By Netflix is preparing to report its fourth-quarter fiscal 2025 earnings after the market closes on Tuesday, January 20, with investors focused on whether the streaming giant can sustain revenue growth as US subscriber momentum cools and strategic ambitions expand.
Analysts broadly expect a modest improvement in earnings and revenue, underpinned by continued international subscriber growth, higher prices and a growing contribution from advertising.
However, management commentary around engagement, churn and its proposed acquisition of Warner Bros. Discovery assets is likely to dominate the earnings call.
According to IG Bank estimates, Netflix is on track to post revenue of $11.97 billion for the quarter, up 16.8% from a year earlier.
Net income is projected at $2.39 billion, representing a 27.7% year-on-year increase, while earnings per share are forecast to rise 29.4% to $0.55.
Advertisement revenue is expected to reach $1.08 billion, reflecting the rapid scaling of the ad-supported tier.
Looking beyond the quarter, analysts are projecting roughly 13% revenue growth for Netflix in 2026, suggesting confidence that the company’s evolving business model can continue to deliver steady gains.
Subscriber growth shifts overseas
Although Netflix stopped disclosing subscriber numbers a year ago, estimates continue to shape market expectations.
Data from Visible Alpha suggests the platform added around 10 million net new users during the quarter, taking its global user base to more than 327 million.
The composition of that growth remains important.
Analysts say international markets continue to provide the bulk of new users, while growth in the US has softened as the market matures and competition remains intense.
In this context, pricing power and monetisation per user have become increasingly critical metrics for investors.
Netflix’s third-quarter results offered some reassurance on that front.
The company delivered double-digit year-on-year revenue growth and expanded its operating margin, helped by price increases introduced earlier in the year, ongoing momentum in the ad-supported plan and disciplined content spending.
Those dynamics now set the backdrop for the seasonally strong fourth quarter, typically boosted by holiday viewing and a heavier slate of new releases.
Pricing, engagement and churn under scrutiny
Investor focus will be firmly on whether Netflix managed to sustain engagement levels through the end of the year and whether higher-priced plans continued to lift average revenue per user without triggering a rise in cancellations.
Management said after the third quarter that price increases had been absorbed better than expected, with limited impact on churn.
Confirmation of that trend in the fourth-quarter numbers would reinforce confidence in Netflix’s ability to raise prices gradually, even in a more competitive and cost-conscious environment.
Any signs of weakening engagement or rising churn, however, could raise concerns about the limits of pricing power, particularly in developed markets.
Advertising takes centre stage
The advertising business is expected to be a central theme of the fourth-quarter release.
Netflix’s push into advertising marks a significant shift from its historically subscription-only model, and progress here carries implications for both growth and valuation.
In the third quarter, Netflix highlighted growing adoption of the ad-supported tier and improving monetisation as its in-house advertising technology continued to roll out.
The fourth quarter, which includes the key festive advertising period, should offer clearer evidence of whether advertisers are increasing spending on the platform and whether ad revenue is scaling in line with management’s longer-term targets.
Analysts say sustained momentum in advertising could strengthen Netflix’s position as a hybrid subscription-and-advertising media company, potentially supporting higher valuation multiples over time.
Content strategy remains a swing factor
Content remains another major variable influencing near-term results and longer-term sentiment.
Netflix has increasingly emphasised the importance of global, non-English-language originals in driving engagement and maintaining its scale advantage.
The fourth-quarter results should help clarify whether recent releases translated into sustained viewing and whether the platform continues to outperform traditional broadcasters and newer streaming rivals in terms of reach and relevance.
Netflix’s content strategy has evolved toward balancing big-budget flagship releases with more targeted programming designed for specific audiences, a shift aimed at improving return on content spending while keeping the library fresh.
Three signals investors should watch
Saxo Bank has highlighted three key signals for investors to watch closely in the fourth-quarter report.
First is average revenue per user.
ARPU reflects how effectively Netflix is monetising its customer base through pricing, plan mix and advertising. Even small, consistent increases can compound meaningfully over time.
Second is operating margin and cash generation.
Netflix has increasingly steered investors toward profitability and cash flow rather than pure subscriber growth.
That focus could become even more important if its proposed Warner Bros. Discovery deal progresses, given the potential for integration costs and higher content spending.
Third is churn and engagement. These metrics underpin pricing power. Services that users engage with regularly tend to have more flexibility to raise prices with limited customer loss.
Warner Bros deal looms over earnings
According to Reuters, Netflix’s plan is to accelerate revenue growth through the acquisition of Warner Bros.
Discovery’s streaming and studio assets are likely to overshadow the earnings discussion.
The $82.7 billion pursuit would give Netflix access to a deep content library, including titles such as Friends, Game of Thrones and Harry Potter.
The earnings call will be Netflix’s first since it announced the deal on December 5, and investors are expected to press management on strategic rationale, integration plans and regulatory risks.
Netflix faces competition from Paramount Skydance, which has reportedly offered $108.4 billion for Warner Bros.
Discovery, including cable assets, Netflix does not want.
The bidding process is expected to drag on for months, with regulatory scrutiny in both the US and Europe likely to be intense.
NFLX stock performance, and is it a buy before earnings?
Netflix shares have risen about 5% over the past year, underperforming the broader market after a one-time $619 million Brazilian tax charge weighed on third-quarter results.
According to Barchart, the unresolved Warner Bros. Discovery transaction is likely to remain a source of volatility for Netflix shares, potentially overshadowing the company’s near-term financial performance.
Options markets are already pointing to heightened swings, with traders pricing in a post-earnings move of about 7.3% in either direction for contracts expiring on January 23.
That implied move is slightly above Netflix’s average earnings-related swing of roughly 6.6% over the past four quarters.
Investors may also recall that the stock dropped 10.1% following the company’s most recent earnings report.
Analysts remain divided on the stock’s near-term prospects, with five Buy ratings and two Hold ratings.
Wedbush analyst Alicia Reese recently maintained a Buy rating but lowered her price target to $115, citing upside from international growth and advertising, tempered by execution and deal-related risks.
Netflix’s full-year revenue guidance is expected to come in around $51.6 billion, slightly above consensus forecasts, with earnings per share near $3.24.
Based on one-year price targets from 43 analysts, the average target price for Netflix stands at $124.80, implying an upside of about 41.7% from current levels.
GuruFocus estimates a more conservative one-year value of $96.44, suggesting a potential upside of roughly 9.5%.
Analysts remain cautiously optimistic on Netflix, with the stock carrying a “Moderate Buy” consensus rating.
While risks are clearly acknowledged, the prevailing view reflects confidence in the company’s underlying fundamentals and its progress in strengthening monetisation.
For long-term investors, the recent softness in the share price is increasingly being seen as a potential buying opportunity.
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