Netflix stock (NFLX) slipped 4% after posting fourth-quarter results that narrowly beat expectations and arrived against the overshadowing backdrop of the company’s newly amended acquisition proposal to take over Warner Bros. Discovery (WBD).
The streaming pioneer narrowly topped Street consensus for revenues with $12.05B (reflecting year-over-year growth of 17.6%) and boosted operating income by 30% (to $2.96B). Operating margin rose from a year-ago 22.2% to 24.5%.
Net income, meanwhile, rose 29% year-over-year to $2.42B and earnings per share edged Wall Street forecasts.
Early Tuesday, Netflix (NFLX) responded to a competing hostile offer for WBD from Paramount Skydance (PSKY) by amending its own WBD offer to an all-cash deal. While Paramount Skydance is offering $30 per share for all of WBD including TV networks, Netflix is offering $27.75 per share for Warner Bros. studios and streaming (with networks in Discovery Global set to spin out from WBD).
Alongside earnings, Netflix (NFLX) noted that the deal also expedites the timeline toward a shareholder vote at WBD and again touted “two main areas” of benefits: “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.”
Engagement
“With over 325M paid memberships, we’re now serving an audience approaching one billion people globally,” the company said.
Members watched 96B hours on Netflix in the second half of 2025, up 2% Y/Y, vs. a 1% gain in the first half, which the company credited to a strong branded content slate including Stranger Things, Nobody Wants This, Guillermo Del Toro’s Frankenstein, Wake Up Dead Man: A Knives Out Mystery, A House of Dynamite and others.
That was offset partly by a decline in non-branded view hours, in part due to a lower volume of licensed, second-run content.
Cash flow
Net cash provided by operations rose significantly year-over-year, to $2.11B from a year-ago $1.54B (but down from last quarter’s $2.83B).
Free cash flow, meanwhile, rose 36% year-over-year to $1.87B. That was down from last quarter’s $2.66B.
Analyst reaction
“I suspect the stock’s post-earnings weakness to be due to a combination of factors, ranging from the stock’s rich valuation heading into the report, management’s guidance for margin expansion to be more back-weighted (raising execution risk), and uncertainty related to the Warner Bros acquisition,” said Seeking Alpha analyst Julian Lin, Investing Group Leader for Best Of Breed Growth Stocks.
Guidance
For 2026, the company is forecasting revenue of $50.7B-$51.7B, in line with consensus for $50.98B. That will be driven by increases in membership and pricing as well as a “projected rough doubling” of ad revenue vs. 2025.
It’s aiming for an operating margin of 31.5%, up from 29.5% in 2025, allowing for some $275M in acquisition-related expenses, as well as for content amortization growth of about 10% for the year. There’s “plenty of room” to increase margins and grow operating margin each year, Netflix (NFLX) said.
Netflix’s (NASDAQ:NFLX) usual live executive earnings interview will begin at 4:45 p.m. ET.