Netflix top brass said their planned acquisition of Warner Bros would be an “accelerant” to overall growth as they discussed solid Q4 2025 earnings on Tuesday (January 20) and provided the first subscriber update in a year as global membership exceeded 325m.
Co-CEOs Ted Sarandos and Greg Peters stressed that the streamer remained on a path to continued “organic” growth without even factoring in their newly-adjusted all-cash $83bn agreement to buy Warner Bros’ streaming and studios business.
Hailing a “massive” opportunity ahead, Peters noted that Netflix viewership still claimed less than a 10% share of TV time in all major markets where the company competes, adding that there were hundreds of millions of households yet to sign up to the service, and that Netflix had 7% of the addressable market in consumer and advertising spend.
Netflix stock fell 1% to $87.05 at market closing and dropped by 4% after hours. The company’s stock has plunged approximately 30% in the last three months, reflecting previous investor concern over the stock component of its bid for Warner Bros – an issue the streamer has moved to address by switching to an all-cash offer.
Warner Bros talk
The issue of Warner Bros was never far from analysts’ thoughts during the earnings ”call”. Fielding hand-picked questions that were read out, possibly to avoid potentially awkward follow-ups, the executives emphasised the planned acquisition would complement their business.
Sarandos acknowledged the pivot away from the oft-repeated mantra that the streamer was a builder, not a buyer. “This is a business and not a religion,” he said, noting that times change and that the executives had engaged in internal debates about the merits of entering the theatrical distribution space. “When this deal closes we will have the benefit of having a scaled, world-class theatrical distribution business with more than $4bn of global box office and we’re excited to maintain it and further strengthen that business.”
And the executive repeated his comments last week in an interview with The New York Times. “So, Warner Bros films are going to be released in theatres with a 45-day window, just like they are today. This is a new business for us and one that we’re really excited about.”
Peters said the planned deal had no impact on the streamer’s pricing approach for the near- to mid-term future.
Financials
Netflix narrowly beat Wall Street estimates based on analysts polled by LSEG as revenues for the fourth quarter reached $12.05bn compared to the $11.9bn estimate. The company said 17.6% year-on-year revenue growth was fuelled by subscriber increases, price hikes, and higher advertising revenue.
By region, North America accounted for $5.3bn of revenue in the period ended December 31 2025 (for an 18% year-on-year increase), followed by Europe, Middle East and Africa on $3.9bn for the quarter (18% increase), Latin America on $1.4bn (15% increase), and Asia Pacific on $1.4bn (17% increase).
Earnings per share for the period ended December 31 2025 was 56 cents versus the consensus estimate of 55 cents. Operating income reached $2.9bn, operating margin was 24.5%, and net income was $2.4bn.
In 2025, Netflix earned $45.2m in revenue, a 16% climb over the prior year, and operating margins climbed three percentage points to 29.5%. Three years after launching the ad-supported tier, advertising revenue increased more than two-and-a-half times to $1.5bn.
Executives are forecasting $51bn revenue in 2026 and expect to spend roughly 10% more on content than in 2025, or approximately $20bn.
Content and engagement
Netflix’s bi-annual Engagement Report said subscribers watched 96bn hours in the second half of 2025, which was an increase of 2% or more than 1.5bn hours viewed over the prior year and a 1% gain on the first half, driven by a 9% year-on-year increase in viewership of originals.
However Peters noted that viewership of second-run titles dropped year-on-year as the company licenced fewer film and television across most regions compared to 2023-24 during and in the aftermath of the Hollywood strikes.
Since debuting in Q4, the final season of Stranger Things drew more than 120m views by January 18. Guillermo del Toro’s Oscar contender Frankenstein earned 102m views, with A House Of Dynamite on 78m. All three titles had been on the service for less than 91 days as of January 18. Wake Up Dead Man: A Knives Out Mystery drew 66m views.
Looking ahead in film, Sarandos said there would continue to be a blend of originals and licensed titles. Anticipated 2026 programming is led by Greta Gerwig’s Narnia in November; Peaky Blinders: The Immortal Man starring Cillian Murphy; and Denzel Washington and Robert Pattinson in the heist caper Here Comes The Flood.
Peters also addressed vertical video. He said the company put a vertical video feed of Netflix series and films in its mobile app several months ago, and was planning to introduce the feed to the general service.
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