Revenue Recognition

3 Months Ended

Mar. 31, 2023

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 revenues, paid net membership additions, and ending paid memberships by region for the three months ended March 31, 2023 and March 31, 2022, respectively:

United States and Canada (UCAN)

	As of/ Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Revenues	$	3,608,645	$	3,350,424
Paid net membership additions (losses)	102		(636)
Paid memberships at end of period (1)	74,398		74,579

Europe, Middle East, and Africa (EMEA)

	As of/ Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Revenues	$	2,517,641	$	2,561,831
Paid net membership additions (losses)	644		(303)
Paid memberships at end of period (1)	77,373		73,733

Latin America (LATAM)

	As of/ Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Revenues	$	1,070,192	$	998,948
Paid net membership additions (losses)	(450)		(351)
Paid memberships at end of period (1)	41,249		39,610

Asia-Pacific (APAC)

	As of/ Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Revenues	$	933,523	$	916,754
Paid net membership additions (losses)	1,455		1,087
Paid memberships at end of period (1)	39,478		33,719

(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. Certain members have the option to add extra member sub accounts. These extra member sub accounts are not included in paid memberships. 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 $3.3 billion and $3.1 billion for the three months ended March 31, 2023 and 2022, respectively. DVD revenues were $32 million and $40 million for the three months ended March 31, 2023 and 2022, 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, 2023, total deferred revenue was $1,262 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. Total deferred revenue as of March 31, 2023 remained relatively flat as compared to the balance of $1,265 million as of December 31, 2022.