Netflix Surpasses Q4 Expectations, Ad Revenue Soars Past $1.5 Billion

Netflix‘s fourth-quarter results edged Wall Street analysts’ estimates, and the company cited “great progress” in its ongoing buildout of an advertising business. Earnings per share came in a penny ahead of expectations at 56 cents, while revenue of $12.051 billion exceeded the target of around $12 billion. The holiday quarter ending December 31 featured the powerhouse launch of the final season of Stranger Things and a successful NFL Christmas Day doubleheader that propelled total streaming to a new industry record. Despite the generally strong financial performance, and a rosy forecast for the first quarter, Netflix shares drifted down 4% in after-hours trading. Many investors are uneasy about the 12 to 18 months process of trying to close the pending acquisition of Warner Bros., and even if it does close (and survive a challenge by Paramount Skydance), the $82.7 billion price tag is considerable. In the second half of 2025, the company said in its quarterly letter to shareholders, total viewing hours increased 2% over the same period in 2024, driven by a 9% rise in viewing of branded originals. In 2025, which was its third full year of selling advertising (which it spent years vowing not to do), the company said it has made “great progress” in the effort. Total ad revenue topped $1.5 billion, which was two-and-a-half times the haul in 2024. Execs said in the shareholder letter that key 2026 priorities include “improving our core business with an increasing variety and quality of series and films, enhancing our product experience, and further growing our ads business.” They plan to expand into more content categories, as they recently did with video podcasts, and add more live events to the mix. Full-year revenue is projected to grow by 12% to 14% to around $51 billion, while advertising revenue should double to more than $3 billion. While Netflix stopped reporting quarterly subscriber totals a year ago, saying engagement and other metrics are a better gauge of its performance, the company said in the shareholder letter that its base is now north of 325 million. That figure lined up with analysts’ outlook. Factoring in the number of people watching per household, Netflix says its total audience is “approaching one billion people globally.” Beyond the financials, Wall Street and the entertainment sector will be listening closely when top executives field questions Tuesday afternoon in the company’s quarterly earnings interview. After stunning the industry in December by announcing a $82.7 billion proposal to acquire Warner Bros., Netflix has been looking to thwart Paramount’s hostile bid for the company.