Streaming video giant Netflix (NASDAQ: NFLX) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 17.6% year on year to $12.05 billion. The company expects next quarter’s revenue to be around $12.16 billion, close to analysts’ estimates. Its GAAP profit of $0.56 per share was in line with analysts’ consensus estimates.
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Netflix (NFLX) Q4 CY2025 Highlights:
- Revenue: $12.05 billion vs analyst estimates of $11.97 billion (17.6% year-on-year growth, 0.7% beat)
- EPS (GAAP): $0.56 vs analyst estimates of $0.55 (in line)
- Revenue Guidance for Q1 CY2026 is $12.16 billion at the midpoint, roughly in line with what analysts were expecting
- EPS (GAAP) guidance for Q1 CY2026 is $0.76 at the midpoint, missing analyst estimates by 6.2%
- Operating Margin: 24.5%, up from 22.2% in the same quarter last year
- Free Cash Flow Margin: 15.5%, down from 23.1% in the previous quarter
- Market Capitalization: $402.1 billion
Company Overview
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Netflix’s sales grew at a decent 12.6% compounded annual growth rate over the last three years. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Netflix reported year-on-year revenue growth of 17.6%, and its $12.05 billion of revenue exceeded Wall Street’s estimates by 0.7%. Company management is currently guiding for a 15.3% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13% over the next 12 months, similar to its three-year rate. This projection is particularly noteworthy for a company of its scale and suggests the market is forecasting success for its products and services.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Netflix has shown robust cash profitability, driven by its cost-effective customer acquisition strategy that enables it to invest in new products and services rather than sales and marketing. The company’s free cash flow margin averaged 19.5% over the last two years, quite impressive for a consumer internet business.
Taking a step back, we can see that Netflix’s margin expanded by 15.8 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.
Netflix’s free cash flow clocked in at $1.87 billion in Q4, equivalent to a 15.5% margin. This result was good as its margin was 2.1 percentage points higher than in the same quarter last year, building on its favorable historical trend.
Key Takeaways from Netflix’s Q4 Results
We struggled to find many positives in these results. Its EPS guidance for next quarter missed and its revenue guidance for next quarter was in line with Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 5.2% to $83.08 immediately after reporting.
Netflix didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
