Netflix is expecting its advertising revenue to keep on trucking it told investors last week after its Q1 financials were revealed.
The top lines are thus: its advertising revenue is expected to double in value to around US$3 billion (AU$4.2 billion).
The number of brands advertising on Netflix grew 70 per cent year-on-year in 2025 to more than 4,000.
Programmatic advertising, on the back of an increased number of DSP partners, is “on its way” to accounting for more than half of Netflix’s non-live ads business.
Considering than Netflix’s Q1 revenue increased 16 per cent year-on-year—above its previous forecast, too—to US$5.245 billion (AU$7.34 billion), those numbers should sound impressive to anyone involved in adland.
“We are maintaining our guidance, our strong outlook for organic growth that we established for 2026. That’s revenue growth of 12 per cent to 14 per cent, operating margin at 31.5 per cent. That includes roughly doubling the advertising business to about US$3 billion. Now 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 1 billion people, which is an exciting milestone to strive for, and it will be an exciting milestone to achieve. But even given that number, we still have plenty of room to grow into our addressable market,” said Netflix CEO Greg Peters during the earnings call.
“So if you look at it from an addressable household perspective that have good data, that have a smart TV, all those things that we think are enabling, we’re still under 45 per cent penetrated in terms of that number. We think that number is roughly 800 million, and it grows every year, obviously. We’ve captured about 7 per cent of addressable revenue. This is countries and categories that we currently directly participate in. We now estimate that [US$670 billion ] as in 2026, and that number grows, of course, year-over-year as well. And we estimate that we account for only 5 per cent of TV view share globally.”
Netflix said that while it will continue to focus on the “top advertising accounts”—i.e. the biggest spenders—which are serviced through its sales team. The push into programmatic, meanwhile, should enable it to diversify its client base significantly.
“Over time, we expect continued growth in that number of advertisers, we’re clearly pushing in that direction,” said Peters. “We think we’re going to see percentage of advertisers who buy programmatically increase and therefore, the programmatic share of ad revenue will go up as well. And as we scale programmatic and our advertiser base broadens further, of course, we’re going to be able to follow this pretty fairly standard modern time-tested model of expanding iteratively into larger and larger pools of advertisers.”
If Netflix does account for just 5 per cent of TV view share globally, it isn’t spread equally.
For instance, Netflix securing the rights to the World Baseball Classic competition (kind of like the World Cup for baseball) drove the largest single sign-up day ever in Japan. As a result, Japan led member growth in Q1 around the wold for Netflix.
In fact, the APAC region as a whole was Netflix’s fastest-growing revenue region in Q1.
“We had a great quarter in India, really strong quarter in Korea, Southeast Asia has showed strength… across the board in APAC, we executed. It wasn’t just one title, one country,” said Spencer Neumann, Netflix’s CFO.
Netflix is also expecting AI to be a boon for its ads business.
“We really see an opportunity to leverage AI within our Netflix ad suite. Make it easier to design new creative formats, custom ads, improved—that improve contextual relevance. And the technology stack just allows us to roll them out more quickly, more effectively and allow partners to leverage those things in an easier manner,” said Peters.
