Option Grant and Exercise Terms
Table of Contents
Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations
This section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019
items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2020.
Results of Operations
The following represents our consolidated performance highlights:
As of Year Ended December 31,
2021
2020
2019
Change
2021 vs. 2020
(in thousands, except revenue per membership and percentages)
Financial Results:
Streaming revenues
$
DVD revenues
Total revenues
Global Streaming Memberships:
$
29,515,496
182,348
29,697,844
$
$
24,756,675
239,381
24,996,056
$
$
19,859,230
297,217
20,156,447
19 %
(24) %
19 %
Paid net membership additions
18,181
36,573
27,831
(50) %
Paid memberships at end of period
221,844
203,663
167,090
9 %
Average paying memberships
210,784
189,083
152,984
11 %
Average monthly revenue per paying membership
$
11.67
$
10.91
$
10.82
7 %
Operating income
Operating margin
6,194,509
21 %
4,585,289
$
2,604,254
35 %
18 %
13%
Consolidated revenues for the year ended December 31, 2021 increased 19% as compared to the year ended December 31, 2020, due to the 11% growth
in average paying memberships and a 7% increase in average monthly revenue per paying membership. The increase in average monthly revenue per paying
membership resulted from our price changes and favorable fluctuations in foreign exchange rates. Paid net membership additions for the year ended
December 31, 2021 decreased 50% as compared to the year ended December 31, 2020. Our service continues to grow globally, with over 90% of the paid net
membership additions for the year ended December 31, 2021 coming from outside the United States and Canada (UCAN) region.
The increase in operating margin is due primarily to content amortization growing at a slower rate as compared to the 19% increase in revenues in part as
a result of delays in content releases due to the COVID-19 pandemic.
The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that
we may not be able to accurately predict. See Item 1A: "Risk Factors" section set forth in this Annual Report on Form 10-K for additional details. While most
of our productions have resumed, certain of our productions continue to experience disruption, as do the productions of our third-party content suppliers. Other
partners have similarly had their operations disrupted, including those partners that we use for our operations as well as development, production and
post-production of content. Production disruptions and new health and safety protocols and requirements can result in additional costs including additional pay
to cast and crew and use of PPE and testing. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions
that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our
employees, customers, partners and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business,
including the effects on our members, suppliers or vendors, or on our financial results.
Streaming Revenues
We derive revenues from monthly membership fees for services related to streaming content to our members. We offer a variety of streaming
membership plans, the price of which varies by country and the features of the plan. As of December 31,
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