How Does Netflix Make Money?

Where does Netflix's money come from?

Netflix operates as one business segment, and its annual report says its revenue comes primarily from monthly membership fees for streaming.^[1] It also earns money from advertisements on the service, consumer products, live experiences and other sources, but revenue from sources other than membership fees was not a material part of the total in 2023, 2024 or 2025.^[1] The filing calls the business model subscription-based rather than one that earns revenue title by title.^[1] Prices vary by country and by plan: at the end of 2025, paid plans ranged from the U.S. dollar equivalent of $1 to $37 a month.^[1]

As of October 5, 2026, the newest annual report (Form 10-K) in the U.S. Securities and Exchange Commission (SEC) list of Netflix filings was the one filed on January 23, 2026.^[2] It covers the fiscal year that ended December 31, 2025, and gives these figures in thousands of U.S. dollars.^[1]

Revenue grew 16%, which the company attributed to more memberships, price increases and more advertising revenue, partly offset by exchange rates.^[1] Operating margin rose to 29.5% from 26.7%.^[1]

How much does Netflix make from ads?

Netflix sells a lower-priced plan with advertising alongside its other plans.^[1] In April 2026 the company said the ads plan was priced at $8.99 in the United States and made up over 60% of first-quarter sign-ups in the countries where it is offered.^[4] It also said it worked with more than 4,000 advertising clients.^[4]

In its January 2026 letter to shareholders, Netflix said 2025 was only its third year selling advertising and that ad revenue grew more than 2.5 times to over $1.5 billion.^[3] Next to total 2025 revenue of $45.2 billion, that is a little over 3% (1.5 ÷ 45.2, a calculation).^[3] In July 2026 the company said it was on track for about $3 billion of ad revenue in 2026, which is its own projection, not a reported result.^[5] The annual report warns that Netflix has limited experience selling ads and that ad revenue may not grow as expected.^[1]

Which regions bring in the most revenue?

Netflix reports revenue for four regions.^[1] In 2025 the United States and Canada region brought in about 44% of the total (19,957,152 ÷ 45,183,036, a calculation).^[1]

• United States and Canada19,957,152
• Europe, Middle East and Africa14,514,646
• Latin America5,357,521
• Asia-Pacific5,353,717

Source: Netflix, Inc. (filed with the U.S. Securities and Exchange Commission) [1]

Revenue grew 15% in the United States and Canada, 17% in Europe, the Middle East and Africa, 11% in Latin America and 21% in Asia-Pacific.^[1] In Latin America, growth was 23% on a constant-currency basis, which holds exchange rates at the previous year's levels and leaves out hedging gains and losses, compared with the reported 11%.^[1] The annual report gives revenue, but not operating income, for each region: Netflix has a single operating segment, and its co-chief executives judge performance by company-wide operating margin and net income.^[1]

Why did Netflix stop reporting subscriber numbers?

In January 2025 Netflix repeated an earlier announcement: starting with its first-quarter 2025 results, it would no longer report paid memberships and average revenue per membership every quarter, and would announce membership figures only as it crossed key milestones.^[7] Its 2025 annual report says it now focuses on revenue and operating margin as its main financial measures.^[1] In January 2026 the company said it had crossed 325 million paid memberships during the fourth quarter of 2025.^[3]

Its last regular count, at the end of 2024, was 301.63 million paid memberships.^[7] That letter also gave each region's average monthly revenue per membership for the fourth quarter of 2024.^[7]

Europe, the Middle East and Africa had the most members, but each membership in the United States and Canada brought in more money per month on average.^[7] In July 2026 Netflix also said its "What We Watched" viewing report would move from twice a year, alongside earnings, to once a year in the first quarter from 2027.^[5][7]

What is Netflix's biggest expense?

Cost of revenues consists mainly of the amortization of content assets, which spreads the cost of licensed and self-produced series and films over time.^[1] In 2025 content amortization was $16,422,166 thousand, about 36% of revenue (16,422,166 ÷ 45,183,036, a calculation).^[1] That is nearly twice the $8,581,104 thousand spent on sales and marketing, technology and development, and general and administrative costs combined (3,301,306 + 3,391,390 + 1,888,408, a calculation).^[1] Licensed content made up $8,713,558 thousand of the amortization and produced content $7,708,608 thousand.^[1]

Each title's cost is spread over the shortest of its license window, its estimated period of use or ten years.^[1] The expense is front-loaded because Netflix expects more viewing early on, and on average more than 90% of a title's cost is expected to be amortized within four years.^[1] Cash goes out sooner: production costs are paid while a title is being made, well before it reaches the service.^[1]

What do the 2026 results show so far?

As of early October 2026, the latest reported quarter was the second quarter of 2026; Netflix said it would post its third-quarter results on October 20, 2026.^[6][8] In the second quarter, revenue was $12,559,938 thousand, up 13% from a year earlier, and the operating margin was 33.4%, compared with 34.1% a year earlier.^[6] For the first six months, revenue rose 15% to $24,809,695 thousand.^[6] First-half net income also included a $2.8 billion termination fee that Netflix received in the first quarter.^[6] Netflix had agreed in December 2025 to buy Warner Bros. Discovery's (WBD's) studios and streaming businesses, but WBD ended the agreement on February 27, 2026, to sign a merger agreement with Paramount Skydance, which paid the fee to Netflix on WBD's behalf.^[6] The fee was booked under interest and other income, not as revenue.^[6]