Netflix (NFLX.O) reported slightly higher-than-expected revenue and earnings for its holiday-quarter results on Tuesday, delivering $12.1 billion in revenue and adjusted earnings of 56 cents per share.
Analysts had forecast $11.97 billion in revenue and 55 cents per share, according to LSEG data. Despite surpassing expectations, Netflix shares dropped more than 4% in after-hours trading as the streaming giant remains embroiled in a heated bidding war for Warner Bros Discovery (WBD.O).
The quarterly results coincided with Netflix amending its $82.7 billion all-cash offer to acquire Warner Bros. The move is seen as an attempt to fend off a competing hostile bid from Paramount Skydance (PSKY.O).
Netflix executives emphasized that the acquisition, which includes Warner Bros’ film and television studios, HBO Max, and iconic franchises such as Game of Thrones, Harry Potter, and DC Comics superheroes like Batman and Superman, would expand the company’s content library and strengthen its subscriber offerings.
“Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty,” said Co-CEO Ted Sarandos in a statement accompanying the amended bid. Netflix also secured commitments for $67.2 billion in bridge loans to support the acquisition and paused share buybacks to preserve cash for the deal. The company has already incurred $60 million in financing-related costs.
The company’s holiday-quarter performance was supported by continued growth in its subscriber base, which reached 325 million paid members, up from 300 million at the end of 2024. Nielsen data reported that Netflix’s monthly viewership rose 10% in December, driven primarily by the final season of the hit sci-fi series Stranger Things, which generated 15 billion viewing minutes. Additional contributors included two National Football League games streamed on Christmas Day and the release of the third installment in the Knives Out murder-mystery series.
Netflix offered full-year 2026 revenue guidance of $50.7 billion to $51.7 billion, slightly below analysts’ consensus at the low end. The forecast includes a projected doubling of advertising revenue year-over-year to approximately $3 billion. Co-CEOs Ted Sarandos and Greg Peters highlighted plans to expand live events internationally, including the World Baseball Classic in Japan, and to enter the video podcast market with talent like Pete Davidson and Michael Irvin. Netflix is also broadening its advertising offerings, including interactive formats and flexible ad structures designed to optimize business outcomes.
Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, said: “Historically, Netflix has not shied away from doing what’s right for long-term growth even at the expense of near-term negative share price reaction. That seems to be the case again.” Analysts noted that while Netflix beat revenue and earnings expectations, the after-hours share drop reflects market concerns over the financial and operational risks tied to the Warner Bros acquisition.
John Belton, portfolio manager at Gabelli Funds, observed: “If this Warner Bros deal closes, one of the benefits is going to be a much bigger content library, which could, in theory, mean slower, less need to invest so aggressively to grow that library over time. This provides Netflix with more flexibility in managing its content spending.”
Netflix’s amended Warner Bros acquisition is part of a broader strategy to strengthen its competitive position through both organic growth and strategic content expansion. The company’s leadership has emphasized that the acquisition would allow for more personalized and flexible subscription offerings, while further diversifying its revenue streams through a growing advertising business.
While Netflix’s quarter highlights robust subscriber growth and steady revenue performance, investors are closely watching the outcome of the Warner Bros bidding war. The deal underscores the streaming giant’s willingness to take bold strategic actions to secure premium content and bolster its long-term growth, even amid short-term volatility in its stock price.
Explore more exclusive insights at nextfin.ai.