Media Quick Take: Netflix closes out 2025 on a strong note

Despite drama swirling around its bid to acquire Warner Bros., Netflix Inc. posted solid results for the fourth quarter of 2025. The streaming giant finished 2025 with more than 325 million global paid subscribers and strong gains for revenue, operating income and free cash flow.

➤ Fourth quarter revenue of $12.05 billion rose by 17.6% versus the prior-year quarter, fueled by an expanding subscriber base and rapidly growing advertising revenue. Advertising revenue topped $1.5 billion for calendar year 2025, and Netflix executives guided for ad revenue to more than double in 2026.

➤ Operating income grew by 30.1% on an annual basis and free cash flow rose by 35.8% to $1.87 billion in the fourth quarter. The company generated $9.46 billion in free cash flow in 2025, jumping 36.7% from $6.92 billion in 2024.

➤ S&P Global Market Intelligence Kagan estimates total global paid subscribers of 327.7 million at the close of the year, with 113.2 million of those (nearly 35%) on Netflix’s ad-supported tier.

Netflix revenue growth ticked up as 2025 progressed, with the 17.6% annual gain in the fourth quarter the highest market the company has achieved in years. The US and Canada generated $5.34 billion in revenue in the quarter (roughly 44% of total revenue) and saw the highest growth rate of any region at 18.2%. A wave of price hikes in the US and Canada in early 2025 was the primary driver behind gains for that region throughout the year; other regions saw similar revenue increases in the fourth quarter, ranging from about 15% to 18%.

Metrics such as revenue, operating income and free cash flow saw year-over-year growth for each quarter of 2025, with the magnitude of revenue gains more than offsetting increased content costs and higher spending on sales and marketing, technology and G&A. Executives guided for content costs to increase modestly in 2026 as the company continues to spend heavily on originals and expand its live programming, coupled with expanded licensing deals with Sony, Paramount and Comcast.

Netflix stopped reporting subscriber totals by region in 2025, but noted that total global paid subscribers surpassed 325 million during the fourth quarter — typically a strong season for the company's net new subscriber additions. We estimate that paid subscribers stood at 327.7 million at the close of the quarter, up 8.6% from 301.6 million in the prior year quarter. Asia-Pacific paid subscribers grew at the fastest rate in the quarter, at 13.5%, while Europe, the Middle East and Africa accounted for the largest subscriber share at 33% of total global subs.

The company also provided additional details around traction for its advertising business, noting that total ad revenue in 2025 exceeded $1.5 billion and grew 2.5x from 2024 levels — implying more than $600 million in ad revenue in 2024. Company guidance for 2026 is for ad revenue to roughly double, driven by the launch of new ad formats, a growing roster of advertisers, and monetization improvements enabled by Netflix's in-house advertising platform. We estimate the company ended 2025 with 113.2 million subscribers on its ad tier plan, accounting for 34.6% of all paid subs.