On January 20, 2026, Netflix released its Q4 2025 shareholder letter, reporting it crossed 325 million paid memberships during Q4 and delivered $45.2B in 2025 revenue (+16%) with a 29.5% operating margin. Netflix also disclosed that ad revenue rose more than 2.5x to over $1.5B in 2025.

Looking ahead, Netflix forecasts 2026 revenue of $50.7B–$51.7B (+12%–14%), with ad revenue expected to roughly double versus 2025 and a 31.5% operating margin target.

Netflix attributed Q4 revenue growth to membership growth, higher pricing, and increased ad revenue, and noted Q4 net income included ~$60M of costs booked in interest expense tied to a Warner Bros.-related bridge loan. It also said its 2026 margin outlook includes ~$275M of acquisition-related expenses.

The Warner bid context

In a separate but related development, Netflix and Warner Bros. Discovery announced they amended their agreement to an all-cash transaction, with closing subject to conditions including completion of the Discovery Global separation, regulatory approvals, and WBD shareholder approval.

Reuters reported the amended proposal values WBD at $27.75 per share (about $82.7B), describing it as a move to increase deal certainty amid competing interest.

INSIDER TAKE

Netflix’s letter is notable less for any single headline number and more for how explicitly it frames the business: membership scale + pricing + advertising as a unified growth engine for 2026.

Two implications stand out for the broader subscription economy:

• Advertising is now being treated as a core monetization layer, not an optional tier. Netflix not only broke out the 2025 ad revenue milestone (over $1.5B) but also tied 2026 top-line growth expectations to a roughly doubled ads business. That is the kind of forward framing that tends to cascade across boardrooms.

• The “unit” of subscription value continues to evolve. Netflix emphasizes “paid memberships” (and an audience approaching one billion people globally), reinforcing how large platforms increasingly talk about scale and value beyond a single login count.

On the M&A thread, Netflix’s own materials and the all-cash amendment make the Warner transaction a real, active variable in 2026 planning, not a speculative headline. The strategic consequences (portfolio scale, bundling leverage, and regulatory scrutiny) are likely to remain a second storyline alongside the operating model outlined in the earnings letter.