Netflix announced on Tuesday that it had achieved 325 million paid subscribers worldwide, a new milestone in the streaming giant that reported membership figures in the previous year.
The company released fourth-quarter earnings and revenue that exceeded Wall Street estimates by some margin. The following is the performance of Netflix, compared to the expectations of analysts, as polled by LSEG, as of the period ended on December 31: Earnings per share: 56 cents compared to 55 cents, which were estimated. Revenue: $12.05 billion compared to $11.97 billion, estimated.
Fourth-quarter net income increased to $2.42 billion or 56 cents per share compared to the fourth-quarter net income of one year ago, which was $1.87 billion or 43 cents per share.
Netflix reported that revenue in the period increased by 18 percent compared to the year before, which was driven by a surge in memberships, higher subscription prices, and additional revenue from advertising. Over the past few years, Netflix has been working on expanding its ad-supported membership tier.
The ad feature was introduced by Netflix at the end of 2022. It reported on Tuesday that ad revenue increased by over 2.5-times between 2024 and 2025 to over $1.5 billion.
The company forecasted that the total revenue will grow by 2026 to the range of $50.7 billion to $51.7 billion, due to the growth of membership and pricing, “a projected rough doubling of ad revenue in 2026,” compared to the previous year.
During an earnings call with investors on Tuesday, Netflix executives pointed to what they termed as overheated competition among industry rivals in terms of finding subscribers and increasing profitability.
Co-CEO Ted Sarandos said, “Looking ahead to ’26, we’re focused on improving the core business, you know, and we do that by increasing the variety and quality of our series and films.”
However, the stock of Netflix dropped by over 4 percent in the after-market on Tuesday. The report by Netflix received comparisons with a Wall Street Journal report published in April that described ambitious internal financial goals in the streamer. By those high expectations, Netflix underperformed in terms of growth.
Co-CEO Greg Peters stated on Tuesday that the internal targets were considered “long-term aspirations” and not to be confused with a forecast. Peters reported, noting that they didn’t take into account the effect of mergers and acquisitions, “Having said that, those goals were based on organic process.”
The Netflix quarterly report is published in the context of its announced deal with the streaming and film studio resources of Warner Bros. Discovery. The announcement of the company in December that it had settled on purchasing streamer HBO Max and the Warner Bros. film station at $27.75 per WBD share or an equity worth $72 billion.
At an earlier point on Tuesday, Netflix had changed its offer to be in cash. The firm announced that it would suspend repurchases of its shares to finance the buyout.
In a letter to the shareholders, Netflix claimed that it believes that the transaction will “allow us to accelerate our business strategy.”
Netflix added that Warner Bros.′ library, development, and intellectual property will help increase its content selection for members and that HBO Max will help to “offer more personalized and flexible subscription options.”
The suggested acquisition was a market shock, since the streaming giant has never ventured into industry consolidation and mega deals. The stock of the company has fallen almost 30 percent since October, when Netflix was initially reported to have been interested in the assets.
Meanwhile, the prospective purchase has not been smooth sailing. Shortly after the announcement of the deal with Netflix, Paramount Skydance initiated a hostile bid to purchase WBD entirely.
Another issue that has scuttled the Netflix deal through its lawmakers and industry insiders is whether the deal will receive key regulatory approvals.
Sarandos said on Tuesday’s call, “We’re working really hard to close the acquisition of Warner Bros. Studios and HBO, which we see as a strategic accelerant. And we’re doing all this while we’re driving and sustaining healthy growth.”
Sarandos stated that Netflix has already begun the regulatory process, and he is sure the company can obtain the regulatory approval, “because this deal is pro-consumer, … pro-innovation, pro-worker.”
The company has asserted on numerous occasions that the combination would maintain employment in an era of massive layoffs in the media. Sarandos indicated on Tuesday that the assets of Warner Bros. would come with the introduction of businesses that do not already exist for Netflix.
Sarandos reported, “We’re going to need those teams, these folks that have extensive experience and expertise. We want them to stay on and run those business. So we’re expanding content creation, not collapsing it in this transaction.”
Both Sarandos and Peters talked about the degree of competition in the media industry, which they reported to cut across different platforms, both traditional television and social media platforms such as YouTube.
CNBC previously reported that the argument to antitrust regulators that Netflix is a small entity within a very large competitive environment is likely to hinge on proving the point.
