Netflix (NASDAQ:NFLX) executives used the company’s Q4 2025 earnings interview to highlight what they described as a strong 2025 performance, outline 2026 financial guidance, and provide expanded commentary on content investment, engagement trends, advertising monetization, gaming, and the company’s planned acquisition of Warner Bros. Studios and HBO.
2025 results and long-term aspirations
In response to a question about long-term internal goals that were previously reported, management emphasized that the company uses “long-term aspirations” internally, but said those goals were based on organic progress and “did not contemplate or assume any M&A.” Executives said they have seen “continued growth” over the last nine months and are forecasting “more healthy growth” for the year ahead, again stressing the opportunity is primarily organic.
- 16% revenue growth
- Roughly 30% operating profit growth
- Margin expansion and growing free cash flow
- Advertising sales increasing 2.5x in 2025
Looking forward, executives described the runway as significant, noting the company is still under 10% of TV time in major markets and is “about 7% of the addressable market” in consumer and advertising spend.
2026 guidance: revenue, margins, and content spending
Netflix forecast 2026 revenue of $51 billion, which management said would be up 14% year over year. The company said the key drivers for 2026 revenue are membership growth, pricing, and another “rough doubling” of ad revenue to about $3 billion.
For profitability, Netflix guided to a 31.5% operating margin for 2026, which executives characterized as two points of expansion. The company added that the margin outlook includes an estimated half-point drag from expected M&A-related expenses; excluding that, management implied about 2.5 points of expansion.
On content costs, management addressed analyst questions about the company’s content amortization outlook. CFO Spence Neumann said 2025’s content slate was “heavily back half weighted,” while 2026 should have “more typical seasonality,” though still with a heavier fourth quarter. Netflix expects content amortization to rise roughly 10% year over year in 2026. The company also said its content cash-to-expense ratio should remain steady at approximately 1.1x, maintaining its approach of growing content spend slower than revenue to support margin expansion.
Content strategy: originals, licensing, live, and podcasts
Executives reiterated that Netflix does not plan to shift away from Netflix original films, even as the company pursues additional licensing. Ted Sarandos said the company will continue producing a slate of original films while also licensing films “in every available window.”
Management highlighted new and expanded licensing arrangements, including a global Pay-One movie deal with Sony described as “first-of-its-kind,” an expanded Universal licensing deal that now includes live-action films, and a new slate of licensed titles from Paramount that will bring series and television shows Netflix has not previously carried worldwide.
On live programming, Sarandos said the company has executed more than 200 live events and intends to expand live offerings outside the U.S., including the World Baseball Classic in Japan in March. He described large live events as a small portion of total view hours but said they can have “outsized positive impacts” on conversation and acquisition, with early signs of retention benefits. He also referenced upcoming live programming, including “Star Search” premiering globally with live voting.
Netflix also discussed its entry into video podcasts, calling it early but encouraging. Sarandos compared video podcasts to a “modern talk show” ecosystem with “hundreds” of offerings rather than a single flagship program, and said Netflix expects sports, comedy/entertainment, and true crime to be effective categories. Management said it has launched podcasts from Spotify and The Ringer, iHeartMedia, and Barstool, with more and new originals planned.
Engagement, churn, and how Netflix measures value
Management addressed questions about how engagement relates to churn and pricing power, and how the company evaluates viewing trends. Executives said viewing hours remain important but are “just one of many metrics” and emphasized the “quality” of engagement.
Netflix said total view hours in the second half of 2025 grew 2% year over year, representing 1.5 billion additional hours, an acceleration from 1% growth in the first half. The company said viewing of Netflix-branded originals rose 9% year over year in the second half (versus 7% in the first half) and accounts for roughly half of overall viewing. Meanwhile, viewing of second-run titles was lower year over year due to a reduced volume of licensed titles, which management attributed to elevated licensing activity in 2023 and 2024 during industry strikes that slowed new production.
Executives said Netflix achieved an all-time high in 2025 for its “primary quality metric,” adding that this improvement is reflected in core outcomes such as acquisition and retention. Management said retention is among the best in the industry, churn improved year over year in the most recent quarter, and customer satisfaction is at an all-time high.
In response to questions about the planned Warner Bros. acquisition being interpreted as a remedy for engagement stagnation, management pushed back, arguing that view hours alone can be misleading due to differences in geography and viewing habits. As an example, executives noted that consumers in Japan watch roughly half to two-thirds as much TV as American consumers, and that mix shifts can affect per-member viewing hours.
Warner Bros. Studios and HBO acquisition: rationale, pricing stance, and regulatory process
Management said the planned acquisition would not change its near- to intermediate-term pricing approach, including during the regulatory review process.
Executives described the due diligence process as increasing their enthusiasm for the deal. Greg Peters said Warner Bros. would add a mature theatrical business that complements streaming, noting Netflix had debated building such a capability historically but prioritized other investments. Peters also said the television studio would expand production capability and that Netflix intends to continue producing shows for third parties. On HBO, he called it a complementary service and said owning it would allow Netflix to “further evolve” plan structure and deliver more value while leveraging Netflix’s global footprint and streaming expertise.
CFO Neumann added that on a pro forma basis after closing, Netflix estimates roughly 85% of combined revenues would still come from the core business Netflix operates today, framing the transaction primarily as an accelerator to its existing strategy alongside the addition of a scaled TV and film studio.
On regulatory approvals, Sarandos said Netflix has submitted its HSR filing and is working with Warner Bros. Discovery and regulators including the U.S. Department of Justice and the European Commission. He said Netflix is confident approvals will be secured, characterizing the transaction as “pro-consumer,” “pro-innovation,” “pro-worker,” “pro-creator,” and “pro-growth,” and described it as a “vertical deal.” Sarandos also argued the TV market is highly competitive and increasingly blurred across platforms, citing examples such as sports and awards programming appearing on major tech and video platforms.
Separately, Sarandos said that once the deal closes, Netflix will be “in the theatrical business” and plans to maintain and strengthen Warner Bros.’ theatrical distribution. He said Warner Bros. films would continue to be released in theaters with a 45-day window, as they are today, and noted the business has more than $4 billion of global box office.
Advertising and product: narrowing ARM gap and new ad formats
On advertising, management said there is still a gap between average revenue per membership (ARM) on the ad-supported tier and the standard plan without ads, but that the gap is narrowing. Executives said closing that gap represents an opportunity as Netflix improves capabilities, expands demand sources, and scales its in-house ad tech stack.
Netflix said its focus for the next several years is likely to be increasing monetization of growing ad inventory, and it reiterated the expectation that ad revenue will roughly double in 2026 to about $3 billion. Management said it believes it can increase fill rates while maintaining similar CPMs.
The company outlined initiatives tied to its ad platform, including making more first-party data available in a privacy-safe way, expanding ad formats and interactivity, and rolling out modular interactive video ads globally by Q2 2026 after testing in late 2025. Executives also said the company will use six-plus months of historical campaign data from its own ad stack to improve RFP processes and media planning outcomes.
On product innovation, Netflix said it has been testing vertical video features for about six months, including a mobile vertical feed filled with clips from Netflix shows and movies. Management said this work is part of a broader mobile experience upgrade, with a new mobile UI expected to roll out later in 2026.
Gaming: cloud-first TV games and expanding access
Netflix described progress in gaming, citing “positive results” with games such as Red Dead Redemption and comparing performance to prior traction with GTA. Management said a major priority is cloud-based TV games, which it called an “exciting launch” still in early rollout. Executives said roughly a third of Netflix members currently have access to TV-based games, dependent on upgrading TV client technology.
Netflix said party games on TV, including Boggle, Pictionary, and Lego party games, have shown strong uptake, though off a small base, with about 10% reach among eligible members. Looking to 2026, the company said it plans to expand the cloud-first strategy and roll out more cloud games, including a newly reimagined FIFA football simulation game. Management reiterated that it will ramp investment in developing initiatives based on demonstrated member value and business returns.
About Netflix (NASDAQ:NFLX)
Netflix, Inc (NASDAQ: NFLX) is a global entertainment company that provides subscription-based streaming of films, television series, documentaries and other video content. Founded in 1997 by Reed Hastings and Marc Randolph and headquartered in Los Gatos, California, the company began as a DVD-by-mail rental service and introduced streaming video in 2007. Netflix later expanded into producing and distributing original programming, beginning notable original hits in the 2010s, and now operates a content production and distribution ecosystem alongside its licensing activity.
The company’s primary product is its on-demand streaming service, which can be accessed on a wide range of internet-connected devices and delivered through a suite of apps and web platforms.
