Greg. I'll move this along now to a set of questions around content as well as engagement. This one comes from Ben Swinburne of Morgan Stanley. 1% engagement growth year-over-year suggests engagement is down year-over-year on an average per member basis.

So total view hours did grow a bit in the first half '25, and that's despite a particularly back half-weighted slate. But to your point on engagement on a per member basis, we've mostly been focused for the last few years on measuring engagement on what we call an owner household basis. So this takes out the borrower effect, and we obviously think this is the best way to assess our engagement per member because it removes the tricky comparison impacts from paid sharing. So that metric, per owner household engagement has been relatively steady over the past 2.5 years. Throughout the rollout of paid sharing and amidst increasing competition for TV time as more viewing moves to streaming and gets this on-demand benefit. So we're glad to have held that normalized engagement level, but we clearly also want to increase it. And to that end, we're optimistic and expect that our engagement growth in the second half of this year will be better than in the first half given our strong second half slate.

Thanks, Greg. Great segue to Doug Anmuth's question from JPMorgan. The content in the back half of the year looks strong with Squid Game 3 already the third most popular non-English series ever, and Wednesday and Stranger Things releasing in the coming months. You often say that no single title drives more than 1% of total viewing. So how do you think about the business currently as being head boosted or head driven? And are you confident that both original and licensed content momentum can continue in 2026?

Thank you, Doug. Regarding your first question, we are definitely benefiting from the long-term shift from linear to streaming content, which has a natural growth pattern. However, we can speed up our growth with major hits. As you mentioned, even successful titles contribute around 1% to total viewing, so we need more than just occasional hits. It's really about consistently providing a variety of shows, films, and soon games, that our members love and expect. For instance, we had 44 shows nominated for Emmys this year, showcasing our quality at scale. We recently witnessed a significant return of Squid Game, and we're also excited about the upcoming returns of Wednesday and Stranger Things, along with a strong lineup of supporting titles like Eric Bana's Untamed, which premiered this week, and Leanne Morgan's new comedy next week. The second half of the year also features what might be our most highly anticipated movie slate ever, starting with Happy Gilmore 2 on the 25th, followed by a new Knives Out film, and exciting new projects from directors like Noah Baumbach, Guillermo del Toro, and Kathryn Bigelow that will continue into 2026. We are looking forward to films like The Rip from Ben Affleck and Matt Damon, Charlize Theron's action film Apex, Millie Bobby Brown in Enola Holmes 3—which was our biggest movie in 2023—and Greta Gerwig's Narnia. Additionally, fan favorites like Bridgerton, One Piece, and Avatar: The Last Airbender are all returning. We also have a new season of Beef, which won numerous awards and was a massive success for us, as well as new shows from around the world including Lupin from France, Berlin from Spain, and a new season of One Hundred Years of Solitude from Colombia. We're introducing exciting new content as well, such as Man on Fire, a reimagining of Little House on the Prairie, and a new project from the Duffer Brothers called The Boroughs. Internationally, we have titles like The Human Vapor from Japan, Operation Safed Sagar from India, and Can This Love Be Translated? from Korea, showcasing our commitment to popular content globally in 2026. Plus, we're bringing back unscripted shows like the reboot of Star Search and exploring The Doll Universe with Wonka's Golden Ticket, and we have some surprises planned for live events next year, including our NFL Christmas Day doubleheader. Overall, we are very enthusiastic about the second half of this year and optimistic that the momentum will carry into 2026.

Thank you, Ted. We'll take the next question from Rich Greenfield of LightShed Partners who asks, are you concerned by the stagnation in your viewing share domestically? I think Rich is probably referring to the Nielsen Gauge data. Do you need to spend more on programming or spend differently to materially move your viewing share higher?

Thanks, Rich. Our ongoing goal is to grow our market share over the long term. In recent years, we have successfully maintained our share while navigating an increasing number of TV-based streaming options, both free and paid, as well as the effects of paid sharing that Greg mentioned earlier. Additionally, our 2025 content slate is more concentrated in the latter half of the year compared to previous years. However, we expect to see continued growth as half of TV viewing shifts from traditional linear formats to streaming. We will achieve this by consistently improving our service. Since 2020, our content amortization has risen by over 50%, from below $11 billion to over $16 billion projected for this year. During that same period, we experienced increased spending alongside heightened engagement, revenue, profit, and profit margin. This illustrates our operational model. Our aim is to maintain healthy revenue growth while reinvesting in the business to enhance all aspects of the service. This encompasses increasing content spending and expanding our entertainment offerings, ultimately driving growth by adding value for our members while also boosting engagement, revenue, and profit globally.

Great. Thank you, Ted. I'll move to Alan Gould from Loop Capital next. Can you provide more information on the TF1 partnership? Why did you choose to add TF1 in France as opposed to other broadcasters as your first partner? Why is now the right time to create such a partnership? Should we anticipate similar partnerships in other countries?

Yes. Perhaps to start with the rationale for the partnership. You would think with that long list of amazing titles that Ted just rattled off, we would have enough to satisfy every person on the planet. But it turns out, we actually consistently hear from our members that they want more. They want more variety, more breadth of content. So the fundamental purpose for this TF1 partnership is all about that goal of expanding our entertainment offering. How do we enhance the value we deliver to members? We want to provide more content, more variety, more quality. So just as you've seen us do with licensing and production, this is just another mechanism to expand that offering. And in this case, it's specifically about highly relevant, local-for-local content in a country that has strong demand for that local content. This is an accelerated way to satisfy that need. Why now? Well, we've invested a lot in a bunch of enabling capabilities that are either required or highly leveraged by this deal. You can think live, ads, the new UI, among other things. And then why TF1 versus some other partner? Well, we know each other really well. We wanted our first partner to be in a big territory. We wanted to pick the leading local programmer. We wanted to be highly aligned in terms of the deal and the shape of the partnership and the values that we thought we could generate mutually by working together for our customers. And we both look at this as an opportunity to learn, to figure out how do we scale the local content that TF1 is producing to more customers in France. So we're looking forward to seeing what consumers think. You never really know until you get out there and get the real reactions. And then obviously, we'll factor that into our plans going forward.

Thanks, Greg. From Robert Fishman of MoffettNathanson. With reports suggesting Apple is now in the driver's seat for F1 rights, plus UFC and MLB still looking for new deals and the NFL may be looking to come to market a year earlier, can you share updated thoughts on how you are approaching sports rights for Netflix and where you draw the line on something that can move the needle?

Well, thanks for that, Robert. Remember, sports are a subcomponent of our live strategy, but our live strategy goes beyond sports alone. Our live strategy and our sports strategy are unchanged. We remain focused on ownable, big breakthrough events, because our audiences really love them. Anything we chase in the event space or in the sports space has got to make economic sense as well. We bring a lot to the table, and the deals that we make ought to reflect that. So live is a relatively small part of the total content spend, and we've got about 200 billion view hours. So it's a pretty small part of view hours as well right now. But that being said, not all view hours are equal. And what we've seen with live is it has its outsized positive impacts around conversation around acquisition, and we suspect around retention. And so right now, we're very excited about where we sit. We're very excited with the existing strategy. We're excited about the Canelo vs. Crawford fight in September and the SAG Awards and our weekly WWE matches, and the NFL, of course, which is a great property, and we're happy to have Christmas Day double header, which includes Dallas versus Washington and Detroit versus Minnesota. So today, our live events have all primarily been in the U.S., keep in mind. So over time, we're going to continue to invest and grow our live capabilities for events around the world in the years ahead. So we're excited, but the strategy is unchanged.

Thanks, Ted. A good follow-up question on that one from Steve Cahall of Wells Fargo. What investments have you made to increase your capabilities in producing live events? What have you been able to do in-house in 2025 that you couldn't do last year?

Thank you, Steve. When we began our journey into original scripted programming, we had no production capabilities. In the first three years, all our shows were produced by third parties. After three years, we produced Stranger Things in-house. Currently, we still collaborate with various production companies like Universal, 20th Television, Paramount, Lionsgate, and Warner Television. There is ample infrastructure available for TV production, which also applies to live events and sports. As we expand our efforts, we might bring some production in-house, and we have already done so with a few projects. However, we are equally likely to continue partnering with established production companies to ensure our productions feel uniquely Netflix. It's important to see the blend of partnerships and in-house production as a way to scale rather than a deficiency in our capabilities. For instance, CBS has been an excellent partner in producing NFL games, and we look forward to collaborating with them again this Christmas.

Maybe take this opportunity just to add some commentary on the general capability we've been dealing with live. When we start something new, we pretty much expect that we're not going to be brilliant at the beginning. But we don't let that stop us from kicking off initiatives that we believe have a strong strategic rationale, even though now we need to develop that capability. And of course, our job is to get out there and learn by doing and get world class as quickly as we possibly can. And if you look at our current capabilities around live, we are in just a completely different place today compared to when we first started. As a good example, just last Friday, we had our first concurrent pair of live events. We had Taylor vs. Serrano, globally delivered alongside WWE Smack Down, which was delivered ex U.S., both events at scale and delivered with extremely high quality. So it's great progress we've seen and we've got a great roadmap of features ahead of us to continue to enhance those experiences for folks.

Thank you both. Last question on the content side or the topic of content comes from Ben Swinburne of Morgan Stanley. What are the learnings from the success of KPop Demon Hunters? More animated musicals with fictional bands, perhaps?

Ben, that is a question from a man who probably has that movie playing on repeat in his home, if I'm guessing correctly. KPop Demon Hunters is a phenomenal success out of the gate. One of the things that I'm excited, really proud of the team over is original animation, not sequel, not live-action remake original animation feature is very tough and has been struggling for years. And I think the fact that our biggest hits now, Leo, Sea Beast and now KPop Demon Hunters, are original animation. So we're super thrilled about that. The mix of music and pop culture, getting it right matters, get the storytelling matters, the innovation and animation itself matters, and the fact that people are in love with this film and in love with the music from this film that will keep it going for a long time. So we’re really thrilled. And now the next beat is where does it go from here? So we put in the letter how just how successful the music has been and continues to be, and we think that will drive fandom for this fictional KPop bands that we have. But more importantly, for the on Golden and for the song Soda Pop, these are enormous hits and they all came from a film that's available only on Netflix. So we're really excited that we can pierce the culture with original animated features considering that folks have been poking us on it.

Let's do it again later in the year with In Your Dreams. Right, Ted?

Absolutely. In Your Dreams is another very funny one and also completely original.

Great. I'll move us on now to a few questions on plans as well as product. So from Michael Morris of Guggenheim. He asks, Netflix continues to broaden content genres, notably with live sports and the recently announced TF1 partnership. Is there a path to additional tiers of service based on types of content available? Or will Netflix always make all content available at the ad-free/ad-supported price points?

I've learned to never say never. So I would say we remain open to evolving our consumer-facing model. I think we've got a few principles, important principles that we're carrying with us that I don't see changing significantly. One is we want to provide members choice, right? So how do we have a different set of plans at different price points with different features? It allows folks to opt into what is the right Netflix for them. Also, how do we provide good accessibility to new members around the world we want to grow, and that means making sure that we've got accessible price points. And then finally, the plans we offer have to ensure that we're having reasonable returns to the business based on the entertainment value that we delivered, and we're hoping to grow those. And so those returns would grow as well. And obviously, the reason to do that is we can continue to reinvest in adding more entertainment and building a better experience. And maybe one other thought, too, is there's a component of complexity and choice stack that we have to consider and how we think about our offering is structured. So having said all that though, I think we believe that the bundle is a great value for members. It allows members around the world to access a wide range of entertainment in a very easy way, at a very reasonable price. So I would expect that, that will remain an important feature of our offering for the foreseeable future.

A lot of value and simplicity, yes.

Yes. From Rich Greenfield, the Lightshed partners, help us understand why your new UI/UX is so important as you expand live content. Beyond live, can you provide some color on what metrics have improved since the launch of the new UI such as speed of users finding a title and change in failed sessions?

Yes. As we said previously, it's really hard for a new UI to immediately compete and be better than the UI that we've had for the past 10 years that has been iteratively evolved and improved. But now that we've actually rolled out this new UI to the first large wave of TV devices, we're actually seeing performance that's better than what we saw in our prelaunch testing. And to some degree, that's expected because we made some improvements based on the results of that testing phase. So it's exciting to see that those delivered actually better results. But the rate of that change actually gives us increased confidence that this new experience will drive better performance by the variety of metrics we look at, some of which include the ones that Rich is mentioning in relatively short order. And then maybe just a point on why do we build this and launch this new experience in the first place? Why was it so important? Bluntly, the previous experience was designed for the Netflix of 10 years ago, and the business has evolved considerably since then. We got a wider breadth of entertainment options. We got TV and film, more of those, of course, from around the world, but now also games and live events. And if you think about the discovery experience that's best suited for these new content types, it's inherently different. Helping our members understand that there's a really good reason for them to launch Netflix and tune in at 7:00 p.m. on a Friday night versus just showing up whenever they were free and wanted to be entertained. That's a totally different job, and we really need a different user interface to do that job well. Add to that, we saw the opportunity to leverage newer technologies like real-time recommendations that respond dynamically to what you need from us in that specific moment. So the Netflix you get on a Tuesday night is different from the Netflix you get on a Sunday afternoon. But all of those rationales together and what we're seeing in terms of the performance thus far, we're very confident that we've got a much better platform in this new user experience to build from to continue to improve, and that will help us meet the needs of the business over the years to come.

Thanks, Greg. The next question comes from Steve Cahall of Wells Fargo. YouTube is the only streamer that exceeds Netflix in terms of U.S. share of TV time. Do you see an opportunity to bring notable YouTube creators and their content exclusively to Netflix? How big could this opportunity be?

Thank you, Steve. We aim to partner with the most talented creators globally, regardless of their location. Some are based in Hollywood, while others are in Korea, India, or exclusively create for social media platforms, many of whom are still undiscovered. For those exceptional creators, we provide outstanding distribution, attractive monetization options, excellent discovery through our user interface, and an eager audience ready for entertainment. Steve, I recently listened to your thoughts on our business model related to this topic, and we share your perspective. Collaborating with a diverse range of content creators is advantageous for us. As you mentioned, not everything on YouTube translates to Netflix, and we completely agree. However, some YouTube creators, like Ms. Rachel, are an excellent fit for us. As noted in the engagement report, she garnered 53 million views in the first half of 2025 on Netflix, indicating her compatibility with our platform. We're also enthusiastic about working with the Sidemen, Pop the Balloon, and various video podcasters who create outstanding content and seek innovative ways to connect with audiences.

And maybe broadening this out for a second and taking that question to look at sort of all of the competitors that we face for share of TV time. We've always said that the market for entertainment is very large, and we face competition from all kinds of directions. So whether it's linear, streamers, video games, or social media, it's also a very dynamic competitive market as we and all of our competitors seek to provide better and better options for consumers. And one of those changes, one of those vectors of dynamicism has been that steady, inevitable shift to streaming and on-demand as more services move to deliver their content in a way that we all know consumers want. That creates increasing competitive pressure for us that we've got to respond to. We also see free services as a form of strong competition. Free is very powerful from a consumer perspective, so it's not surprising that some free services are growing in engagement. But I think Ted said it well earlier in the call, not all hours are created equal. And we have a different profit model from other services, a strong profit model. So we're going to compete to win more moments of truth for sure, but especially compete to win those most profitable moments. And back to your specific question, it's worth remembering there's about 80% of total TV view share that neither Netflix nor YouTube are winning right now. We think that represents a huge opportunity for which we are competing aggressively and we aim to grow our share.

The vast majority of our money and attention is focused on that 80%.

Thank you. Next question from Justin Patterson of KeyBanc. Could you please talk about your generative AI initiatives? Where do you think GenAI will be most impactful over time, revenue or expense efficiency?

Well, let me start with GenAI. We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper. They're AI-powered creator tools. So this is real people doing real work with better tools. Our creators are already seeing the benefits in production through pre-visualization and shot planning work and certainly, visual effects. It used to be that only big budget projects would have access to advanced visual effects like de-aging. Remember, last quarter, we talked about Pedro Paramo. That's just no longer the case. And this year, we had El Eternaut. It's a very big hit show for us from Argentina. And in that production, we leveraged virtual production and AI-powered VFX. And there was a shot in the show that the creators wanted to show building content collapsing in Buenos Aires. So our Eyeline team partnered with their creative team. Using AI powered tools, they were able to achieve an amazing result with remarkable speed; in fact, that VFX sequence was completed 10 times faster than it could have been completed with traditional VFX tools and workflows. And also, the cost of it just wouldn't have been feasible for a show on that budget. So that sequence actually is the very first GenAI final footage to appear on screen in a Netflix original series or film. So the creators were thrilled with the result. We were thrilled with the result. And more importantly, the audience was thrilled with the result. So I think these tools are helping creators expand the possibilities of storytelling on screen, and that is endlessly exciting.

To touch on a few other areas, we see significant potential in enhancing the member experience using new generative technologies. For two decades, we've focused on personalization and recommendations, yet we believe there is still considerable opportunity to improve by applying newer generative techniques. We are currently piloting a conversational experience that enables our members to engage in natural language discussions with our user interface, allowing them to, for example, request a dark psychological thriller from the '80s and receive appropriate results. This iterative process offers a level of interaction that was impossible with our previous experiences, which is truly exciting. All our efforts in this area will amplify the large investment we are making in content. A better experience means every dollar we spend translates into greater value for our members by connecting them with titles they will enjoy. Advertising is another promising area. While creating brand-forward advertising spots can be challenging within the creative landscape of our titles, we believe generative techniques can help reduce these challenges over time, allowing us to create more such spots. Overall, we see numerous opportunities where our data and scale give us a distinct advantage to leverage these generative techniques, ultimately providing more benefits for our members and our creative community.

If you don't mind me coming back for 1 second, I just rolled off Eyeline as if everyone knows what Eyeline is. I probably should clarify that Eyeline is our production innovation group inside of our VFX house at Scanline, and they're doing a lot of this work with our creators. So I just realized that just threw that out there as if everyone knew.

Thanks for clarifying, Ted. Let's see. Our next question comes from Brian Pitz of BMO Capital Markets. With your evolving gaming ambitions, including partnerships with Grand Theft Auto and the recently announced Roblox agreement, can you talk to near-term monetization opportunities within gaming?

We are evaluating the immediate monetization potential in gaming in much the same way we have approached other new content areas like scripted shows and films. By enhancing the value of our offerings, we can boost user acquisition, retention, and willingness to pay, which fundamentally supports our business. While we've noticed positive effects from members engaging with games on our service, these are modest in relation to our overall business size. However, we already have some evidence of success and plan to increase our investment in this area, although it currently represents a small portion of our total content investment. We aim to proceed cautiously and ensure that we can effectively translate our investment into value for our users before committing further. We've made good strides with licensed titles like GTA and our own developed games such as Squid Game: Unleashed. We'll be expanding in both of these categories, as well as introducing new interactive experiences that we believe we are uniquely positioned to offer. We are excited to launch these developments over the coming year. Additionally, we are open to evolving our monetization strategy, but we need to achieve greater scale first before this becomes a significant focus. It's also important to note that the total addressable market for gaming is extremely large, and we remain confident in our strategic opportunities and are eager to make further advancements.

Thanks, Greg. We'll take our last question from Jessica Reif Ehrlich of Bank of America Securities. Given your healthy balance sheet and what appears to be a coming wave of M&A in media globally, are there certain types of assets that would strengthen your moat, i.e., what is your view of owning successful IP or studio assets as they come to market?

I'll take that one, Spencer. Thanks, Jessica. Well, look, we agree. Continued consolidation of studio and network assets is likely, but at least with respect to consolidation within legacy media, we don't think it materially changes the competitive landscape. As you also know, we've historically been more builders than buyers, and we continue to see big runway for growth without fundamentally changing that playbook. You heard a lot of that today. So we look at a lot of things. We apply a framework or lens to those opportunities when we look at, is it a big opportunity? Does it strengthen our entertainment offering? Does it strengthen our capabilities? Does it accelerate our strategy? And we look at all of that relative to the opportunity cost of distraction or other alternatives. We've been pretty clear in the past that we also have no interest in owning legacy media networks. So that also kind of reduces the funnel for us. But in general, we believe we can and will be choosy. We've got a great business. We're predominantly focused on growing that organically, investing aggressively and responsibly into that growth and returning excess cash to shareholders through share repurchase. And I think you'll see us continue on that path.

Great. Thanks, Spence. And that will wrap up our Q2 earnings call. So we thank you all for taking the time to join us, and we look forward to seeing you all next quarter. Thank you.