Netflix posted better-than-expected revenue and profit for the final quarter of 2025, according to results released Tuesday. Yet, shares declined over 4% in after-hours trading, as investors focused on the company’s costly efforts to acquire Warner Bros. Discovery.
Fourth-quarter net profit reached $2.42 billion, representing $0.56 earnings per share, surpassing the average analyst forecast of $0.55 per share by LSEG. In the same quarter a year ago, Netflix recorded $1.87 billion in net income, or $0.43 per share. Revenue for the October-December period came to $12.1 billion, modestly ahead of the $11.97 billion anticipated by analysts.
The company attributed its 18% year-over-year revenue increase to gains in membership numbers, higher subscription fees, and strong advertising growth. During the quarter, Netflix reached 325 million paid subscribers, increasing from 300 million during the same period in 2024.
The ad-supported subscription tier, launched at the end of 2022, contributed significantly, with ad revenue in 2025 rising by more than two and a half times over 2024 to exceed $1.5 billion.
Netflix issued full-year revenue guidance for 2026 in the range of $50.7- $51.7 billion. Although this projects a substantial increase—incorporating a planned doubling of advertising income to approximately $3 billion as outlined by CFO Spencer Neumann—the lower end of the range fell just short of analyst expectations of $50.98 billion.
The earnings release coincided with Netflix’s announcement of an amended $82.7 billion merger agreement with Warner Bros Discovery. The company switched to an all-cash bid—seeking to enhance deal certainty—as it contends with a rival offer by Paramount Skydance.
Netflix also indicated it would suspend share repurchases, with the intent of preserving cash for the Warner Bros. transaction, for which it has already recorded $60 million in financing-related expenses.
In December, Netflix revealed plans to acquire HBO Max and the Warner Bros. film studio for an equity value of $72 billion—set at $27.75 per share for Warner Bros Discovery. Management emphasized the strategic value of acquiring Warner Bros.’ content, production resources, and intellectual property. Netflix expects HBO Max to broaden its streaming portfolio and enable more customizable subscriptions.
As negotiations for the Warner Bros. acquisition progress, Netflix is focused on advancing the deal while managing the financial implications of its expanded growth strategy.
