Netflix, Inc.

Good afternoon and welcome to the Netflix Q4 2025 earnings interview. I'm Spencer Wong, VP of Finance and Capital Markets. Joining me today are co-CEOs Ted Sarandos and Greg Peters and CFO Spence Newman. As a reminder, we'll be making forward-looking statements and actual results may vary. We'll now take questions submitted by the analyst community and we'll begin first with questions about our results and forecast. The first question comes from Robert Fishman of Moffitt Nathanson. who asks, the Wall Street Journal report last year discussed an internal memo with long-term goals to double revenue and triple profits. Without commenting on those specific targets, about nine months later, is there anything you have seen in the core business to reevaluate the speed of growth over the next few years, and can you clarify if those targets included any M&A?

Sure. We find it useful to talk internally about our long-term aspirations, which, as we said at the time that this was reported last year, aren't the same as a forecast. But having said that, those goals were based on organic progress. They did not contemplate or assume any M&A because we didn't have any M&A on sort of our horizon at the time. And over the last nine months, we've seen continued growth. We are now forecasting more healthy growth for the year to come, specifically organic growth. Of course, there's a lot of hard work ahead to fully realize those opportunities, both short-term and long-term. But based on the progress that we've made so far and expect to make and our continuing assessment of the opportunity, we still feel good about those targets. putting maybe a little bit more meat on that bone. In 2025, we met or exceeded all of our financial objectives. We made solid progress on our key priorities. We delivered 16% revenue growth, roughly 30% operating profit growth, expanding margins, growing free cash flow, ad sales two and a half times in 2025. We expect that business to roughly double again in 2026 to about $3 billion. So we're making good progress, and the opportunity ahead of us is massive. We are still under 10% of TV time in all major markets which we compete. We've got hundreds of millions of households around the world still to sign up. We're just about 7% of the addressable market in terms of consumer and ad spend. So tons of room ahead of us. Ted, anything you want to add there?

I would just say, looking ahead to 26, we're focused on improving the core business. And we do that by increasing the variety and quality of our series and films. We do that by enhancing the product experience and by growing and strengthening our ad business. We're also building out some newer initiatives, you know, like our live outside of the U.S., things like the World Baseball Classic in Japan that's launching in March. We're expanding into more content categories like video podcasts, which just kicked us off this week. And we're continuing to scale our cloud-first game strategy. We're working really hard to close the acquisition of Warner Brothers Studios and HBO, which we see as a strategic accelerant. And we're doing all this while we're driving and sustaining healthy growth. We forecast 2026 revenue at $51 billion, which is up 14% year on year. It's an exciting time. You know, this is an exciting time in the business. Lots of innovation, lots of competition. But that's also been true of us for 25 years. At Netflix, we kind of embrace change and thrive on competition because it pushes us to keep improving the service even faster and faster for our members. You know, years ago when we moved from DVD by mail into streaming, we were in a heated battle with Walmart for that DVD business. So we're no strangers to competition and we're no strangers to change. Through that change in competition, we've grown into an entertainment company that is thrilling an audience that is now approaching near one billion people and producing series and films around the world with hits that resonate with audiences locally and globally. Thank you, Ted. And just to circle back to Greg's point real quick, you know, we're very excited about the business. We're very excited about the organic opportunity ahead. You see that in our performance. And we're as energized as ever to achieve our mission to entertain the world. Thanks, Ted.