Core Insights - Netflix reported fourth-quarter 2025 earnings of 56 cents per share, exceeding the Zacks Consensus Estimate by 1.82% and marking a 30.2% increase from the previous year [1] - Revenues rose 18% year over year to $12.05 billion, driven by membership growth, higher subscription pricing, and increased advertising revenues, surpassing the consensus mark by 0.67% [1][2] Financial Performance - Operating income reached $2.96 billion, up 30% year over year, with an operating margin of 24.5%, reflecting a two percentage point increase [3] - Net income included approximately $60 million in costs related to a bridge loan associated with the Warner Bros. acquisition [4] - Marketing expenses were $1.11 billion, technology and development expenses totaled $890.3 million, and general and administration expenses reached $567.8 million [5] Membership and Engagement - Netflix surpassed 325 million paid memberships, with significant engagement as members watched 96 billion hours in the second half of 2025, a 2% increase year over year [6][9] - The final season of "Stranger Things" generated 120 million views, contributing to high engagement levels [7] Content Performance - Successful fourth-quarter releases included "Emily in Paris" S5 (41 million views) and "Nobody Wants This" S2 (31 million views) [8][10] - Live events, such as Anthony Joshua's fight, generated significant audience engagement, with a 33 million average minute audience [13] Advertising Growth - Advertising revenues exceeded $1.5 billion in 2025, more than doubling year over year, as Netflix enhanced its advertising technology capabilities [15][16] - Partnerships with Spotify and iHeartMedia were announced to expand content offerings [17] Balance Sheet and Cash Flow - As of December 31, 2025, Netflix had cash and cash equivalents of $9.03 billion and total debt of $14.46 billion [18] - Non-GAAP free cash flow for the fourth quarter was $1.87 billion, compared to $1.38 billion in the prior year [18] Acquisition Update - Netflix announced plans to acquire Warner Bros. Discovery for an all-cash transaction valued at $27.75 per share, expected to enhance its content library and subscription options [21][22][23] - The company will pause share buybacks to accumulate cash for the acquisition while maintaining a solid investment-grade rating [24] Future Outlook - For Q1 2026, Netflix expects revenues of $12.16 billion, indicating a 15.3% year-over-year growth [25] - Full-year 2026 revenue is projected between $50.7 billion and $51.7 billion, representing 12% to 14% growth, driven by membership increases and a projected doubling of ad revenues [26][28]