Netflix, Inc. stock research
FY2025 Q4
Netflix (NFLX) Gross Margin — Quarter Ended Dec 31, 2025
Revenue and gross profit both increased compared to both the prior quarter and the same quarter last year. Gross margin weakened slightly from the prior quarter but improved versus the same quarter last year.
Gross margin takeaway
Quarter ended Dec 31, 2025 · FY2025 Q4
Revenue and gross profit both increased compared to both the prior quarter and the same quarter last year. Gross margin weakened slightly from the prior quarter but improved versus the same quarter last year.
- Revenue grew more than cost of revenue versus the year-ago quarter, resulting in a higher gross margin. Sequentially, cost of revenue increased at a slightly faster pace than revenue, leading to a marginal decline in gross margin.
- Compared to the prior quarter, gross margin was lower despite higher revenue and gross profit. Compared to the same quarter last year, gross margin was higher, supported by a larger increase in revenue relative to cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
45.9%
Gross profit
$5.5B
Revenue
$12.1B
Cost of revenue
$6.5B
Quarter-over-quarter change
-0.6 pts
Year-over-year change
+2.2 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2025 | $10.5B | $5.3B | $5.3B | 50.1% |
| Jun 30, 2025 | $11.1B | $5.8B | $5.3B | 51.9% |
| Sep 30, 2025 | $11.5B | $5.3B | $6.2B | 46.4% |
| Dec 31, 2025 | $12.1B | $5.5B | $6.5B | 45.9% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2025
-0.6 pts
Year-over-year change
Dec 31, 2024
+2.2 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
Revenue grew more than cost of revenue versus the year-ago quarter, resulting in a higher gross margin. Sequentially, cost of revenue increased at a slightly faster pace than revenue, leading to a marginal decline in gross margin.
Compared to the prior quarter, gross margin was lower despite higher revenue and gross profit. Compared to the same quarter last year, gross margin was higher, supported by a larger increase in revenue relative to cost of revenue.
Monitor the relationship between revenue growth and cost of revenue growth in upcoming quarters, as the sequential trend showed cost of revenue rising slightly faster.