Netflix Posts Record Profit, Sees No Fallout From Tariffs

We're executing on our 2025 priorities: improving our series and film offering, and growing our ads business; further developing newer initiatives like live programming and games; and sustaining healthy revenue and profit growth,

Netflix said in a letter to shareholders

We remain optimistic about our 2025 slate with a lineup that includes returning favorites, series finales, new discoveries and unexpected surprises designed to thrill our members,

Netflix told shareholders

The will-they-or-won't-they tariff situation is destruction to many industries and will make entertainment more expensive to produce,

said Emarketer senior analyst Ross Benes

Netflix is part of a broader industry shift away from focusing on how many new viewers are obtained to focusing on how much money viewers are bringing in,

analyst Benes said

Ted Sarandosnetflix co-CEO

We remain focused on the things that we can control, and improving the value of Netflix is the big one,

co-chief executive Ted Sarandos added

Retention, that’s stable and strong. We haven’t seen anything significant in plan mix or plan take rate,

said Peters

There’s been no material change to our overall business outlook since our last earnings report,

Netflix wrote in its quarterly note to shareholders

Netflix is an indispensable service in users' lives. It will be the last subscription that users will cancel given the broad and breadth of programming,

Pescatore said

In difficult economies, home entertainment value is really important to consumer households, ... and Netflix is a tremendous value in absolute terms and certainly in competitive terms."

Sarandos said

We really do expect the demand to remain strong,

he said

Revenue was modestly above our guidance due to slightly higher-than-forecasted subscription and ad revenue (which is still very small relative to subscription revenue),

Netflix said in its letter to investors

Entertainment has historically been pretty resilient in tougher economic times,

said Greg Peters, co-chief executive, on Thursday

Having a diverse business model through subscription and a slow but rising ad-based tier will mitigate any risks from tighter consumer spending that could drive cancellations,

PP Foresight analyst Paolo Pescatore said

We view these targets as reorienting Q & A around investment into a potential downturn and the next steps to scale the ads business (which includes attracting direct response budgets).

Patterson kept his overweight rating on the stock heading into earnings

Netflix has been shifting to more of a monetization than membership story, and the six-year [compound annual growth rates] for membership and revenue imply larger contributions from monetization initiatives (including advertising reaching $9B, or ~11.5% of revenue),

Justin Patterson wrote in a Monday note

We see near-term subscriber growth coming from the password sharing crackdown and new ad-supported tier, with longer-term growth coming from continued price hikes and the multibillion-dollar ad business,

Heaney wrote in a Monday note

We believe the flow through of record 4Q subscriber performance and price increases will jump start growth for the year while the return of several key franchises including Stranger Things, Squid Games and Wednesday sustains momentum,

Hodulik wrote in a note to clients this week

Netflix's advertising business, which is nascent, should be an incremental positive, not negative, even in a more challenging advertising backdrop,

Bank of America's Ehrlich said

We still see a path to double digit revenue growth even if ad takes longer to scale,

he said