Netflix beats on earnings, but shares dip as the streamer's forecast for Q1 falls short of Wall Street expectations

• Netflix reported fourth-quarter results that were slightly above Wall Street estimates.
• Netflix stock dipped in after-hours trading after its first-quarter 2026 guidance fell short.
• Netflix generated record viewership in December and is expanding into areas such as podcasts.

Netflix ended 2025 with a bang, but shareholders aren't celebrating.

The streaming giant came in slightly ahead of estimates for the fourth quarter, reporting record revenue of $12 billion and earnings per share of $0.56. Wall Street had expected Netflix to report revenue of just under $12 billion and earnings per share of $0.55. Last quarter, Netflix's earnings came in well below estimates after a costly dispute with Brazilian tax authorities.

Netflix's first-quarter guidance wasn't as rosy, however. The streamer's forecast of $0.76 per share was below analysts' estimates of $0.81 per share. Netflix also said it planned to spend about 10% more on content in 2026.

The stock was down over 4% in after-hours trading.

Netflix's chief financial officer, Spencer Neumann, said on the earnings call that the company was "increasing our expense growth a bit this year" to invest in new opportunities. Netflix's co-CEOs outlined a few of those opportunities, including the streamer's new licensing deal with Sony.

Heading into the fourth-quarter earnings, Netflix shares had fallen about 30% in the last three months. Shareholders have seemed concerned by its decision to buy Warner Bros. Discovery's studio and HBO assets.

Netflix's leadership team has sounded confident that regulators will approve its deal, but rival suitor Paramount Skydance hasn't given up in its quest to buy all of WBD. On Tuesday, Netflix sweetened its bid by making its offer all-cash.

For the first time in a year, Netflix shared an updated subscriber count. The company said it has more than 325 million subscribers, up from 300 million at the end of 2024.

Besides that growth, several signs suggest Netflix's business is healthy.

Netflix's cancellation rate is easily the lowest among paid streaming services in the US, at less than 2%, according to subscription data provider Antenna. No other streamer has a churn rate below 4%.

And Netflix appears to be as popular as ever, thanks to hits like "Stranger Things." Its viewership share on US TVs surged to a record 9% in December, according to Nielsen, up from 8.3% in November. Its next closest paid competitor is Disney, whose streaming services have been stuck below 5% share for years.

Netflix is still chasing YouTube in the battle for eyeballs, however. YouTube commands nearly 13% of viewership time in the US, according to Nielsen.

As YouTube takes on Netflix in the living room, Netflix is becoming more like YouTube by adding video podcasts. Netflix is also spending big on sports, including NFL games on Christmas Day.

If Netflix buys Warner Bros., it will add an avalanche of movies and TV shows that could further boost its engagement, including the "Harry Potter" franchise and HBO's "Game of Thrones."