Netflix edged past Wall Street expectations in the fourth quarter and revealed a major milestone it had not shared in a year. The streaming giant now counts 325 million global paid subscribers, even as competition across entertainment continues to intensify.
The company reported results after market close on Tuesday.
How Netflix performed
For the quarter ended December 31, Netflix delivered a modest beat on both earnings and revenue, compared with estimates from analysts polled by LSEG:
- Earnings per share: 56 cents vs. 55 cents expected
- Revenue: $12.05 billion vs. $11.97 billion expected
Net income rose to $2.42 billion, or 56 cents per share, up from $1.87 billion, or 43 cents per share, a year earlier.
Revenue climbed 18% year over year, driven by subscriber additions, price increases, and growing advertising sales.
Advertising becomes a growth engine
Netflix continues to lean into its ad-supported tier, which launched in late 2022. That bet is starting to pay off.
The company said ad revenue in 2025 grew more than 2.5 times compared with 2024, reaching over $1.5 billion. Management expects that momentum to accelerate.
Looking ahead, Netflix forecasts 2026 revenue between $50.7 billion and $51.7 billion, citing ongoing membership growth, higher pricing, and a projected doubling of ad revenue versus 2025.
Market reaction turns negative
Despite the solid results, investors focused on what comes next. Netflix shares fell more than 4% in after-hours trading.
On the earnings call, co-CEO Ted Sarandos acknowledged the pressure the company faces.
“Looking ahead to ’26, we’re focused on improving the core business by increasing the variety and quality of our series and films,” he said.
Some investors compared the results to ambitious internal growth targets previously reported by The Wall Street Journal. Co-CEO Greg Peters pushed back, saying those figures reflected long-term aspirations rather than formal guidance.
Warner Bros. Discovery deal raises questions
The earnings report landed as Netflix navigates uncertainty around its proposed acquisition of Warner Bros. Discovery’s streaming and studio assets.
In December, Netflix announced plans to acquire HBO Max and Warner Bros. Studios for an equity value of $72 billion, or $27.75 per WBD share. Earlier Tuesday, the company amended the offer to an all-cash deal and said it would pause share buybacks to help fund the purchase.
The move surprised the market. Netflix has historically avoided large-scale media acquisitions.
Since rumors of the deal surfaced in October, Netflix shares have fallen nearly 30%. The transaction now faces regulatory scrutiny and competition from a rival bid involving Paramount Skydance.
Sarandos said Netflix has begun the approval process and expressed confidence the deal will close.
“This deal is pro-consumer, pro-innovation, and pro-worker,” he said, adding that Netflix plans to retain Warner Bros. teams rather than cut jobs.
The bigger picture
Both Sarandos and Peters emphasized that Netflix now competes not only with traditional studios but also with platforms like YouTube, where attention, not subscriptions, drives growth.
The message was clear. Netflix is still growing. Advertising is scaling fast. But as the company pushes into its next phase, investors are weighing how much risk comes with that ambition.
Algi Febri Sugita | SOPA Images | Lightrocket | Getty Images
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