Netflix reported fourth quarter 2025 results reflecting continued top-line momentum and expanding profitability, closing a year in which management stated the company met or exceeded all internal financial objectives.
Q4 revenue reached $12.05 billion, representing 18% year-over-year growth, or 17% on a foreign exchange–neutral basis. Operating income rose 30% year over year to approximately $3.0 billion, while diluted EPS increased to $0.56 from $0.43 in the prior-year quarter.
Management attributed the quarter’s outperformance relative to guidance primarily to stronger-than-expected membership growth and advertising revenue, partially offset by unfavorable FX movements.
#Financial Performance Breakdown
A combination of paid membership expansion, pricing actions, and accelerating advertising sales drove revenue growth in Q4. Netflix ended the quarter with over 325 million paid memberships globally. Operating margin expanded to roughly 25%, up two percentage points year over year, benefiting from scale and revenue leverage, despite higher content amortization and operating expenses. For the full year 2025, revenue totaled $45.2 billion, up 16% year over year, with operating margin improving to 29.5% from 26.7% in 2024.
Advertising revenue surpassed $1.5 billion for the full year, more than 2.5 times higher than in 2024, marking Netflix’s third year in advertising. Q4 free cash flow was $1.9 billion, compared with $1.4 billion a year earlier, supported by higher operating income and favorable timing of certain cash items. The company ended the quarter with $9.0 billion in cash and equivalents and $14.5 billion in gross debt, prior to funding considerations related to the pending Warner Bros. acquisition.
#Strategic and Operational Highlights
Engagement trends remained stable, with global view hours increasing 2% year over year in the second half of 2025. Management noted that branded original content viewing rose 9%, supported by a strong Q4 slate across series, films, documentaries, and stand-up specials. This growth was partially offset by a decline in non-branded, licensed viewing, reflecting reduced availability of second-run content following elevated licensing during the 2023–2024 production disruptions.
Netflix continued expanding beyond traditional scripted content. During the quarter, the company advanced initiatives in live programming, cloud-based games, and video podcasts. Live events such as major boxing and NFL broadcasts were highlighted as delivering disproportionate engagement relative to total viewing hours. The company also rolled out enhancements to its TV user interface and continued testing AI-driven tools for advertising creation, content localization, and personalization.
#Management Commentary and Outlook
Looking ahead, management forecast 2026 revenue of $50.7 billion to $51.7 billion, implying 12%–14% year-over-year growth based on FX rates as of January 1, 2026. Advertising revenue is expected to roughly double again in 2026, building on the progress made in 2025.
Netflix targets a 2026 operating margin of 31.5%, inclusive of approximately $275 million in acquisition-related expenses tied to the planned Warner Bros. transaction. Management cautioned that content amortization growth and FX movements could influence quarterly margin variability.
#Investor Takeaway
Netflix’s Q4 2025 results highlight continued execution on revenue growth, margin expansion, and free cash flow generation, alongside meaningful progress in advertising and newer content formats.
However, management emphasized that the entertainment market remains highly competitive, with ongoing investment requirements and integration risks related to the proposed Warner Bros. acquisition.
While the company outlined a constructive outlook for 2026, outcomes remain dependent on execution, consumer engagement trends, FX conditions, and regulatory approvals.