Date: April 16, 2026 | Source: Motley Fool (fool.com) / company press release
---
Gregory Peters (Co-CEO): Perhaps I can kick this one off and step back with a high-level framing. Of course, it is early in the year. There is still plenty of time to go and plenty of work left to do. But we have seen really good progress so far in this first quarter that builds on the solid momentum and results from 2025. Given that, we are maintaining our guidance and strong outlook for organic growth that we established for 2026: revenue growth of 12% to 14% and operating margin at 31.5%. That includes roughly doubling the advertising business to about $3 billion.
We ended last year with more than 325 million paid members, and as that number continues to grow, we are entertaining an audience that is approaching a billion people. Even given that number, we still have plenty of room to grow into our addressable market. From an addressable household perspective that have good data and a smart TV, we are still under 45% penetrated. We think that number is roughly 800 million, and it grows every year. We have captured about 7% of addressable revenue in countries and categories that we currently directly participate in. We now estimate that is $670 billion as of 2026. We estimate that we account for only 5% of TV view share globally.
Theodore Sarandos (Co-CEO): I would add, looking ahead, we are focused on three big priorities. Number one, deliver even more entertainment value for our members, and we do that by continuing to strengthen our core offering—series and films, originals and licensed. Number two, we are leveraging technology to improve the service—from how it is delivered to how to find great things to watch, and now even how content is created and produced. Number three, we are improving monetization through a combination of broad distribution, increasingly sophisticated pricing and pricing plans, and a great and growing ad business. These features help position us to deliver multiyear growth beyond the 12% to 14% that we expect to deliver this year.
Spencer Neumann (CFO, on the Warner Bros. deal cost and the guide): You may recall back in January, our initial forecast or guidance for the year was carrying $275 million of cost for M&A-related activity. That was not just Warner Brothers, actually. One item we were carrying was the Interpositive acquisition. For Warner Brothers specifically, even though we walked away from the deal, some of our initially planned costs for the deal will not fully materialize, but some that we were planning to carry into 2027 were pulled forward into 2026. When you put all that together, we are still in the ballpark of the total we were projecting for M&A-related expenses in the year. There is no material impact on our operating margin outlook.
Theodore Sarandos (on the Warner Bros. experience): At the risk of being a broken record, we said from the beginning that the WB deal was a nice-to-have, not a need-to-have. We are very confident in the core business. Going into it, our biggest risk was losing focus on our core business while working on the transaction. As you can see from our Q1 results, we did not lose focus. We learned a lot about deal execution and early integration. We are proud to have won the bid. We were confident in our ability to get to the finish line with regulators. Mostly, we really built our M&A muscle. The most important benefit of this entire exercise was that we tested our investment discipline. When the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away. We do come through this with no change in our capital allocation philosophy. M&A remains a tool to help us achieve our goals, and as you can see with the WB deal, we will remain very disciplined in how we approach it.
Gregory Peters (on engagement): Volume of engagement is still relevant. In Q1, view hours were up at a similar rate of growth to what we saw in 2025, despite having the Winter Olympics—17 days of robust streaming competition—land in Q1 as well. But while view hours are important, they are just one of several metrics we look at. In Q1 that primary member quality metric hit another all-time high.
Theodore Sarandos (on the World Baseball Classic): Thanks for asking about the World Baseball Classic, because it was a hit. It was the most-watched program we have ever had in Japan and the biggest global baseball streaming event of all time, with 31.4 million viewers. Events like this drive outsized business impact and are proof that all engagement is not created equal. Japan led our Q1 member growth around the world and had its highest quarter of paid net adds in our history. It was also the first big regional live event for us outside of the United States, and we got to flex a new muscle—streaming multiple games concurrently.
Spencer Neumann (on APAC): Think about it more broadly because, as great as the WBC was, you may notice that APAC was our strongest FX-neutral revenue growth market for the quarter. It was not just because of this. We had strong performance across APAC: a great quarter in India, a really strong quarter in Korea, and Southeast Asia showed strength.
Theodore Sarandos (on sports strategy): Our sports strategy is unchanged. We are most interested in big breakthrough events, less so in regular season packages. Everything we pursue has to make economic sense. The NFL is a great property and delivers value as part of our total offering. We are in discussions and think there is an opportunity to expand the relationship—within the same strategy focused on creating big events. We announced a multiyear deal with CONCACAF for rights in Mexico, in addition to women's World Cup rights in the United States and Canada, and our first big global MMA event with Ronda Rousey. We are ramping up our sports events globally and local-for-local.
Gregory Peters (on advertising): Today, we are still concentrating on the largest buyers, which are serviced primarily by the Netflix sales teams—either directly or with our sales team driving buying behavior through DSPs. Over time, we expect continued growth in the number of advertisers, and we think the percentage who buy programmatically will increase, and therefore programmatic share of ad revenue will go up.
Gregory Peters (on pricing): Our pricing philosophy is consistent: we look to provide more and more value and occasionally, when we have added more value, ask members to contribute more. We think we are delivering one of the best entertainment values that has ever existed. In the United States right now, Netflix subscribers are paying the least per hour of viewing compared to other SVOD offerings. Our ads plan at $8.99 in the United States is a great, highly accessible entry point.
Spencer Neumann (on retention): We saw stronger retention across the board this quarter; every region was better year over year. That is encouraging in terms of the value we provide and aligns with the primary engagement value metric, where we had a record in Q4 of last year and a record again in Q1 of this year.
Gregory Peters (on gaming): We have been building foundations: the ability to develop games, bring games onto our service, connect those games with players, and give players high-quality experiences. We have learned that gameplay can have a positive impact on member retention, as well as driving acquisition, although the observed acquisition effect has been small to date. We are investing in games that reflect our other beloved IP or events. Netflix Playground extends our long history of treating kids as a special audience—Seuss, Bad Dinosaurs—no ads, no in-app purchases. We are seeing encouraging signals.
Theodore Sarandos (on competition): Competition is not new for Netflix. Consumers have always had incredible choices in entertainment, and we have continued to grow by offering enormous value. Great projects are immensely competitive, and those are the projects we want. Relationships matter. Providing a great experience for creators, delivering a big audience, and generating buzz are what we do. We are seeing a lot of repeat business, the ultimate sign we are doing our job well.
Theodore Sarandos (on AI): In general, we expect GenAI to help make content better—better tools and processes. Netflix will remain at the forefront in exploring and innovating AI in the creative process. With our acquisition of Interpositive, we think it accelerates our GenAI capability because it is proprietary technology created specifically for filmmakers. We have generated interest with creators who have spent time with the tools.
Theodore Sarandos (on Reed Hastings stepping off the board): Reed Hastings, our founder and our board chair, let us know he has decided not to run for reelection to our board at the next shareholder meeting. It is unusual for a founder to step away from the board of the company after succession, but Reed is no ordinary founder. Reed will remain the chairman and a member of our board through his current term. He has modeled what it is to be a leader and a friend.
---