Netflix Q4 Revenue Surges 17.6% as Streamer Reaches 325 Million Paid Subscribers

Netflix beat Wall Street expectations for its fourth quarter of 2025, with revenue climbing 17.6% during the quarter, primarily driven by subscriber growth, pricing changes and increased ad revenue.

The streamer stopped publicly disclosing subscriber and average revenue per user numbers at the end of 2024 as it shifted focus to engagement, but previously said it would provide updates when it hits major milestones. On Tuesday, the company revealed that it had crossed over 325 million paid subscribers.

But the strong results were not enough to stop Netflix shares from falling over 4% in after-hours trading as uncertainty hangs over the stock amid its pending $83 billion deal for Warner Bros. Discovery’s streaming and studio assets.

Here are the results for the quarter and 2025:

Subscribers: 325 million paid subscribers, up from its previous disclosure of 301.6 million at the end of 2024.

Net income: $2.42 billion, compared to $1.87 billion a year ago. The figure included roughly $60 million in costs related to a “bridge loan and associated bridge reduction financings” related to the Warner Bros. deal. For the full year, net income was $10.98 billion.

Earnings per share: 56 cents per share, compared to 55 cents per share expected from analyst estimates compiled by Yahoo Finance.

Revenue: $12.05 billion, up 17.6%% year over year, compared to $11.97 billion expected from analyst estimates compiled by Yahoo Finance. For the full year, total revenue grew 16% year over year to $45.2 billion. Ad revenue came in at over $1.5 billion for the year.

Operating income: $2.96 billion, up 30% year over year, compared to $2.27 billion a year ago.

Netflix’s revenue grew 18% year over year to $5.34 billion in the U.S. and Canada, 18% year over year to $3.87 billion in the Europe, the Middle East and Africa (EMEA) region, 15% year over year to $1.42 billion in Latin America and 17% year over year to $1,421 billion in the Asia Pacific (APAC) region.

Looking ahead to the first quarter of 2026, Netflix expects revenue of $12.16 billion, operating income of $3.91 billion, an operating margin of 15.3%, net income of $3.26 billion and earnings of 76 cents per share. 

For the full year 2026, Netflix expects revenue of $50.7 billion to $51.7 billion, representing growth of 12% to 14% year over year driven by subscriber and pricing increases and a projected doubling in ad revenue for the year versus 2025.

The company is targeting a 2026 operating margin of 31.5%, which includes $275 million in acquisition-related expenses and roughly 10% growth in content amortization, with higher growth in the first half of the year than the second half due to the timing of title launches. As a result, Netflix expects higher operating income growth in the second half of 2026 than the first half.

“We still see plenty of room to increase our margins and our intent is to
grow our operating margin each year, although the magnitude of margin expansion will vary year-to-year as we balance reinvesting in our business with improving profitability,” the company noted in its quarterly shareholder letter.

Netflix goes all-cash in revised Warner Bros. deal

The results come as Netflix revised its $83 billion deal for Warner Bros. Discovery’s studio and streaming assets to all-cash in an effort to fast-track a shareholder vote by April. The move also comes as Netflix shares have fallen below the collar in the company’s original cash-and-stock deal.

The all-cash transaction continues to be valued at $27.75 per share. WBD stockholders will also receive additional value from shares of Discovery Global, Warner’s cable networks which will be spun off in six to nine months.

Netflix said that Warner Bros.’ library, development and IP would allow it to provide an “even broader and higher-quality selection of content” and that the addition of HBO Max would allow provide more personalized and flexible subscription options.

“Netflix and Warner Bros. are highly complementary businesses and together we’ll be able to offer more opportunities to creators and strengthen the entire entertainment industry. This will allow us to offer more choice and greater value to consumers,” the company said. “Additionally, we’ll expand production capacity in the US and abroad and grow investment in original content over the long-term, which will create jobs and help sustain a healthy entertainment industry.”

Netflix has obtained commitments for a $59 billion senior unsecured bridge facility to support the acquisition, with the intention of replacing it with
a more permanent and cost effective funding structure prior to closing.

On Monday, the company entered a $5 billion senior unsecured revolving credit facility and a $20 billion senior unsecured delayed draw term loan
facility, and reduced its outstanding bridge facility commitments to $34 billion. It also obtained a $8.2 billion increase to its bridge facility commitments to support the change to an all-cash transaction, increasing the total commitments to $42.2 billion.

“We anticipate reductions to these bridge facility commitments between now and closing through a combination of future bond offerings and cash we expect to accumulate on our balance sheet,” the company said.

Netflix also said it would prioritize reinvestment in the business, both organically and through selective M&A, and returning excess cash to shareholders through stock buybacks. Those buybacks will be paused to accumulate cash to help fund the Warner Bros. acquistion. It also said it remains committed to maintaining a investment grade credit rating.

In addition to securing approval from shareholders, Netflix is also engaging with regulators, including the Department of Justice and European Commission, and expects its deal to close within 12 to 18 months from the original deal announcement.

In an effort to thwart the Netflix deal, Paramount Skydance has launched a $30 per share, all-cash hostile takeover bid for all of Warner Bros. Discovery.

The $108.4 billion tender offer is set to expire on Wednesday at 5 p.m. ET, though that deadline is expected to be extended after a Delaware judge dismissed its motion to expedite proceedings in its lawsuit against Warner Bros. Discovery. As of Dec. 19, less than 400,000 WBD shares had been validly tendered to Paramount Skydance. 

Netflix to expand licensed titles and games, improve product features and AI capabilities

Netflix subscribers watched 96 billion hours of content on the service, up 2% year over year in the second half of 2025. The growth was driven by viewing of originals, which was up 9% year over year for the period. However, that growth was partially offset by a year-over-year decline in “viewing of non-branded view hours,” which reflected a lower volume of licensed, second-run content across most regions after an elevated period of licensing during the WGA strike.

In 2026, the company will expand its offering licensed titles, with the company striking a deal with Universal. It also licensed roughly 20 shows from Paramount including “Matlock” and “King of Queens” for international territories and “Seal Team,” “Watson” and “Mayor of Kingstown” for US and international territories. It also expanded its Pay 1 film pact with Sony Pictures Entertainment.

It also plans to expand its gaming offering, with Netflix launching TV-based party games including Boggle, Pictionary, Lego Party and Tetris, to roughly one-third of its members. It will also launch a newly reimagined FIFA football simulation game. It will also continue to evolve its product features, including interactive experiences such as live voting and Moments, connectivity to play games on TV from a phone, real-time personalized recommendations that respond to moods and interests in the moment, and new discovery and viewing experiences including thematic title collections and vertical video on mobile.

Additionally, Netflix began testing new AI tools for advertisers in 2025 to create custom ads based on the company’s IP and will build on that progress in 2026. It also introduced automated workflows for ad concepts and used advanced AI models to streamline campaign planning, significantly speeding up these processes. On the content production and promotion side, AI is being used to improve subtitle localization and will be expanded to help with merchandising.

More to come…

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