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Netflix's Annual Reports (10-Ks) used to be a work of art. What happened?
- Simulacra 6y agoTwo come to mind: Cost and lawyers.
- formercoder 6y agoFlashy 10-Ks are hugely annoying, especially in IFRS where there’s no standard. Give me tables all day every day. The lack of standardization in financial reporting already sinks enough of my time.
- samtc 6y agoIs XBRL any good? I see more filings on EDGAR/SEDAR using that.
- breput 6y agoIt isn't a choice for any registrant that is filing to the SEC. Even the smallest filers will have to file most reports using XBRL after June. The application of XBRL doesn't really affect the design of the reports. It ebbs and flows - it feels like more designed filings are coming back with better tools that allow more designed reports.
- wombatpm 6y agoThe is an entire industry that does financial printing; 10k, quarterly reports, prospectuses etc. they handle the filing with SEC/Edgar. If there is a descrepency it arises there. Any one remember when RRDonnelley submitted Googles data a couple hours early during trading and they had to halt trading in the stock?
- jdsully 6y agoAbout 5 years ago I made an XBRL viewer. In a ton of reports I tested the data did not match the paper reports. After ruling out bugs in my own software I went as far as emailing a few companies investor relations departments and never got a response. I hope things have improved in the years since but I doubt it. Nobody looks at the XBRL its just a regulatory box tick.
- formercoder 6y agoUnfortunately it’s very occasionally wrong, making it almost useless for me.
- breput 6y agoThe foreign (non-US) filers (and also IFRS) are bringing the design back. I don't like it either.
- vmception 6y agoWhen you dont need to stand out more it stops mattering
- ilaksh 6y agoI think it's the difference between paying the word processing department (if those still exist) to edit last year's document and paying for what amounts to an expensive marketing campaign that few people are going to see.
- breput 6y agoMore than a few EU companies are outsourcing the design of their 20-F/40-F documents to design companies. It is mostly a style/taste thing, although I know that some US companies are also interested in improving the presentations of their filings. There are a lot of limitations and constraints involved when you're filing HTML that needs to look decent against all browsers and operating systems. Some filers will make a highly designed report and file it as a PDF alongside the official HTML version.
- ntdef 6y agoWhat happened was Barry McCarthy, who was CFO at Netflix till 2010, left Netflix. Barry was an exceedingly creative and forward thinking CFO. He was the CFO responsible for taking Spotify public via direct listing in 2018, which was an incredibly bold move at the time. Definitely creative as far as CFOs go.
- bluedays 6y agoI was just thinking it was probably the work one one guy who doesn’t work at the company anymore
- carls 6y agoI'm not sure this is a sufficient explanation. McCarthy left in 2010. But it looks like the decline in the "designy"-ness began in 2006.
- heleninboodler 6y agoAdobe used to do these designy annual reports as well [1], and it looks like they stopped in 2003. I wonder if something in that era encouraged them to knock it off. Edit: for Adobe, it may have coincided with significantly cutting back their Marketing/Communications department, which had a huge staff of really great artists in the 90's. I believe this became viewed as an extravagance to have a stable of really talented and creative artists and designers on staff when you can hire this stuff out and get "reasonable" results. [1] example: https://www.yumpu.com/en/document/view/33241791/adobe-annual-report-1989-the-information-technology-corporate- https://www.yumpu.com/en/document/view/33241791/adobe-annual...
- jcampbell1 6y agoSarBox came out around that time. No one was in the mood to be cute at that time.
- TheSpiceIsLife 6y agoShould have known, but I had to look that up. Sarbanes-Oxley https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act Which is about corporate financial responsibility, generally speaking. Signed in to law July 30, 2002
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- breput 6y agoI don't know where this blog is getting their data from, but Netflix's 10-K filings have never been highly designed. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001065280&type=10-K&dateb=&owner=exclude&count=40&search_text= https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C...
- breput 6y agoI assume they are pulling these from Netflix's Investor Relations site. That is a very different question than what is officially filed, which is very different from what this blog presents.
- carls 6y agoIt seems like the blog is referencing the documents posted directly on Netflix's website[1], the early versions of which do open up with well-designed cover pages. In contrast, the link you shared is perhaps the direct filings that the SEC receives from the company, which may remove these designed elements prior to filing. ----- [1] https://ir.netflix.net/financials/annual-reports-and-proxies/default.aspx https://ir.netflix.net/financials/annual-reports-and-proxies...
- breput 6y agoThat's what I figured. So the blog post is completely off-course - this person is complaining that the Investor Relations site no long has tarted up versions of the annual filings. "One fine day, as I was following the internet rathole, I landed myself on the Netflix investor page for some reason. One thing to understand about these 10-K forms is that these are …. pretty basic." Like the vast majority of companies that just need to comply with their regulatory requirements.
- carls 6y agoAlthough the author may be wrong about whether the 10-Ks he saw were the same ones being submitted to the government, I think his curiosity is still worth indulging. Why did Netflix slowly stop designing their 10-K reports that lived on their own investor relation page? My own guess is that there was some downward pressure to just produce the basic report, since that's all the government would see and investors wouldn't really value the design.
- H8crilA 6y agoI understand the point of the article, but if you're serious about reading company statements you (at least at first) skip all promo material / preso-looking pages and skip to the part looks the most boring. Literally, don't even look at them (at first). Or even better you can do it the Buffett way, read from the end to the beginning.
- paxys 6y agoI think the move makes sense. There are lots of avenues for creative advertising available to a company. Standard financial disclosures shouldn't be one of them, especially since more and more of them are being machine-read nowadays.
- devmunchies 6y ago> There are lots of avenues for creative advertising available to a company. Standard financial disclosures shouldn't be one of them if a goal of marketing is to stand out then its the perfect place. very little is off limits.
- WheelsAtLarge 6y agoI worked for a company that would spend hundreds of thousands of dollars on their annual report. Every year it was a big deal. There were meetings, interviews, photo shoots and a lot of late nights to make sure it was just perfect and on time. It was beautiful every year. Then one year a new Chief of operations was hired. She reviewed costs and saw that the creative department was too expensive. She closed it and outsourced the work. One thing that happened was that the annual report was turned into a plain accounting report which reported the needed information. Tada, no one really complained, people that needed the information got what they needed and a few hundred thousand dollars was saved every year. It never came back.
- breput 6y agoLike everything, the fancy designed reports (annual or otherwise) come and go out of fashion. Yesterday it was a requirement. Today it is too expensive and the COO got credit for cutting expenses. Tomorrow the CFO is jealous of Company X's report and it's back.
- umbrellaguy 6y agoSounds like the newest buzz in biz - "Business Intelligence".
- ativzzz 6y agoNot new anymore, that started with the "Big Data" craze back around ~2012/2013. But at the core it makes sense - it's just businesses making better use of the tons of data their systems are generating.
- conductr 6y agoI was about to dispute this because of my experience using the term widely in late 2008-2010 range but Google Trends shows you are probably more accurate on timing. I work in corp finance and BI was pushed on us early.
- 6y ago
- goodluckchuck 6y agoIts a canary of sorts; Netflix sold out.
- smabie 6y agoIf by "sold out" you mean focusing on delivering value to customers and investors instead of wasting money on frivolous and actually harmful designs, then yes. If you want a company that didn't "sell out", check out WeWorks IPO docs.
- hbcondo714 6y agoAnnual Report: A corporation's annual report is usually a colored, professionally presented, and marketable document intended for an audience of shareholders. 10-K: The 10-K report is submitted to the SEC in a generic format, with no pictures or charts. The SEC has very strict guidelines on what information must be included and how it must be organized. Source: https://www.investopedia.com/ask/answers/102714/what-are-differences-between-10k-report-and-firms-own-annual-report.asp https://www.investopedia.com/ask/answers/102714/what-are-dif... Edit: I'm glad to see this is the #1 post on HN (at the time of this writing) even though the author, like many individual and some institutional investors, innocently do not know the difference between a company's PR-like annual report and an SEC-audited 10-K form. Hopefully the upvotes will draw attention to this common misconception which is also discussed by the SEC: https://www.investor.gov/introduction-investing/investing-basics/glossary/annual-report https://www.investor.gov/introduction-investing/investing-ba... Disclosure / Shameless Plug: I run https://Last10K.com https://Last10K.com which is an SEC.gov alternative for investors to find and read 10Ks more efficiently.
- sinuhe69 6y agoLike the ideas of reading 10K more efficiently. But to me, the text interface of Last10k could not deliver this promise. Visualization is IMO a much better way to quickly grasp information.
- dmurray 6y agoIt's better because if used well, it brings your attention to the most important information. That becomes a problem when the company's idea of what investors should pay attention to is different from the SEC's. (not a criticism of Last10k, this is more about the overall question of why Netflix could be encouraged to use the blander format).
- hbcondo714 6y agoYes, I was looking to doing some kind of infographic.
- etaioinshrdlu 6y ago
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- stuu 6y agoReason: They used to be mailed out.
- geofft 6y agoDid you have to mail them back when you were done reading?
- stuu 6y agoNah, sending them out was required [0] and the web wasn't the defacto medium for invesetor info not that long ago. They were all pretty fancy [1]. [0] https://www.investor.gov/introduction-investing/investing-basics/glossary/annual-report#:~:text=The%20annual%20report%20to%20shareholders,corporate%20information%20to%20their%20shareholders.&text=Reporting%20companies%20must%20send%20annual,annual%20meetings%20to%20elect%20directors https://www.investor.gov/introduction-investing/investing-ba.... [1] https://www.ebay.com/sch/i.html?_from=R40&_trksid=p2334524.m570.l1313&_nkw=old+annual+report&_sacat=0&LH_TitleDesc=0&_osacat=0&_odkw=annual+report https://www.ebay.com/sch/i.html?_from=R40&_trksid=p2334524.m...
- Hackbraten 6y agoHint: Netflix used to require subscribers to send the bytes of the video back to Netflix.
- rezonant 6y agoWoosh
- chipotle_coyote 6y agoThis strikes me as a very on-point answer. Other people have noted that "Annual Report" and "10-K" aren't precisely the same thing: the 10-K is the annual SEC filing, akin to the 10-Q filed quarterly. The annual report is what's sent to investors. It can just be the 10-K, but I've definitely seen many companies in the past that did what amount to full-color brochures. I'm pretty sure the phone company I worked at in the late 90s had very pretty ones, although not as witty as Netflix's.
- monadic3 6y agoWho gives a shit?
- monadic3 6y agoTf are they talking about? If you consider any netflix annual report to be a work of art, seek mental health support you fuckin psychopath
- xivzgrev 6y agoMy guess is that Netflix was still trying to establish itself. Many investors probably were skeptical to invest in Netflix so they wanted to create something more splashy to engage people. At some point Netflix went from a niche service to being a mature established company that people are going to seek out. The splashiness was no longer needed.
- deleted 6y ago[deleted]
- sinuhe69 6y agoWhy not doing two versions of the annual reports? One in plain text to meet the regulator’s requirement and the other one, shorter but more creative for the general audience and building of brand awareness? I believe it’s totally worth it.
- radiator 6y agoI for one happen to like the typography of the 2010 version much better.
- dorkwood 6y agoI think it was honestly just a trend. Back then you used to have design students making annual reports for fun so they'd have something to pad out their portfolios. I'd wager that sort of thing is now towards the bottom of the list for most.
- richx 6y agoOne of the reasons might be, that the SEC mandated all filers to submit the reports in XBRL Format starting in 2009 (foreign private issuers using IFRS followed 2017). It’s called Interactive Data by SEC and requires to tag each and every value with an XML element to give it an accounting meaning. The XBRL tools have not been able at that time to convert PDF or InDesign files, so all reports look rather ugly since then. I’m head of development team that invented a PDF Tagger; we sold it like warm bread during last month, because all EU listed companies are also mandated to submit iXBRL now. Btw, the cover page always looks that ugly because it must be the „form“ template from SEC. Here is a link to a more pretty report, also having XBRL tags: https://www.gleif.org/assets/components/xbrl-viewer/gleif-annual-report-2019/ixbrl-viewer.signed4.htm https://www.gleif.org/assets/components/xbrl-viewer/gleif-an...
- u678u 6y agoI'm sure people here will recognize that a boring 10-k is easy for bots to parse and enter into computer systems that most users end up using. In fact 10-ks should probably have standardized XML format or similar for this.