Netflix Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Swinburne - Morgan Stanley - Analyst : No matter how well you do, we always want more, as I'm sure you know. So you talk a lot about trying to sustain double digit topline for kind of as long as you can. What's the opportunity still ahead? I mean 300 million members, $40 billion in revenue. Last year you said we're just getting started. I know it's a year later, but talk about sort of the addressable market you still see ahead for the business.

Question: Ben Swinburne - Morgan Stanley - Analyst : You mentioned earlier of the competition, and I wanted to ask you in particular about YouTube, and I know you know, between the two of you, it's still a minority of viewership, so there's a lot of room for both services to grow. It's certainly not a zero-sum game, but it does seem like they are increasingly maybe one of your, if not your primary competitor for video content engagement. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:50PM, NFLX.OQ - Netflix Inc at Morgan Stanley Technology, Media & Telecom Conference How do you guys think about their product market fit and sort of what they're offering consumers, what you guys do, where there is and isn't overlap? Talk about YouTube as a long-term competitor in your mind.

Question: Ben Swinburne - Morgan Stanley - Analyst : That's a good point on the sort of creator proposition that you make. Why don't we talk a little bit about content spending and content investment. When I think about your stock and the business, I was focused on kind of trying to assess return on content spending and a couple of numbers that I find interesting are you for the last five years you've grown revenues on a CAGR basis in kind of a low to mid-teens, but your cash content spend is growing at about 3%. So by definition, Bela and the team are really driving. You know, they're getting more dollars out of every dollar they put into the content. So what allows you to do that because the market is competitive, the business is getting bigger, and yet the return on content spending seems to be really improving.

Question: Ben Swinburne - Morgan Stanley - Analyst : Where is the incremental dollar these days going? I know you guys are focused on a lot of different parts of the sort of different genres, different languages. Is there a particular area that's maybe in maintenance mode versus where you're really leaning in right now?

Question: Ben Swinburne - Morgan Stanley - Analyst : Yeah, I mentioned the 3% CAGR. This year, I think you guys are or at least the market's expecting kind of high single digit growth, kind of, it's been about $18 billion. How do you guys -- put that together from a budgeting and kind of investment perspective, what helps you arrive at the right spending level for a given year?

Question: Ben Swinburne - Morgan Stanley - Analyst : It's been really interesting for us to get a look at all the engagement data that you guys now put on every six months. I think the most recent was -- maybe last week came out for the second half of last year. I mean one of the things that I always try to highlight to folks is just the level of consumption of non-English language programming. And I guess I'd love to hear spent how kind of Bela has set up the global organization to scale up production around the world at this level, like that must be a massive exercise.

Question: Ben Swinburne - Morgan Stanley - Analyst : Got it. One more topic on the content front, Spence. So I wanted to talk about sports. It's been a big topic this week at the conference across a lot of speakers. I'll tease you a little bit. Whenever we ask you about sports, you guys say, no, we have a live event strategy. It's not sports strategy. It's a live event. So I want to ask you to --

Question: Ben Swinburne - Morgan Stanley - Analyst : The question is what's the difference? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:50PM, NFLX.OQ - Netflix Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Ben Swinburne - Morgan Stanley - Analyst : I'm glad you brought that up. So in your shareholder letter, you guys were pretty explicit that exactly that. Large sport, regular season rights don't make sense for you. There was an interview that Bela did recently, where she certainly sounded like she expressed some interest in NFL rights, Sunday afternoon NFL rights, can you kind of reconcile those two comments for the audience, please?

Question: Ben Swinburne - Morgan Stanley - Analyst : You won't be surprised here. Mark Shapiro was on stage here on Monday, and very excited about how WWE is doing on Netflix. What's -- anything interesting from your perspective? I know we're maybe a couple of months in, any learnings or how is it going relative to what you guys thought?

Question: Ben Swinburne - Morgan Stanley - Analyst : Okay. All right, let's shift gears to advertising. Obviously, a big focus in the market today. What are you guys doing right now to try to get this to the next level? You've talked about crawl-walk-run, what's the work happening in 2025 at Netflix to sort of take advertisers to the next level?

Question: Ben Swinburne - Morgan Stanley - Analyst : When you go from -- you've been operating, I think, largely with Xandr historically as your partner to your own first-party ad tech, and you've done it in Canada, was there any -- is it one or two things specifically that's really unlocking advertiser demand and allowing you to sell through more of your inventory? Is it just basically the laundry list of things you just kind of walked through?

Question: Ben Swinburne - Morgan Stanley - Analyst : Last question on advertising. You talked about trying to double the business this year. It's coming off a low base. Is there a way for us to think about your kind of long-term ambitions? I don't know if it's an ARM level or a percent of revenue or sort of how big the opportunity is for you guys if you look out over the next, say, five years?

Question: Ben Swinburne - Morgan Stanley - Analyst : Certainly, a contributor to growth.

Question: Ben Swinburne - Morgan Stanley - Analyst : Sure. Okay. Let's talk about product. You mentioned at the top, password sharing and your paid sharing initiatives. I mean net ads last year were well beyond where I think most of you were expecting, especially because we thought you had a tough compare to 2023. You guys often talk about having operationalized page sort of in the business. What does that mean? And is this still benefiting growth in membership today. Here we are, I don't know, 18 months since you started in earnest implementing password sharing, paid sharing?

Question: Ben Swinburne - Morgan Stanley - Analyst : Yes. How about AI? How do you see that from here as an opportunity? I know you guys have been using machine learning for a very long time. Everyone is very envious in the industry of your recommendation engine. But I would imagine internally, you think AI could be a pretty big opportunity to further improve the business.

Question: Ben Swinburne - Morgan Stanley - Analyst : Yeah. I just want to -- I want to make sure we do touch on games briefly. A couple of years into this, investment. I think you guys kept it relatively modest, but you've also brought in some new leadership into that Netflix Games division. What -- if there's a new strategy, what is the strategy? And sort of how do you assess your position and progress so far?

Question: Ben Swinburne - Morgan Stanley - Analyst : That's helpful. We're getting -- we're going to run out of time soon. I did want to ask you one more question. You probably don't get a lot in this context, which is really around the culture memo at Netflix. It gets a lot of attention in the press. I know it's really important internally and you guys rolled out a new one last summer. I don't -- to talk about why this matters at Netflix, and what were the changes that you guys implemented last year?

Question: Ben Swinburne - Morgan Stanley - Analyst : Got it. Well, Spence, I really enjoyed the conversation. Thank you so much for coming.