NFLX · 10-Q · 2026Q3 · Full report

Interest Rate Exposure

NETFLIX INC · 2026-10-21 · Importance 37 · Surprise 6 · No source text

Netflix uses interest-rate swap agreements to hedge changes in the fair value of fixed-rate debt attributable to benchmark interest-rate movements, although the hedges do not eliminate all exposure. At September 30, 2026, the company had $2.4 billion of interest-rate fair-value hedge notional amounts and approximately $2.2 billion of senior notes designated as hedged items. The swaps pay floating rates based on SOFR, effectively converting designated fixed-rate debt to floating-rate debt. Interest-rate hedging produced a $145.2 million offset to interest expense for the nine months ended September 30, 2026.

Key facts

• As of September 30, 2026, the carrying amount of the Company’s Senior Notes designated as hedged items in fair value hedges of interest rate risk was approximately $2.2 billion. source
• For the nine months ended September 30, 2026, NETFLIX INC reported interest expense of $622,463 thousand versus $542,115 thousand in the nine months ended September 30, 2025 (increase of $80,348 thousand), including approximately $85 million recognized in connection with the termination of financing arrangements for the WBD transaction. source
• The applicable margin for Alternate Base Rate loans under the Revolving Credit Agreement ranges from 0.00% to 0.25%, and for Adjusted Term SOFR Rate loans ranges from 0.75% to 1.25%, each based on the Company’s credit ratings. source
• For the three months ended September 30, 2026, NETFLIX INC reported interest expense of $184,701 thousand versus $175,294 thousand in Q3 2025 (increase of $9,407 thousand). source
• The Company recorded interest expense for the three months ended September 30, 2026 of $(184,701) (in thousands). source

Impact estimates