Netflix, Inc. Revenue & Financials

The margin expansion story is more interesting than the revenue growth story. Netflix grew revenue from $33.7 billion in FY2023 to $45.2 billion in FY2025 — solid, but not shocking for a company adding ad revenue and raising prices. What's remarkable is what happened to profitability. Net income went from $5.4 billion to $11.0 billion in the same period. Operating margins crossed 30%. Free cash flow in Q1 2026 alone was $5.09 billion — up 91% year-over-year — which annualizes to roughly $20 billion if sustained. That's not a streaming company. That's a money printer. The reason is operating leverage. Netflix's biggest cost — content at $17 billion annually — is essentially fixed. Whether 200 million or 325 million people watch Stranger Things, the production budget doesn't change. Every incremental subscriber, every price increase, every ad dollar flows almost directly to the bottom line. It's the same economics that make software companies so profitable, except Netflix's 'software' is television. Q1 2026 specifics: revenue of $12.25 billion (beating estimates by $70 million), EPS of $1.23 (up 86% YoY), and the ad business scaling fast enough that management reiterated full-year guidance of 12-14% revenue growth with 31.5% operating margin. That implies roughly $50-51 billion in 2026 revenue. The stock tells a more complicated story. After a 10:1 split in June 2024, shares traded as high as $126 in July 2025, crashed to $77 by February 2026, and recovered to ~$88 by May. At $370 billion market cap, Netflix trades at roughly 8x trailing revenue — expensive for media, cheap for a high-margin software business with a growing ad platform. The market hasn't decided which category Netflix belongs in. That ambiguity is the opportunity.