Paramount might have outlasted and outbid Netflix in the competition to acquire Warner Bros. Discovery, but Netflix is not overly fussed about the loss.
As CFO Spencer Neumann told investors during an earnings presentation on Thursday, Netflix’s choice to walk away from the deal will bear “no material impact” on the company’s operating margin outlook.
Meanwhile, Netflix exceeded its quarterly revenue targets (and its guidance was established when the WBD deal was still on the table, by the by). The company generated $12.25 billion in revenue for the first quarter of 2026, which is a 16% increase year over year compared to 2025.
In the accompanying letter to shareholders, Netflix attributed the growth to price increases that came into effect in late March, as well as higher membership growth and – sing along if you know the words – increased ad revenue.
The success of the World Baseball Classic, which Netflix secured exclusive streaming rights for in Japan, contributed to quarterly growth, according to Co-CEO Ted Sarandos. The live baseball tournament drove the single largest sign-up day ever in the region, he said, and “was a great shot in the arm for our ad sales group in Japan.”
A programmatic push
While Netflix’s membership growth was a strength, much of that growth in Q1 was tied to its ads business. Roughly 60% of new sign-ups in Q1 came through the ad-supported plan, which only costs $8.99 per month compared to the ad-free tier at $19.99.
On the other side, Netflix’s advertising base has grown 70% year over year and now includes over 4,000 clients, according to Co-CEO Greg Peters.
Currently, programmatic ad buying makes up 50% of non-live ads sales, which Netflix’s leadership team said it expects to lean further toward programmatic in the future.
“We’re clearly pushing in that direction,” said Peters, reiterating the streamer’s current goal of doubling advertising revenue to $3 billion in 2026.
More mobile, more money
But will advertisers be spooked off of streaming television after seeing Nielsen’s updated Gauge Report, one investor asked?
Not at all, Peters answered.
Sure, the Gauge Report weighs linear TV and streaming TV differently and seemingly points to higher view time for the former over the latter. But the gauge isn’t used as an actual transactable currency in the video marketplace – and even if it were, Netflix is more than capable of measuring its own streaming hours internally.
“None of this changes our effectiveness or our aspirations in the ad space,” Peters said.
In fact, thanks to the company’s recent expansion into video podcast streams, Netflix is seeing growing rates of incremental engagement on both mobile and daytime streaming, said Sarandos.
And speaking of mobile, Netflix will roll out a “vertical video discovery feed” for its streaming mobile app, the company also announced on Thursday, apparently taking a page from the playbook of social video hubs like YouTube and TikTok.
Given that Disney+ and NBCUniversal’s Peacock have also launched their own versions of discovery feeds this year, the streaming entertainment industry has now reached “three makes a trend” territory for social-style video feeds. Albeit ad-free versions, so far.
