Netflix reports its first quarter 2026 earnings after market close tonight at 6 Eastern, and the investor narrative around the company has fundamentally changed in the last 12 months. The password sharing crackdown that defined the 2023 to 2024 period is effectively over. The ad supported tier has passed 65 million monthly active users, up from 23 million at the end of 2023. The live programming investment has produced three marquee wins in the last six months. What Wall Street is trying to figure out tonight is whether the content strategy of the last two years is beginning to compound in the way Ted Sarandos and Bela Bajaria have been promising since 2024.
Expected subscriber additions for the quarter are in the 6.5 to 8 million range according to consensus estimates. Average revenue per member is projected to grow 4 to 5 percent year over year, driven by ad tier maturation and targeted price increases in international markets. The number to watch more closely than headline subscriber count is domestic and Canadian ARPU, which is expected to show the first quarter over quarter decline in 18 months as the lower priced ad tier continues taking share from the standard tier. Netflix executives have been signaling this for a year. The ad tier economics are better than the ad free tier economics at scale, but the transition creates ARPU optics that make investors nervous.
Live programming is the quarter's most watched storyline. Netflix paid 450 million over three years for exclusive rights to NFL Christmas Day games starting in 2024. That deal has performed well enough that the company bid aggressively on NBA rights, WWE Raw, and a piece of the UEFA Champions League. Raw moved to Netflix in January 2025 and has averaged 4.2 million viewers per Monday night, slightly above where it landed on USA Network in its final year. The Jake Paul vs Mike Tyson fight in November 2024 pulled 108 million global viewers, which is still the largest single event streaming audience in industry history.
What the live strategy has done is solve a structural problem Netflix had been running into. Scripted content peaks quickly and then decays in attention share. A hit show drives a conversation burst of 2 to 3 weeks. Live content produces recurring weekly engagement that does not decay. Every Monday night Raw gives Netflix a reason for casual subscribers to stay subscribed. Every Christmas Day NFL game brings in lapsed subscribers. The live inventory has become the glue holding the broader scripted and unscripted investments together.
The scripted content hit rate has improved in the last year. Squid Game Season 3, Bridgerton Season 4, Stranger Things Season 5, Extraction 3, Wednesday Season 2, and The Night Agent Season 3 all posted top 10 weekly global rankings. The unscripted side has held up. Love Is Blind Season 9 trailed Season 8 in audience but outpaced every other competing dating reality show. Squid Game The Challenge Season 2 pulled stronger audiences than its predecessor. The combined effect is that content ROI, which Netflix has been working to improve since 2022, is finally showing up in the operating margin line. Operating margin is expected to hit 28 to 30 percent in the quarter, up from 21 percent in Q1 2024.
International growth is where the long term story sits. APAC added 3.8 million subscribers in Q4 2025 and the growth rate in India, Indonesia, and the Philippines has accelerated in the first quarter. India in particular has become the growth engine everyone underestimated. Netflix cut prices in India in 2022, which was viewed as a retreat at the time. The lower price point combined with the ad tier launch in 2024 has produced 2.1 million Indian subscribers added in 2025 alone, compared to roughly 200,000 additions per year in the 2021 to 2022 period. Content localization in Hindi, Tamil, and Telugu has paid off.
The competitive picture has softened. Disney Plus, Warner Bros Discovery Max, and Paramount Plus have all faced their own pressure through 2025 and the first quarter of 2026. Disney merged Hulu fully into Disney Plus and raised prices, which produced churn. Max has been rumored as a potential strategic partner or acquisition target for Comcast, Apple, or Amazon. Paramount completed its merger with Skydance in 2024 and is still rationalizing its content investment. Netflix does not have a direct scale competitor in the US right now that is growing faster than it is.
The ad tier economics are worth understanding because they will dominate the next two years of the earnings story. Netflix ad revenue crossed 4 billion dollars on an annualized run rate basis in Q4 2025. Ad load is still low at roughly 4 to 5 minutes per hour, compared to 12 to 14 minutes on traditional linear television. There is significant room to raise ad load without pushing users to the ad free tier, based on viewer research Netflix shares at advertiser upfronts. The upside is large. If Netflix can lift ad revenue to 10 billion on 120 million ad tier subs at the current ARPU, the impact on operating income is material.
What to watch at 6 Eastern tonight. The subscriber number will move the stock but less than it used to. The ARPU trend, operating margin expansion, and guidance on the second half live inventory calendar will matter more. The call is always tightly scripted by investor relations and the questions from analysts usually cluster around three or four themes. Expect questions on the next sports rights cycle, the timing of meaningful price increases in the ad tier, and how Netflix plans to compete with Amazon for the next wave of live rights. The answers will shape how the stock trades into the summer.