Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company's primary source of revenues is 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. The Company is the principal in all its relationships where partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”), provide access to the service as the Company retains control over service delivery to its members. Typically, payments made to the partners, such as for marketing, are expensed. However, if there is no distinct service provided in exchange for the payments made to the partners or if the price that the member pays is established by the partners and there is no standalone price for the Netflix service (for instance, in a bundle), these payments are recognized as a reduction of revenues.

The following tables summarize streaming revenue, paid net membership additions, and paid memberships at end of period by region for the three months ended March 31, 2022 and 2021, respectively:

United States and Canada (UCAN)

	As of/ Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Revenues	$	3,350,424	$	3,170,972
Paid net membership additions (losses)	(636)		448
Paid memberships at end of period (1)	74,579		74,384

Europe, Middle East, and Africa (EMEA)

	As of/ Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Revenues	$	2,561,831	$	2,343,674
Paid net membership additions (losses)	(303)		1,810
Paid memberships at end of period (1)	73,733		68,508

Latin America (LATAM)

	As of/ Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Revenues	$	998,948	$	836,647
Paid net membership additions (losses)	(351)		357
Paid memberships at end of period (1)	39,610		37,894

Asia-Pacific (APAC)

	As of/ Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Revenues	$	916,754	$	762,414
Paid net membership additions	1,087		1,361
Paid memberships at end of period (1)	33,719		26,853

(1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellations, as a result of a failed method of payment, become effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.

Total U.S. revenues, inclusive of DVD revenues not reported in the tables above, were $3.1 billion and $3.0 billion for the three months ended March 31, 2022 and 2021, respectively. DVD revenues were $40 million and $50 million for the three months ended March 31, 2022 and 2021, respectively.

Deferred revenue consists of membership fees billed that have not been recognized, as well as gift cards and other prepaid memberships that have not been fully redeemed. As of March 31, 2022, total deferred revenue was $1,239 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. The $30 million increase in deferred revenue as compared to the balance of $1,209 million as of December 31, 2021 is a result of the increase in average monthly revenue per paying member and acquisition-related deferred revenue.