Good afternoon and welcome to the Netflix Q2 2026 Earnings Interview. I'm Spencer Wong, VP of Finance and Capital Markets. Joining me today are co-CEOs Ted Sarandos and Greg Peters and CFO Spence Newman. As a reminder, we will be making forward-looking statements and actual results may vary. We'll now take questions submitted by the analyst community. We'll begin with a question on our guidance and our business outlook. And this question comes from Steve Cahall of Wells Fargo. What is the main driver of FX-neutral revenue growth slowing from 12% year-over-year in 2Q to 11% year-over-year as the guidance for the third quarter suggests? Spence, do you want to take that?

Yeah, sure, sure. Thanks, Steve. So, look, we don't manage the business on a quarter-to-quarter basis. Our goal is to sustain healthy revenue and profit growth. We talk about that in our letter every quarter. we're guiding, as you say, to 12% revenue growth in Q3 reported, 11% FX neutral. The Q3 revenue drivers are very similar to Q2. It's primarily growth in our subscription revenue from increases in memberships and pricing and higher ads revenue. We continue to see healthy acquisition and retention trends on the membership side, and our recent price adjustments are going well on the pricing side. Now, recall there is a little bit of quarter-to-quarter choppiness in growth because last year was more back half weighted so that may be a little bit of what you see in the deceleration but honestly it's uh it's not uh what we managed to we managed to the full year um and halfway through the year we're making strong progress against our goals and we're tracking to our financial plan for 2026. we expect to deliver another strong year with as we saw as you see in the guide 13 to 14 percent top line growth for the full year that's roughly 12 fx neutral We're about $6 billion of incremental revenue year over year. And by the way, when we finish 2026, it's worth saying also that in many ways, we're still just getting started as a company. We're entertaining an audience approaching a billion people with still lots of room to grow into our addressable market on every measure. We're under 45% penetrated into addressable households around the world. It's probably 800 million addressable households. We're capturing, you know, we think just 7% of addressable revenue market. It's about $670 billion of addressable revenue in the countries and categories in which we operate today. And we estimate that we're only about 5% of TV view share globally. So we're delivering on our 2026 plan, and we believe we've got lots and lots of runway of solid growth ahead of us.

Thanks, Spence, for that thorough answer. I'll now move us along to the topic of engagement, where we do have several questions. This first one is from Rob Sanderson of Loop Capital Markets. His question is, management has stated that engagement quality is improving even as reported viewing hours per member have softened. Can you help investors understand what internal metrics provide confidence and how these translate into lower churn, pricing power, higher ads monetization, et cetera? At what point would slow growth in total viewing hours become a concern?

I'll take this one and unpack it a bit since I know that there's plenty of interest in this topic. Start by saying there is not a linear relationship between view hours and revenue and profit because all hours are not created equal. All hours don't provide the same kind of value to the business. And a really great example of this is live programming. So live events do a lot of lifting for us for acquisition. They're good for monetization. They drive ad revenue fandom they're also a promotional platform but they do not yield typically as many raw view hours so live we expect uh will be five percent of our content budget this year but we think that will only be one percent of view hours having said that you know six out of top ten new member sign up days over the past five years have come from live events and if you compare that to another content category, take animation series, kids, family TV, that's also about 5% of our content spends, the same amount of spend, but it's going to drive, we expect 8% of view hours. So same spend and 8x the raw view hours. So you can see the differences there, even though because as, you know, indicated by the amount that we're investing in both those categories being the same, we think they're doing the same value for the business. So we're constantly looking to improve across every dimension of engagement. We look at these as three dimensions, quality, variety, quantity, because they taken collectively drive acquisition, they drive retention, they drive the value that our consumers and our advertising partners ascribe to our service. We described in the last few earning calls the progress we've made on quality over the years. We're not going to go into the details of that quality metrics because frankly, it's taken years for us to develop it and vet it and assess it and improve it. And we think that those details are a competitive advantage. We'll also continue to expand the variety of our entertainment offering. You see us launch new types of content like live, like video podcasts, cloud TV games. Those are all doing things, different things in our portfolio to support different needs from our members. And then on quantity, a few hours grew 2% in the first half of 2026. That's an incremental 1.5 billion hours relative to the same period last year. It's a slight acceleration compared to 1.5% growth in 2025. And just to be very clear, like all those other dimensions, we remain focused on continuing to grow that number. And better understanding how we are doing at delivering member value, member love is critical to our business. We get it. We geek out on improving that understanding, operationalizing the understanding. And with regard to engagement, when I started about 20 years ago, we had one number to describe engagement, hours, just flat hours, no waiting, no adjustments. And very similar to how we've evolved other metrics in the business since then, we've gone through about a dozen major iterations of our understanding that we get more and more sophisticated because we know ultimately it's combined quality, variety, and quantity of engagement that translates into satisfaction and value for members. And that drives the strong business outcomes we see right now. Industry-leading retention, we see increased willingness to pay, strong advertiser demand, and those ultimately drive the top-level metrics for our business, revenue, and operating profit, which are really the ultimate signs of our health.

I have this visual of you geeking out, Craig.

It's hard to see Spencer geeking out, but i can see us geeking out those are those are 20 years of debates and and walkiness uh well let me geek out on the next question uh which comes from steve kahal of wells fargo uh his question is amortization expense for content growth is accelerating in 2026 how is this late performing and what metrics are are we watching to see how this growth in content drives, increased member value, how do we think about the expense acceleration converting into revenue acceleration?

Let me take that, Steve. Look, I think when it comes to programming spend, there are three really important takeaways. First, to remember is that the vast majority of our programming spend goes into the core TV series and film, where we have a really strong track record more than a decade of translating those investments into value for our members and returns for the business uh i'm going to come back to that core in just a second but the second one is that we're really disciplined investors so there isn't some hyper acceleration of content investment we grow the content spend slower than revenue while we're continuing to invest in a huge addressable market so um we're forecasting content expense up about 10 this year It's a little higher than the 8% we averaged over the last five years and below the 14% that we averaged over the past decade. The third thing we want you to remember here is that when we expand into new entertainment offerings, new initiatives, we do it gradually. We do it where we believe we can add more value for our members, and we do it where we believe we have the right to win. And then we look for the positive signals before we invest at material scale. This is our MO. It's been our MO for some time. you ask how the slate's performing um there's a lot to be happy with in q2 i will find you was our biggest launch of original series this year uh swapped is on track to become the second biggest original animated film right behind k-pop demon hunters which is exciting uh speaking of k-pop we have k-dramas like teach you a lesson which is on track to become the second most watched south korea show ever globally and it's on track to be our biggest series in south korea of all time um there's a show called the polygamist you probably is not on your radar maybe steve uh but it's out of a mia it's another great example of the understand of our understanding of the local markets and the local regions the polygamist was a popular novel from zimbabwe more than 10 years ago uh from an author named uh sue niati and the teams uh adapted that into a soapy series for south africa where it's now a huge hit and is traveling all over the region and all over the world uh in latin america we've got a a big season that just came back for rosario tieres uh this was a show that started its life as a license show from tv azteca in mexico after three successful seasons we picked it up and produced the original season four season five and just screened that season six so you're seeing the slate perform around the world uh which is way in a real differentiated part of our business um now with that said with the core we're also really pleased with with the investment so far in our live programming um it plays a really important role as greg mentioned earlier driving acquisition accelerating ad revenue uh fueling conversation uh helping us to launch new shows um it's helped us build our and it's also helping us to understand what are the benefits of live over the over the entire catalog so you know we're ramping up our live event slate. You saw the Kevin Hart roast in Q2, the Major League Baseball Home Run Derby earlier this week. What was really fun at the Derby, we produced an original and exclusive Hot One special that we shot on a baseball field to promote Will Ferrell's new series, The Hawk, which just launched today, actually. And I think it's a cool example of uh the intersection between our core you know that core series the hawk uh of our expansion of the new exclusive creator content with hot ones with sean evans is a best in class creator we're thrilled to be in business together plus live sports all coming together on a baseball field and on netflix around the world the result there is a highly attractive scalable return on content investment and it ladders up to healthy business metrics like greg just detailed and our strong growth in revenue dollar profit and profit margin thanks ted our next question on engagement comes from david joyce of seaport research partners the question is attention is being

raised that your second season viewing of series is dropping and therefore affecting engagement growth how would you address this are you going to revert to releasing one episode at a time or making longer seasons with more episodes or managing the production process so there is less time between seasons? Ted, you want to take that?

Yeah, thanks for asking, David. I really appreciate the question because in aggregate, we are not seeing any material change in our second season viewing compared to season ones. Our second seasons are performing well within our bands of expectation. Very often we see drop-off from season one to season two. It's very common in the industry. And it's even more so with us because we launch our show so big. So, you know, our global reach, our discovery mechanism, releasing all at once, this enables us to find a very large audience early. So our shows tend to start really big, while most other places, their shows start pretty small and occasionally grow from there. For example, I just mentioned the Polygamist from South Africa. That show's already had 24 million views in five weeks and it's still you're charting um when we look across the entire portfolio across all the regions all the content categories our season two fall off is actually slightly improved this year relative to last year now of course you can pick any five data points to tell any story you want but i'm going to repeat this our season two fall off is actually slightly improved this year relative to last year. So no changes in release strategies. Thanks, Ted.

The next question comes from Vikram Kesavabotla of Baird. Last quarter, you shared that the World Baseball Classic was a significant driver of signups in Japan. What have you observed with respect to the retention and engagement of these members since then?

How has this influenced your perspective on the value of regional live programming uh yeah you look great thanks for asking our uh we talked about this a lot last quarter um it was world baseball classic on netflix in japan was a huge hit it became our most watched program ever in japan it was the biggest baseball streaming event ever uh world baseball classic is kind of like these other big live events and they behave a lot like our returning seasons of our big shows uh they drive disproportionate signups and because of that acceleration, they can exhibit slightly higher churn. But the results are exactly consistent with that trend and in line with our expectations and all of our modeling. So we're thrilled and we're continuing to see, you know, to lean into live events because they have a big outsized positive on the business. They drive conversation, drive net acquisition. So we're going to continue to build out that global live event calendar and expand it to include some regional live events as well.

Great. I'll now move us on to a series of questions around content strategy. We have actually two that are pretty similar, so I will do my best to combine them. They're from Robert Fishman of Moffitt Nathanson and Rich Greenfield of Lightshed Partners. First from Robert Fishman, what is your openness to leverage Netflix's leading global scale to bundle with other streaming services like peacock or even consider a streaming channel store to compete with amazon youtuber roku on a related point rich greenfield uh asks while it's only been a few weeks the integration of tf1 in france um uh is that integration driving higher engagement for netflix uh including non-tf1 content do you think there is a meaningful opportunity for netflix to become a distributor or platform for third-party streaming services around the world i can take this one uh since the very beginning when we launched our streaming service we've always

sought to expand the entertainment offering we've got in that service we wanted to provide more value for our members our members consistently tell us that they want more from us we see that in sort of usage behavior we see it any kind of testing or modeling we do around the space And I would say that fulfilling on that customer desire for more has really been the driver for growth for our business for the last two decades. This partnership with TF1 is yet just another approach to expanding that offering. We're just adding to the range of capabilities we have to do that and the mechanisms we have to do that. We've built leadings to streaming entertainment service by combining an unparalleled selection of high-quality programming, best-in-class product experience. We've got a global footprint, big reach, and the ability then to deliver huge audiences, deep engagement, industry-leading monetization. So whether through licensing or through new partnerships like TF1, we believe that we can help other producers, other services maximize the value, the relevance of the content that they invest in by finding those bigger audiences. And we have many, many examples of this effect, including now in this new model with TF1. We also believe that such partnerships are good for our members. They enhance the variety of our offering. They're also effective for our business. And it's early in the TF1 partnership. We're literally four weeks in, so there's a bunch that we'll learn through this process. But we are pleased with the performance we are seeing in that integration. we've been able to enhance our already compelling service for our French members with even more local French programming programming we know that they want to watch we've seamlessly integrated the TF1 product experience in a way where it supports their brand but it also keeps things distinct and we actually think this approach is advantageous for both them and for us and the early results from how members are reacting how they're interacting are very promising so we don't have anything new to announce today. We're going to continue to learn. There's a lot that we'll dig into over time. We also think that there's a lot we can improve in the product experience already that we've seen. But if we see additional deals that similarly serve our members, that work for our partner, that work for us, we'll certainly consider them.

Thanks, Greg. Robert Fishman has another question in this category. What's the opportunity for Netflix to launch a fast platform given the rapid engagement growth in that space? Could Netflix library programming be used as an on-ramp for new subscribers, or would you be open to adding third-party licensed content to compete with other fast channels for incremental ad dollars?

Yeah, so if you go back more than a decade when we transitioned from one tier, one offering to sort of a set of offerings, We've been consistently seeking to expand the range of those offerings. So think about that as price and plan choices and widen the spread of those, give customers more options, more range of choice, both at the lower end and also on the premium side. Maintaining and increasing accessibility, especially as we expand our content offering around the world, add new customer segments. That's a critical focus and goal for us. Also, optimizing long-term revenue is the other big goal. A free offering could make sense in some markets, but we have to be thoughtful about cannibalization of paid tiers. We've got to ensure that we've got the right offering, the right differentiation of that offering. It's probably also worth noting that having an effective scaled ads business in any candidate country for such an offering is clearly an important enabling factor to make those economics work.

So that's all to say that free is something that we're going to continue to consider, but we have no near-term plans to launch something. great thanks greg um from uh next is from john hoodluck of ubs with the addition of video games and more recently vertical video clips and podcasts what other content formats are interesting from a long-term roadmap perspective and how should we gauge the success of these initiatives well um let's not get into areas that we may be exploring here and let's not pre-announce anything but I am pleased with the early progress we're making with vertical clips for choosing on mobile and certainly video podcasting.

We mentioned in the letter, we announced a partnership with the publishers like Condé Nast and Hearst and People. So we're going to bring on some lifestyle content on the service next month. And with the podcast, we're super encouraged with the viewing patterns that we're seeing. They have convinced us that this viewing is definitely incremental for us uh we're seeing that in daytime viewing uh so we're engaging our members outside of prime time where we historically have uh have done most you know most of the engagement on netflix and keeping in mind since professional long-form content is pretty small part of mobile it's exciting to see that um our video podcasts are out indexing on mobile for us so it's a really great progress on both fronts um it's really important for us to meet our members where they are with the kind of entertainment that they're trying to enjoy so we've been building out this great lineup of podcasters include a mix of owned and licensed with creators like martha stewart kate and oliver hudson have a great new one we're thrilled to have jay shetty's on purpose exclusively on netflix and our members are starting their day with the breakfast club they're loving the official bridgerton podcast bill simmons pete davidson brian williams just a few. These are examples of us continuing to evolve and deliver members more entertainment value and more ways to engage with stuff they love. But to take a step back and kind of contextualize this, over the last 15 years, the definition of TV has broadened and our definition has changed along with it. So it's easy to forget, but if you rewind the clock to say 2013, we had a single prestige English language scripted drama show. No unscripted, no local language, no originals, no comedies, no competition shows. And now we're the number one creator of original programming around the world. Just this week, the Emmy nominations were announced, and we have an Emmy nomination on nearly every category. We didn't even know back in that first year if House of Cards would qualify for the Emmys. there was a bunch of debate as to whether or not it was TV. So these just announced nominations, I think, are a testament to the quality, the quantity, and the variety of our original programming. These expansions are evolutionary, not revolutionary. These are expansions on the same continuum that we started on years ago, adding new things as they become available to us, as we see signals that our consumers will get value, including it in their Netflix subscription. That continuum has served our members and our business really well. So we're really excited about the progress on it.

I'll shift this now to a new topic, which is monetization. And I'll begin with advertising. The question is from Steve K. Hall also of Wells Fargo. As you look at the ad tier average revenue per membership today, what are the biggest opportunities for increasing that monetization?

Yeah, maybe worth starting by noting that we manage the ads business for total revenue, total revenue growth. So those are the optimization functions, ARM and fill rates sort of come along for the ride and achieving those goals. Having said that, there's still a gap between ad tier ARM and then ARM for our standard without ads tier. But that gap is narrowing. And I think of that gap is essentially near term under realized revenue growth. So it represents an opportunity for us. As we improve ads capabilities, we can close that gap over the time. And you've seen us do exactly that over the last year. How have we done it? We've expanded demand sources. We continue to execute quickly on our own ad tech stack. We're adding features. We're adding more ads products. We're adding more measurement. We're making it easier for us, for folks to transact with us. Those all drive demand. They drive competitiveness. that yields increased fill rates. It pushes ads arm higher. Those improvements are really the bulk of the opportunity we have to improve unit performance and monetization for the next few years.

Thanks, Greg. From Sean Diffley of Morgan Stanley, there's a question on pricing. Has there been any change in the receptivity to price hikes this cycle? And how do you think about the timing and magnitude of taking price? In other words, first quarter versus fourth quarter seasonality, which is historically a stronger period.

Yeah, our first half price changes, these are markets like US, Mexico, Spain. They've gone well. The results are consistent with prior price changes. They're consistent with our expectations. So we aren't seeing any real changes in that performance. And then with regard to timing and magnitude, we really go back to that top-level macro question we've got of, you know, have we delivered sufficient value to our members? We're constantly looking at the signals that help us understand that question. Of course, plan selection, plan movement. We've got retention, which is industry-leading. So we see improvements in value delivered start to move well in advance of making price adjustments, and then we price behind that value that we are delivering. Those same signals inform all of our price change. They include the ones that we've made in the first half of this year, and they help us determine that timing and magnitude that you're getting at. I think also I would be remiss if I didn't use this opportunity to state that I believe that we are delivering one of the best entertainment values that has ever existed. You know, it's a comparison point. If you go to the U.S. and you take what Netflix subscribers are paying, they pay the least per hour viewing compared to comparable SVOD offerings. In some cases, they would have to pay twice as much per hour for a competitive service. And our ads plan at $8.99 in the United States, we think is an amazing entry point. It's an incredible value, highly accessible. You think about all the entertainment you get for that. It's a pretty good deal.

Thanks, Greg. The next question is from Rich Greenfield of LightShed Partners. How should we think about reports of Netflix bringing back free trials in select markets? What provoked these tests and are they a function of increased competition, market saturation, or both?

Rich, you know well, we are always testing. We're always assessing, trying to improve the service. That definitely includes trying to understand the best ways to bring new members into Netflix. And our investment in several product capabilities over the last several years for a variety of reasons have now given us even greater flexibility and capabilities to test different approaches in different markets, different market segments, different conditions to see how we best bring those folks on. So, for example, we've tested a low-cost first month in Japan that was coincident with the World Baseball Classic. That served us incredibly well. We've been testing upgrade-on-us options in various different countries in various different conditions around the world. And, you know, as a general part of this test and learn strategy now, we're testing free trials for non-rejoining new members in a number of countries. And obviously, we'll see how they perform, and then we'll react appropriately.

Thanks, Greg. Our next question is from Vikram Kesevabotlov-Baird. His question is, Netflix has made progress on its cloud-first video game strategy this year, including the addition of several new titles. How are these games performing on the platform so far, and how should we expect the video game offering to evolve going forward?

Yeah, I'll start by reminding folks of the market opportunity here. This is roughly $150 billion in consumer spend, ex-China, ex-Russia, doesn't include ads revenue. We've been building some solid foundations. Now we're seeing exciting positive signals that help inform and give us increased conviction in our future growth and the nature of that growth here. So you mentioned the cloud-based strategy, those cloud-based TV games, we really see it working. FIFA and Unhinged became our two most successful cloud game debuts, really solid numbers that put it in the top tier of game performance for us. Another big positive sign is that since last October, so eight months ago, when we really sort of scaled up this cloud initiative, monthly active players for cloud games have increased 11x, and adoption is significantly ahead of that curve that we had for mobile games, with even higher retention value. So we're definitely excited about that and focused on scaling up cloud games. We're also seeing positive signals with kids games. So Netflix Playground, which is our app for kids games, no ads, no in-app purchases, curated set of games, very safe space. We've seen 3x growth in daily players since that launch. That's driven more engagement in kids mobile games, which is up 600% year over year. So that's super exciting to see as well. Again, we're just getting started here. We're scratching the surface in terms of what we think the total potential of the space offers for us. You're going to see us continue to calibrate, refine our level of investment here, which is still very small relative to our overall content spend, based on demonstrated performance, based on what is working for our members and what's delivering returns to our business.

Thanks. I'll move us on now to a question from Jessica Reif-Ehrlich of Bank of America. Given Netflix's global footprint of approximately 330 million subscription households, how do you think about leveraging that scale as a strategic asset? How does the currently consolidating media landscape impact these decisions? I'll take that.

So you're right, Jessica. We do benefit in a number of ways from the tremendous scale that we worked so hard to build over the last 20 years. We've invested in a number of areas of the business. I look at our tech investment, where we spend billions of dollars every year, and as a result, we have best-in-class discovery, personalization, plus a bunch of great R&D and innovation, including in production, in distribution, in data that we can draw on to constantly improve every aspect of the business, on the breadth and depth of our content catalog. These, in combination, all deliver this kind of flywheel of advantages. We have the biggest, most engaged audience in the world. Creators and advertisers love that. We lead the industry in monetization. We have better programming ROI because we am more to cross this global footprint, and that very often that programming is very travelable. This is good for our members. It's good for our business. It creates a really healthy model for organic growth. Greg mentioned TF1 earlier. I think it's being able to bring that scale to work with partners like TF1 in France to bring content to our members in multiple ways and multiple business models. I think that really helps when we can bring that distribution scale to local players. And finally, Jessica, I'd say regarding consolidation, the industry has been consolidating for over 10 years, so this isn't new. We focus all of our energy on pleasing our members and sustaining healthy growth for the business.

Thanks, Ted. Our next question comes from Sean Diffley of Morgan Stanley. What have been the early learnings from the interpositive deal and how should we think about potential cost savings and content creation? Could the impact of your $20 billion cash content budget, could this impact your $20 billion cash content budget on a go-forward basis or is it more likely to be reinvested into more content and better compensating talent. Ted?

Well, look, it's early days for Interpositive, but we're broadly seeing that Gen.AI is starting to have an impact across hundreds of our productions. So important to note that we have other Gen.AI tools in addition to Interpositive. We're thrilled with all the speed they're bringing to market for us. But we also have iLine and we have our animation lab. And what's cool is that they're all working together to drive innovation. We said in the letter, but Gen.AI is scaling quickly across the entire creative process, from concept to previs, through post and delivery. We're making higher quality output more quickly and efficiently than we could have using traditional methods. So Gen.AI workflows now have been used in roughly 300 of our titles, with the largest concentration right to date is on post-production. But we're leveraging Gen AI for really complicated shots and sequences. We call this out in the letter, but things like enhancing crowds or historical battle scenes, those kind of things. And keep in mind that in many of the cases, productions would have left out those key shots because they just wouldn't have been able to afford them, they wouldn't have been able to do them in the timeframes that they're working on. So those sequences are saved by the availability and access to these Gen AI tools. On the content side, we believe it takes great artists to make something great, and AI is not changing that. AI will give creatives better tools to bring their visions to life. Movies are being made by people who make movies. AI provides them with better tools to make them even better. So today, our talent leverages tools for things like set references and previs and VFX and sequence prep and shot planning. You know, it all makes the production itself so much more smooth and efficient and fast. And that's just the beginning. You know, we're seeing it across the, you know, the entire production life cycle. And AI, you know, those use cases are scaling faster and faster. So our documentary series we just released called American Experiment, that series features 17 minutes of AI enhanced footage. It enabled us to expand the scope of the series in ways that just wouldn't have been feasible before. those 17 minutes sean they were produced twice as fast and at half the cost of previous options so by equipping creatives with these tools we believe they're going to enhance their abilities and we are going to have better and more impact for every dollar we spend on our programming so content creation timelines can be shortened and quality can be enhanced so the cost savings will likely be reinvested into more content on the service which fuels high quality engagement and that whole kind of revenue profit flywheel that's going to come from that that we've been talking about from

day one thanks ted uh we have time for uh one last question and uh we'll take that uh from dan kernos of uh stonex um and uh it's a question around capital allocation given recent reports around Lionsgate that Netflix has denied and broader speculation around interest in NBC Universal. How should investors think about the line between opportunistic IP and library acquisitions and larger scale M&A that could change Netflix's capital allocation or strategic profile?

Well, I'll take this if you don't mind, guys. Dan, we're not going to comment on market speculation but i'd like to take the opportunity to remind everyone what our about our core philosophy you know we have multiple ways to achieve our goals producing licensing partnering and we're constantly seeking ways you know to allocate our resources uh in the most attractive options to maximize value for our members and delivering for for a return for our investors as we said we're primarily builders not buyers and that remains the case today so others will speculate about our intent here because they have their own reasons for that. But our track record is clear that we have a very high bar to do any big M&A.

Spence, do you want to add anything? Maybe I'll chime in a little bit specific to capital allocation, Ted. Thanks, Dan. I just want to be really clear. There is no change to our capital allocation philosophy. We invest in the business both organically and opportunistically through M&A. And again, as Ted said, we are primarily builders not buyers we also maintain strong liquidity and a strong healthy balance sheet and lastly we return excess cash to shareholders through share repurchase and on that last point you can see that very clearly in q2 we repurchased 4.7 billion of share shares this quarter that's our largest quarter of share repurchase in our history and we still have about 27 billion of capacity on our remaining authorizations so we feel really good about our growth path. As Ted said, we've got a really high bar and we have no change in our capital allocation philosophy.

Great. Thank you, Spence. And thank you all for your questions and for joining us for our quarterly earnings call. And we will see you next quarter. Thank you.