Netflix posted its Q4 earnings on Tuesday after announcing that it had converted the $72 billion equity deal with Warner Bros from stock and cash to all cash—an acquisition that will see the streaming giant gain control over all of Warner Bros franchises in movies, cable network HBO, and streaming platform HBO Max.
At the time of writing, Netflix shares closed on Tuesday at $87.05.
The streaming giant is disclosing its quarterly financial results at a time when investors are keenly watching how the market will react to any update it makes regarding what could be one of the largest deals in show business.
The official shareholder letter addressed the Warner bros acquisition in detail.
“We believe our proposed purchase of Warner Bros. will allow us to accelerate our business strategy. Together, we see two main areas of opportunity. First, Warner Bros.’ library, development and IP will allow us to provide an even broader and higher-quality selection of content for members; and, second, the addition of HBO Max will allow us to offer more personalized and flexible subscription options, better meeting the diverse preferences of our global audience,” read the letter.
“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. 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,”
Revenues for Q4 were estimated at $12.05 billion, up by 17.6% from Q4 2024. Total revenue for 2025 was $45.2 billion, up by 16% year over year. Netflix attributed the large gain in revenue to
- an increase in paid subscribers to over 325 million memberships;
- a boost in earnings from its ads segment to $1.5 billion in 2025
- a large catalogue of exclusives and original content, which boosted engagement for the year.
North America and EMEA continued to be the company’s two largest regional markets in Q4 in terms of dollar value, with revenues of $4.5 billion and $3.3 billion, respectively.
While revenues increased on a year-on-year basis, q-o-q growth showed a slump in operating income and net income. Operating income was $2.96 billion, and net income was $2.4 billion. Free cash flow also slumped from Q3 to $1.87 billion.
The company maintains an optimistic outlook for 2026, providing fiscal guidance for revenues ranging from $50.7 billion to $51.7 billion; doubling of ad revenue; and an operating margin of 31.5%.
Netflix is also targeting growth in newer segments—apart from its core business of movies and TV shows—such as video-based podcasts and cloud-based gaming.
Viewership of Netflix originals—content which the streaming company produces itself, either completely or in collaboration with a studio or which it acquires exclusive rights over early on—showed an increase of 9% in year-over-year growth.
Netflix also continues to lean heavily on movies and TV shows produced by other studios, leveraging multiple partnerships with Paramount, Universal, and Sony Entertainment Pictures to run more content.