NETFLIX INC (NFLX) Q2 2026 Earnings Call Transcript

Good afternoon, and welcome to the Netflix Q2 2026 earnings interview.

I am Spencer Wang, VP of Finance and Capital Markets. Joining me today are co-CEOs Ted Sarandos and Gregory K. Peters, and CFO Spencer Neumann. As a reminder, we will be making forward-looking statements; actual results may vary. We will now take questions submitted by the analyst community. We will 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?

Spencer, do you want to take that?

Yeah. Sure. Thanks, Steve. So, look, we do not 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 are guiding, as you say, to 12% revenue growth in Q3 reported, 11% FX neutral. The Q3 revenue drivers are very similar to Q2. It is 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 chop 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 is not what we manage to. We manage to the full year. And, through the year, we are making strong progress against our goals, and we are tracking to our financial plan for 2026. We expect to deliver another strong year as you see in the guide, 13 to 14% top-line growth for the full year that is roughly 12% FX neutral. We are about $6 billion of incremental revenue year over year. By the way, when we finish 2026, it is worth saying also that in many ways we are still just getting started as a company. We are entertaining an audience approaching a billion people, with still lots of room to grow into our addressable market on every measure. We are less than 45% penetrated into households around the world. It is roughly 800 million addressable households. Capturing, you know, we think just 7% of addressable revenue market. It is about $670 billion of addressable revenue in the countries and categories in which we operate today. We estimate that we are only about 5% of TV viewing share globally. So delivering on our 2026 plan, and we believe we have got lots and lots of runway for solid growth ahead of us.

Thanks, Spencer, for that thorough answer. I will now move us along to a topic of engagement where we do have several questions. This first one is from Rob Sanderson of Loop Capital Markets.

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, etcetera? At what point would slow growth in total viewing hours become a concern?

I will take this one and it a bit since I know that there is plenty of interest in this topic. I will 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 do not 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 are good for monetization. They drive ad revenue, fandom. They are also a promotional platform. But they do not yield typically as many raw view hours. So live, we expect will be 5% of our content budget this year, but that will only be 1% of view hours. Having said that, six out of the top 10 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 and family TV, it is also about 5% of our content spend; the same amount of spend is going to drive, we expect, 8% of view hours. So same spend, and 8x the raw view hours. You can see the differences there. Even though, as you know, indicated by the amount that we are investing in both those categories being the same, we think they are doing the same value for the business. So we are constantly looking to improve across every dimension. 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 earnings calls the progress we have made on quality over the years. We are not going to go into the details of that quality metrics because frankly it has taken years for us to develop it and vet it and assess it and improve it. And we think those details are a competitive advantage. We are also continuing to expand the variety of our entertainment. You see us launch new types of content like live, like video podcasts, cloud TV games. Those are all doing different things in our portfolio to support needs from our members. Then on quantity, view hours grew 2% in the first half of 2026. That is an incremental 1.5 billion hours relative to the same period last year. It is a slight acceleration compared to 1.5% growth in 2025. 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 and operationalizing that 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 weighting, no adjustments, and very similar to how we have evolved other metrics in the business. Since then, we have gone through about a dozen major iterations of our understanding. We get more and more sophisticated because we know ultimately it is 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 of our business, revenue and operating profit, which are really the ultimate signs of our health.

I have this visual of you geeking out, Gregory. It is hard to see Spencer geeking out, but I can see us geeking out.

Those are 20 years of the debate and wackiness.

Well, let me geek out on the next question, which comes from Steve Cahall of Wells Fargo.

Amortization for content growth is accelerating in 2026. How is the slate performing, and what metrics 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?

I am going to 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. I am going to come back to that core in just a second, but the second is that we are really disciplined investors. So there is not some hyper-acceleration of content investment. We grow the content spend slower than revenue while we are continuing to invest in a huge addressable market. So forecasting content expense up about 10% this year, so 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 has been our MO for some time. Ask how the slate's performing: there is a lot to be happy with in Q2. 'I Will Find You' was our biggest launch of the original series this year. 'Swap'd' is on track to become the second-biggest original animated film right behind 'K-Pop: Demon Hunters', which is exciting. Speaking of K-Pop, we have K-dramas like 'Teach You a Lesson', which is on track to become the second most-watched South Korean show ever globally, and it is on track to be our biggest series in South Korea of all time. There is a show called 'The Polygamist'—probably not on your radar perhaps, Steve—but it is out of EMEA. It is another great example of the understanding of our local markets and the local regions. 'The Polygamist' was a popular novel from Zimbabwe more than 10 years ago from an author named Sue Nyathi. The teams adapted that into a soapy series for South Africa where it is now a huge hit and is traveling all over the region and all over the world. In Latin America we have a big season that just came back for 'Rosario Tijeras'. This was a show that started its life as a licensed show from TV Azteca in Mexico. After three successful seasons, we picked it up and produced it as original Season 4, Season 5, and just greenlit Season 6. So you are seeing the slate perform around the world, which is a real differentiated part of our business. Now with that said, with the core, we are also really pleased with the investment so far in our live programming. It plays a really important role as Gregory mentioned earlier—driving acquisition, accelerating ad revenue, fueling conversation, helping us to launch new shows. It is also helping us to understand what are the benefits of live over the entire catalog. So, you know, we are 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 Ones' special that we shot on a baseball field to promote Will Ferrell's new series, 'The Hawk', which launched today. I think it is a cool example of the intersection between our core—our core series 'The Hawk'—our expansion into new exclusive creator content with 'Hot Ones' with Sean Evans as a best-in-class creator. We are thrilled to be in business together. Plus live sports 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 that Gregory 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.

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 that 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 1s. Our second seasons are performing well within our bands of expectation. We very often see drop-off from Season 1 to Season 2; very common in the industry. And it is even more so with us because we launch our shows so big. 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 is still charting. When we look across the entire portfolio, across all the regions, all the content categories, our Season 2 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 am going to repeat this: our Season 2 fall-off has actually slightly improved this year relative to last year. So no changes in release strategies.

Thanks, Ted. The next question comes from Vikram Kesavabhotla of Baird.

Last quarter, you shared that the World Baseball Classic was a significant driver of sign-ups 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?

Thanks for asking. We talked about this a lot last quarter. The 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. 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. They drive disproportionate sign-ups. Because of that acceleration, they can exhibit slightly higher churn, but the results are exactly consistent with trend and in line with our expectations in all of our modeling. So we are thrilled and we are continuing to lean into live events because they have a big outsized positive on the business. They drive conversation, drive net acquisition, and 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 will 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 are from Robert Fishman of MoffettNathanson and Rich Greenfield of LightShed Partners.

What is your openness to leverage Netflix's leading global scale bundle with other streaming services like Peacock, or even consider a streaming channel store to compete with Amazon, YouTube, or Roku?

On a related point, while it has only been a few weeks, the integration of TF1 in France—Is that integration driving higher engagement for Netflix, 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?

Yeah. I can take this one. Since the very beginning when we launched our streaming service, we have always sought to expand the entertainment offering we have 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 usage behavior. We see it in any kind of testing or modeling we do around the space. 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 are just adding to the range of capabilities that we have to do that and the mechanisms we have to do that. We have built a leading streaming entertainment service by combining an unparalleled selection of high-quality programming and a best-in-class product experience. We have a global footprint, big reach, and the ability then to deliver huge audiences, deep engagement, and industry-leading monetization. So whether through licensing or through new partnerships like TF1, we believe that we can help other producers and other services maximize the value and relevance of the content that they invest in by finding those bigger audiences. And we have 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 are also good for our business. And it is early in the TF1 partnership. We are literally four weeks in, so there is a bunch that we will learn through this process, but we are pleased with the performance we are seeing in that integration. We have been able to enhance our already compelling service for our French members with even more local French programming we know that they want to watch. We have seamlessly integrated the TF1 product experience in a way that supports their brand but also keeps things distinct. And we actually think this approach is advantageous for both them and for us. The early results from how members are reacting and how they are interacting are very promising. So we do not have anything new to announce today. We are going to continue to learn; there is a lot that we will dig into over time. We also think that there is a lot we can improve in the product experience already that we have seen. But if we see additional deals that similarly serve our members, that work for our partner, and that work for us, we will certainly consider them.

Thanks, Gregory. Robert Fishman has another question in this category.

What is the opportunity for Netflix to launch a FAST platform given the rapid engagement growth in that space? Could Netflix's library or 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?

If you go back more than a decade when we transitioned from one tier, one offering to a set of offerings, we have 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 and 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 and add new customer segments, is 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 pay tiers. We have got to ensure that we have the right offering and the right differentiation of that offering. It is probably also worth noting that having an effective scaled ads business in any candidate country for such an offering is clearly an important enabler to make those economics work. That is all to say that free is something that we are going to continue to consider. But we have no near-term plans to launch something.

Great. Thanks, Gregory. Next is John Hulik 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? How should we gauge the success of these initiatives?

Well, 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 are making with clips for viewing on mobile and certainly video podcasting. We mentioned in the letter we announced a partnership with publishers like Condé Nast and Hearst and People. We are going to bring on some lifestyle content on the service next month. And with podcasts, we are super encouraged with the viewing patterns that we are seeing. They have convinced us that this viewing is definitely incremental for us. We are seeing that in daytime viewing, so we are engaging our members outside of a time where we historically have done most of the engagement on Netflix. And keeping in mind that professional long-form content is a pretty small part of mobile, it is exciting to see that our video podcasts are out-indexing on mobile for us. So it is really great progress on both fronts. It is really important for us to meet our members where they are with the kind of entertainment that they are trying to enjoy. So we have been building out this great lineup of podcasters, including a mix of owned and licensed with creators like Martha Stewart, Kate and Oliver Hudson have a great new one. We are thrilled to have Jay Shetty's 'On Purpose' exclusively on Netflix. And our members are starting their day with 'The Breakfast Club'; they are loving the official 'Bridgerton' podcast; Bill Simmons, Pete Davidson, Brian Williams, just to name 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 contextualize this, over the last 15 years, the definition of TV has broadened and our definition has changed along with it. So it is 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 are the number one creator of original programming around the world. Just this week, the Emmy nominations were announced and we have a nomination in nearly every category. We did not 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 nominations 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 and we see signals that our consumers will get value including in their Netflix subscription. That continuum has served our members and our business really well. So we are really excited about the progress.

Thanks, Ted. I will shift this now to a new topic, which is monetization, and I will begin with advertising. The question is from Steve Cahall 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 optimization functions—ARM and fill rates—come along for the ride in achieving those goals. Having said that, there is 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 as essentially near-term, unrealized revenue growth. It represents an opportunity for us. As we improve ads capabilities, we can close that gap over time. And you have seen us do exactly that over the last year. How have we done it? We have expanded demand sources. We continue to execute quickly on our own ad tech stack. We are adding features. We are adding more ads products. We are adding more measurement. We are making it easier 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, Gregory. From Sean Diffely of Morgan Stanley, there is 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 in markets like the U.S., Mexico, and Spain have gone well. The results are consistent with prior price changes. They are consistent with our expectations. So we are not seeing any real changes in that performance. With regard to timing and magnitude, we really go back to that top-level question we have of: have we delivered sufficient value to our members? We are constantly looking at the signals that help us understand that question. Of course, plan selection and plan movement. We have 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 changes. They include the ones that we have made in the first half of this year. And they help us determine the timing and magnitude that you are getting at. I think also I would be remiss if I did not use this opportunity to say that I believe that we are delivering one of the best entertainment values that has ever existed. As a comparison point, if you go to the U.S. and you take what Netflix subscribers are paying, they pay the least per hour of viewing compared to comparable SVOD. 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 is an incredible value, highly accessible. You think about all the entertainment you get for that. It is a pretty good deal.

Thanks, Gregory. 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 we are always assessing how to improve the service. That definitely includes trying to understand the best ways to bring new members into Netflix. 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 and different market segments and conditions to see how we best bring those folks on. For example, we tested a low-cost first month in Japan that was coincident with the World Baseball Classic. That served us incredibly well. We have been testing 'upgrade on us' options in various countries under different conditions. And as a general part of this test-and-learn strategy, now we are testing free trials for non-rejoining new members in a number of countries. Obviously we will see how they perform, and then we will react appropriately.

Thanks, Gregory. Our next question is from Vikram Kesavabhotla of Baird.

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 will start by reminding folks of the market here. This is roughly $150 billion in consumer spend ex-China, ex-Russia. It does not include ads revenue. We have been building some solid foundations, and now we are 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, with really solid numbers that put them in the top tier of game performance for us. Another big positive sign is that since last October, eight months ago when we really scaled up this cloud initiative, monthly players for cloud games have increased 11x, and adoption is significantly ahead of the curve that we had for mobile games, with even higher retention value. So we are definitely excited about that and focused on scaling up cloud games. We are also seeing positive signals with kids' games. 'Netflix Playground' is our app for kids' games—no ads, no in-app purchases, curated set of games, a very safe space. We have seen 3x growth in daily players since that launch. That is driving more engagement in kids mobile games, which is up 600% year over year. So that is super exciting to see as well. Again, we are just getting started here. We are scratching the surface in terms of what we think the total potential of the space offers for us. You are going to see us continue to calibrate and 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 is delivering returns to our business.

Thanks. I will 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 will take that. So you are 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 have invested in a number of areas of the business. Look at our tech investment where we spend billions of dollars every year. As a result, we have best-in-class discovery and personalization, plus a bunch of great R&D and innovation including in production, in distribution, and in data that we can draw on to constantly improve every aspect of the business and 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 amortize across this global footprint, and very often that programming is very travelable. This is good for our members, it is good for our business, and it creates a really healthy model of organic growth. Gregory mentioned TF1 earlier. I think 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 really helps when we can bring that distribution scale to local players. And finally, regarding consolidation, the industry has been consolidating for over 10 years, so this is not 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 Diffely of Marian Stanley.

What have been the early learnings from the Inter deal, and how should we think about potential cost savings in content creation? Could the impact of your GenAI and tool investments impact your $20 billion content budget on a go-forward basis, or is it more likely to be reinvested into more content and better compensating talent?

Ted?

Great. Well, look, it is early days for Interpositive, but we are broadly seeing that generative AI is starting to have an impact across hundreds of our productions. Important to note that we have other GenAI tools in addition to Interpositive. We are thrilled with the speed they are bringing to market for us. We also have EyeLine, and we have our animation lab. What is cool is that they are all working together to drive innovation. We said in the letter that GenAI is scaling quickly across the entire creative process—from concept to previs through post and delivery. We are making higher-quality output more quickly and efficiently than we could have using traditional methods. So GenAI workflows have been used in roughly 300 of our titles, with the largest concentration right to date in post production. But we are leveraging GenAI for really complicated shots and sequences. We call this out in the letter—things like enhancing crowds or historical battle scenes—those kinds of things. Keep in mind that in many cases, productions would have left out those key shots because they just would not have been able to afford them or do them in the time frames they are working on. So those sequences are saved by the availability and access to these GenAI tools. On the content side, we believe it takes great artists to make something great. AI is not changing that. AI will give creators 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. Today, our talent leverages tools for things like set references and previs and VFX and sequence prep and shot planning. It all makes the production itself so much more smooth, efficient, and fast. And that is just the beginning. We are seeing it across the entire production life cycle and those use cases are scaling faster and faster. Our documentary series we just released called 'American Experiment' features 17 minutes of AI-enhanced footage. It enabled us to expand the scope of the series in ways that just would not have been feasible before. Those 17 minutes were produced two times as fast and at half the cost of previous options. So by equipping creators with these tools, we believe they are going to enhance their abilities. We are going to have better impact for every dollar we spend on our programming. 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 revenue-profit flywheel that we have been talking about from day one.

Thanks, Ted. We have time for one last question, and we will take that from Dan Kurnos of Stonex.

It is a question around capital allocation. Given recent reports around Lionsgate that Netflix has denied and broader speculation around interest in NBCUniversal, 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?

I will take this if you do not mind. Dan, we are not going to comment on market speculation. I would like to take the opportunity to remind everyone about our core philosophy. We have multiple ways to achieve our goals: producing, licensing, partnering, and we are constantly seeking ways to allocate our resources into the most attractive options to maximize value for our members and deliver a return for our investors. As we said, we are primarily builders, not buyers. That remains the case today. Others will speculate about our intent 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. Spencer, want to add anything?

Maybe I will chime in, a 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 healthy balance sheet. Lastly, we return excess cash to shareholders through share repurchases and on that last point, you can see that very clearly in Q2. We repurchased $4.7 billion of shares this quarter. That is our largest quarter of share repurchases in our history, and we still have about $27 billion of capacity on our remaining authorization. So we feel really good about our growth path. As Ted said, we have got a very high bar, and we have no change in our capital allocation philosophy.

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