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XBRL · SEC EDGAR2007–2025(19yr)| Metric | FY 2007 | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $1.2B | $1.4B | $1.7B | $2.2B | $3.2B | $3.6B | $4.4B | $5.5B | $6.8B | $8.8B | $11.7B | $15.8B | $20.2B | $25.0B | $29.7B | $31.6B | $33.7B | $39.0B | $45.2B | +15.9% |
| Gross Profit | $419.2M | $454.4M | $591.0M | $805.3M | $1.2B | $983.4M | $1.3B | $1.8B | $2.2B | $2.8B | $4.0B | $5.8B | $7.7B | $9.7B | $12.4B | $12.4B | $14.0B | $18.0B | $21.9B | +22.0% |
| Gross Margin | 34.8% | 33.3% | 35.4% | 37.2% | 36.3% | 27.2% | 29.5% | 31.8% | 32.3% | 31.7% | 34.5% | 36.9% | 38.3% | 38.9% | 41.6% | 39.4% | 41.5% | 46.1% | 48.5% | +2.4pp |
| Operating Income | $91.8M | $121.5M | $191.9M | $283.6M | $376.1M | $50.0M | $228.3M | $402.6M | $305.8M | $379.8M | $838.7M | $1.6B | $2.6B | $4.6B | $6.2B | $5.6B | $7.0B | $10.4B | $13.3B | +27.9% |
| Operating Margin | 7.6% | 8.9% | 11.5% | 13.1% | 11.7% | 1.4% | 5.2% | 7.3% | 4.5% | 4.3% | 7.2% | 10.2% | 12.9% | 18.3% | 20.9% | 17.8% | 20.6% | 26.7% | 29.5% | +2.8pp |
| Net Income | $66.6M | $83.0M | $115.9M | $160.9M | $226.1M | $17.2M | $112.4M | $266.8M | $122.6M | $186.7M | $558.9M | $1.2B | $1.9B | $2.8B | $5.1B | $4.5B | $5.4B | $8.7B | $11.0B | +26.1% |
| Net Margin | 5.5% | 6.1% | 6.9% | 7.4% | 7.1% | 0.5% | 2.6% | 4.8% | 1.8% | 2.1% | 4.8% | 7.7% | 9.3% | 11.0% | 17.2% | 14.2% | 16.0% | 22.3% | 24.3% | +2.0pp |
| Free Cash Flow | $233.2M | $240.2M | $279.1M | $242.6M | $268.0M | -$18.7M | $43.7M | -$53.2M | -$840.7M | -$1.6B | -$2.0B | -$2.9B | -$3.1B | $1.9B | -$132.0M | $1.6B | $6.9B | $6.9B | $9.5B | +36.7% |
| FCF Margin | 19.3% | 17.6% | 16.7% | 11.2% | 8.4% | -0.5% | 1.0% | -1.0% | -12.4% | -17.9% | -16.8% | -18.1% | -15.6% | 7.7% | -0.4% | 5.1% | 20.5% | 17.7% | 20.9% | +3.2pp |
| EPS (Diluted) | $0.97 | $1.32 | $1.98 | $2.96 | $4.16 | $0.29 | $1.85 | $4.32 | $0.28 | $0.43 | $1.25 | $2.68 | $4.13 | $6.08 | $11.24 | $9.95 | $12.03 | $19.83 | $2.53 | -87.2% |
1. THE BIG PICTURE
Netflix has successfully transitioned from a high-growth disruptor into a high-efficiency cash machine, generating 25 cents of profit for every dollar of revenue. While competitors struggle with the transition from linear to digital, Netflix is using its superior margins and free cash flow to consolidate the industry through the pending Warner Bros. Discovery (WBD) acquisition. Netflix is no longer just fighting for "moments of truth" with content; it is using its balance sheet to redefine the competitive landscape.
2. WHERE THE RISKS HIT HARDEST
The "dream team" corporate culture that Netflix cites as its primary competitive advantage (10-K Item 1) is directly threatened by the WBD transaction. Integrating a legacy media giant involves assuming substantial debt and navigating a potential $5.8 billion termination fee, which could disrupt the focus on talent and excellence that management views as instrumental to growth (Risks). Furthermore, the strategy of "winning moments of truth" through fixed-cost content production is vulnerable to membership fluctuations; if subscriber growth slows, those fixed costs cannot be easily reduced, threatening the 30.9% operating margin that currently leads the peer group (XBRL).
3. WHAT THE NUMBERS SAY TOGETHER
A look across the financials reveals a company that is significantly more efficient than its peers, even if its "raw materials" are expensive. While Netflix has a lower gross margin (49.1%) than telecom peers like Comcast (71.7%), it achieves a far higher net margin (25.4%) and FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin (22.8%) (Peer Benchmarking). This indicates a lean operating structure that converts revenue into cash more effectively than legacy players.
The growth trajectory is accelerating: revenue growth rose from a 15.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter rate to 18% in the most recent quarter (8-K). This divergence is driven by the ad-supported tier, which saw revenue grow more than 2.5x in 2025. With short interest low at 2.0% of the float, market sentiment appears to back management’s claim that the ad business is a structural tailwind rather than a temporary boost (Supplemental Signals).
4. IS IT WORTH IT AT THIS PRICE?
At 25.3x forward earnings, the market is pricing in approximately 10.0% long-term growth (Computed Valuation). This expectation is well-supported by Netflix’s actual performance, including 15.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth and a 2026 revenue target of up to $51.7 billion (Recent Results). Netflix trades at an 84% premium to the peer median forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 13.8x, but this is justified by its status as the only company in its peer group with double-digit revenue growth and a 20%+ FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin.
However, the valuation is sensitive to any deceleration. If growth were to slow to 8.5%, the justified multiple would fall to 18.4x, representing a 27% downside from current levels (Computed Valuation). The primary factor that could trigger such a re-rating is the WBD acquisition, which could weigh down Netflix's lean 0.5x net leverage with substantial new debt.
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if the WBD transaction is terminated, necessitating a $5.8 billion cash payment that would consume more than half of Netflix's annual free cash flow.
- Constructive if ad revenue "roughly doubles" in 2026 as projected, proving that Netflix can maintain its 31.5% operating margin target while scaling a newer, lower-priced subscription tier (8-K).
6. BOTTOM LINE
Structural Advantage: A high-margin operating model supported by a global content engine that produces industry-leading free cash flow conversion.
Bottom Line: Netflix is a premium-priced industry leader whose valuation is supported by its growth, but the pending WBD acquisition introduces a level of financial and operational complexity Netflix has never previously faced.
1. Top 5 Material Risks
- Membership Growth and Retention: Netflix must consistently add new members to replace cancellations and grow the base. Failure to do so, or consumer dissatisfaction with pricing, content, or ad-supported plans, directly threatens revenue and operating results.
- Fixed Content Costs: Because content expenditures are largely fixed, Netflix may be unable to adjust costs downward if membership growth slows, which would adversely impact margins and liquidity.
- Substantial Indebtedness: As of December 31, 2025, Netflix holds $14.5 billion in senior notes and $5.7 billion in content liabilities. This leverage limits financial flexibility and requires significant cash flow for debt service.
- WBD Transaction Risks: The acquisition of WBD’s streaming and studios businesses may not be completed, potentially triggering a $5.8 billion termination fee. If completed, the transaction involves assuming substantial additional debt and integration challenges that could disrupt operations.
- Competitive Landscape: Netflix faces intense competition from traditional broadcasters, streaming providers, and other entertainment sources like social media. Competitors with larger financial resources or exclusive content rights may gain market share, impacting Netflix’s ability to maintain profitability.
2. Company-Specific Risks
- Dependency on AWS: Netflix runs the vast majority of its computing on Amazon Web Services (AWS). Any commercial dispute or disruption to this infrastructure would severely impact operations, as Netflix cannot easily switch providers.
- Content Delivery Network (CDN) Reliance: Netflix has built its own CDN to stream content. If ISPs do not interconnect with this network or charge for access, Netflix’s ability to deliver content efficiently could be impaired.
- Payment Processing Vulnerability: Netflix relies on third-party payment processors and partner billing. The termination of any major payment method or a failure in these systems would significantly impair the ability to operate the business.
- Labor Agreements: Major U.S. guild agreements (WGA, SAG-AFTRA, DGA) expire in 2026. Failure to renew these on favorable terms or resulting work stoppages could halt productions and delay the release of new content.
3. Regulatory/Legal Risks
- Data Privacy and Security: Netflix is subject to global regulations like the GDPR and CPRA. Any failure to comply or a breach of member personal information could result in significant penalties, legal claims, and reputational damage.
- International Regulatory Levies: Various EU Member States impose financial obligations and investment quotas (e.g., the 30% European works requirement) on media operators, which increase operating costs and limit content flexibility.
- Net Neutrality and Network Fees: Despite a 2025 U.S.-EU commitment against network usage fees, the risk of discriminatory network management or "de facto" obligations remains, which could increase costs or restrict access to the service.
- Intellectual Property Litigation: Netflix faces ongoing risks from copyright, trademark, and patent infringement claims related to its content and technology, which can lead to costly litigation and the forced removal of content from the service.
4. Financial Impact Map
- Membership Growth and Retention → Revenue and Operating Income → Failure to grow or retain members directly reduces top-line revenue and limits the ability to leverage fixed content costs.
- Fixed Content Costs → Operating Margins → Because content costs are largely fixed, a shortfall in revenue growth directly compresses operating margins.
- Substantial Indebtedness → Cash Flow from Operations → Debt service payments and content liabilities require a substantial portion of cash flow, limiting capital for other business needs.
- WBD Transaction → Liquidity and Debt Obligations → The transaction involves a potential $5.8 billion termination fee and the assumption of significant additional debt, which would materially increase total indebtedness.
- Competitive Landscape → Market Share and Profitability → Increased competition may force more aggressive pricing or higher marketing spend, directly impacting net income and profitability.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-K | Jan 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 10-Q | Oct 2025 | Sep 2025 |
| 14A | Apr 2025 | — |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Netflix to Acquire Warner Bros. Discovery Streaming Assets for $83 Billion Enterprise Value
- ▸Netflix to acquire Warner Bros. Discovery Studio & Streaming business
- ▸Transaction enterprise value set at $83 billion
- ▸Market concerns include antitrust hurdles, execution risk, and potential price escalation
- ▸Magellan Global Fund cites deal as strategically sound for long-term value creation
- ▸Netflix shares closed at $98.66 on April 2, 2026
Netflix implements new subscription price hikes across premium and ad-based tiers
- ▸Implementing price increases for both premium and ad-based subscription tiers
- ▸Premium tier subscription price increasing by $2.00 per month
- ▸Ad-based tier subscription price increasing by $1.00 per month
- ▸Expanding live sports content portfolio to include MLB and MMA programming
- ▸Leveraging AI and live sports to drive subscriber growth and pricing power
Netflix Institutional Ownership Hits 83.7% Amid Insider Selling and Valuation Debate
- ▸FY2025 revenue $45.18B, +15.85% YoY
- ▸FY2025 free cash flow $9.46B, +36.68% YoY
- ▸2026 revenue guidance $50.7B–$51.7B at 31.5% operating margin
- ▸Ad revenue doubled in 2025 to over $1.5B
- ▸Institutional ownership at 83.7% with significant Q4 2025 stake increases
Netflix Seeks to Double NFL Streaming Rights to Four Annual Games
- ▸Netflix targeting four annual NFL games, up from current two-game package
- ▸Potential new slots include Thanksgiving Eve matchup and international season opener
- ▸Current Christmas Day deal valued at $75 million per game
- ▸Competing against YouTube and Amazon for additional broadcast rights
- ▸Citizens initiates coverage of Netflix with Market Perform rating
Netflix Q1 earnings approach as Bank of America highlights pricing power and growth
- ▸Bank of America reiterates Buy rating with $125 price target
- ▸Company abandoned potential acquisition of Warner Bros. Discovery
- ▸Recent US price hikes signal management confidence in pricing power
- ▸Q1 earnings report scheduled for April 16 after market close
- ▸Growth drivers include advertising, live events, sports, and international expansion
Netflix to Acquire Warner Bros. for $42.2 Billion in All-Cash Deal
- ▸Acquiring Warner Bros. for $27.75 per share via $42.2B bridge facility
- ▸Netflix Q4 revenue $12.05B, +17.6% YoY; operating income $2.96B, +30%
- ▸Netflix 2026 revenue guidance $50.7B–$51.7B; operating margin target 31.5%
- ▸Spotify Q4 revenue $4.53B, +6.8% YoY; operating income $701M beats guidance
- ▸Spotify record gross margin 33.1%; added 38M net MAUs in Q4
Netflix projects 2026 ad revenue to double to $3B, operating margins to reach 31.5%
- ▸Ad revenue projected to double to $3B in 2026
- ▸Operating margin target set at record 31.5% for 2026
- ▸Tudor Investment Corp increased stake by 147% to 1.6M shares in Q4 2025
- ▸Ad sales grew 2.5x during 2025
- ▸Projected 10% share of global Connected TV ad spend by 2027
Netflix raises subscription prices by $1-$2 across all tiers to fund $20B content spend
- ▸Ad-supported plan increased $1 to $8.99
- ▸Premium tier increased $2 to $26.99
- ▸Price hikes support $20B projected 2026 content budget
- ▸FY26 revenue guidance maintained at $50.7B–$51.7B
- ▸Oppenheimer raised price target to $135 from $125
Netflix projects 2026 revenue of $50.7B-$51.7B, representing 12-14% growth
- ▸Projected 2026 revenue $50.7B–$51.7B, up 12-14% YoY
- ▸Content viewing hours reached 96 billion in H2 2025
- ▸Branded content viewing increased 9% YoY in H2 2025
- ▸Strategy focuses on franchise-led content to drive retention and pricing power
- ▸Scaling advertising business remains a core pillar for long-term monetization
Netflix Increases U.S. Subscription Prices Across All Tiers to Fund Content Expansion
- ▸Increased subscription prices across all U.S. ad-supported and ad-free plans
- ▸Revenue to be reinvested into live sports, podcasts, and live events
- ▸Stock currently trading at $93.43, 18% below analyst target of $113.43
- ▸Company maintains 35.9 P/E ratio versus 35.1 industry average
- ▸Stock up 13% over past 30 days and 170.4% over past 3 years