Netflix, Inc. (NASDAQ: NFLX)

Netflix’s Q2 2025 revenue grew 16% year-over-year to $11.08 billion, or 17% on a foreign exchange neutral basis. This growth was primarily driven by more members, higher subscription pricing, and increased advertising revenue. All regions experienced healthy year-over-year revenue growth, with each region posting double-digit F/X neutral increases. UCAN revenue growth accelerated to 15% versus 9% in Q1 2025 due to the full quarter impact of price changes.

Operating performance was particularly strong, with operating income totaling $3.77 billion, up 45% year-over-year. The operating margin expanded significantly to 34% from 27% in Q2 2024, reflecting improved operational efficiency and scale benefits. This margin expansion was driven by revenue growth outpacing expense growth, demonstrating Netflix’s ability to drive operating leverage.

Net income increased to $3.13 billion from $2.15 billion in the prior year, representing a 46% increase. Diluted earnings per share amounted to $7.19 versus $4.88 last year, a remarkable 47% year-over-year improvement. The strong earnings performance reflects both operational excellence and effective cost management.

Free Cash Flow was $2.27 billion in Q2 2025, demonstrating Netflix’s exceptional cash generation capabilities. While slightly down from $1.21 billion in Q2 2024 due to timing of content investments, the company maintained strong cash flow margins and continued returning significant capital to shareholders through share repurchases.

For the six-month period, operating cash flow reached $5.21 billion compared to $3.50 billion in the prior year, highlighting the sustainable nature of Netflix’s cash generation and the strength of its subscription-based business model.

Netflix delivered an exceptional Q2 2025 content slate that drove strong member engagement and demonstrated the company’s global content leadership:

Hit Series Performance

• Squid Game S3: 122M views, already becoming Netflix’s sixth biggest season of any series in history with just a few weeks of viewing
• International Hits: Sirens (56M views), Ginny & Georgia S3 (53M views), Mad Unicorn from Thailand (7M views), The Eternaut from Argentina (29M views)
• U.S. Originals: The Four Seasons starring Tina Fey and Steve Carell (40M views), Ransom Canyon (30M views), FOREVER (20M views) – all renewed for second seasons

Film Success Stories

• Exterritorial: 89M views, becoming Netflix’s fourth most popular non-English language film ever
• Tyler Perry’s STRAW: 109M views, demonstrating strong audience appeal
• Animation Breakthrough: K-Pop Demon Hunters (80M views) became a cultural phenomenon with fictional bands breaking real K-pop records

The company’s “local for local” content strategy continued to deliver results, with Spanish content like The Gardener (34M views) and Bad Influence (46M views) finding both domestic and international audiences. Netflix announced an investment of over one billion Euros in Spain between 2025-2028 to further expand its Spanish programming slate.

Netflix achieved over 95 billion hours of viewing in the first half of 2025, a 1% increase year-over-year despite the content slate being unusually second-half weighted. Non-English language content represented more than one-third of all Netflix viewing, highlighting the global appeal of the platform’s diverse content offerings.

The company’s content strategy emphasizes quality and diversity, with viewing being very broad and not dependent on any single title. Even the biggest titles account for less than 1% of total viewing, demonstrating the platform’s content breadth and the staying power of its library, with nearly half of Netflix originals viewing coming from titles launched in 2023 or earlier.

United States and Canada (UCAN) delivered 15% revenue growth to $4.93 billion, a significant acceleration from 9% growth in Q1 2025. This improvement was driven by the full quarter impact of price changes implemented earlier in the year. The region continues to demonstrate pricing power and member retention despite a mature market environment.

Europe, Middle East & Africa (EMEA) achieved 18% reported revenue growth to $3.54 billion, or 16% on an F/X neutral basis. The region showed strong performance across multiple markets, benefiting from continued subscriber acquisition and the successful implementation of paid sharing initiatives. Content localization efforts, including the significant investment in Spanish content, contributed to regional strength.

Latin America (LATAM) posted 9% reported growth but an impressive 23% growth on an F/X neutral basis, highlighting the significant impact of currency fluctuations in this region. Despite F/X headwinds, the underlying business fundamentals remained strong, with effective local content strategies and market penetration driving subscriber growth.

Asia Pacific (APAC) was the standout performer with 24% revenue growth to $1.31 billion, or 23% on an F/X neutral basis. The region benefited from continued market expansion, strong content performance including Korean originals, and successful localization strategies. The partnership with TF1 in France, announced during the quarter, represents Netflix’s innovative approach to expanding content offerings in key markets.

All regions demonstrated healthy double-digit F/X neutral growth, reflecting Netflix’s global scale advantages and the universal appeal of its content strategy. The regional performance underscores the company’s ability to adapt to local preferences while maintaining consistent execution across diverse markets.

Netflix made significant product and technology advances in Q2 2025, focused on enhancing the member experience and building advertising capabilities:

Redesigned TV Homepage

Netflix introduced a redesigned TV homepage that represents the first major interface update in over a decade. The new design is simpler, more intuitive, and better represents the breadth of entertainment on Netflix today. Early results are encouraging, with the new experience outperforming pre-launch testing and demonstrating strong member interest in the new features.

• More intuitive display of key information including trailer videos, synopsis, and title callouts
• Responsive recommendations that update rows of titles in real time
• Better balance between helping members find content they already have in mind and discovering new content
• Approximately 50% of members have used the new experience since rollout

Netflix Ads Suite Completion

The company completed the rollout of the Netflix Ads Suite, its proprietary first-party ad tech platform, across all advertising markets. This represents a foundational investment in the company’s long-term advertising strategy, enabling:

• Better measurement capabilities for advertisers
• Enhanced targeting options
• Innovative ad formats
• Expanded programmatic capabilities
• Integration with Yahoo DSP for enhanced programmatic offerings

Gaming and Interactive Experiences

Netflix continued investing in immersive, narrative games based on its IP, including:

• Thronglets: Launched alongside Black Mirror S7, immersing fans in the world of the episode “Plaything”
• Squid Game: Unleashed: Significant updates introducing new games, characters, and Play Along rewards based on season 3

These product innovations demonstrate Netflix’s commitment to enhancing the member experience across all touchpoints while building the technological infrastructure necessary to support its expanding business model, particularly in advertising.

Netflix outlined several strategic initiatives and provided updated guidance for 2025, reflecting confidence in continued growth and operational excellence:

2025 Financial Outlook

• Revenue forecast increased to $44.8-$45.2 billion from $43.5-$44.5 billion, representing 15%-16% year-over-year growth
• F/X neutral operating margin target of 29.5%, up from prior 29% forecast (30% on reported basis at current F/X rates)
• Free cash flow forecast increased to $8.0-$8.5 billion from approximately $8.0 billion
• Q3 2025 revenue growth of 17% expected on both reported and F/X neutral basis

Content Strategy and Pipeline

Netflix remains optimistic about its second-half 2025 content slate, featuring highly anticipated titles:

• Returning Series: Wednesday S2, Stranger Things finale (fifth and final season), Alice in Borderland S3 from Japan
• Film Slate: Happy Gilmore 2 with Adam Sandler, Kathryn Bigelow’s A House of Dynamite, Guillermo del Toro’s Frankenstein
• Live Programming: Canelo vs. Crawford boxing match on September 13th, NFL Christmas Day doubleheader

Advertising Business Development

The company continues to build its advertising business with expectations to roughly double ads revenue in 2025. The U.S. upfront is nearly complete with results consistent with this goal, and clients are excited about Netflix’s growing scale and successful tech stack rollout.

Global Expansion and Partnerships

Netflix announced innovative partnerships, including with TF1 in France, which will allow French members to access TF1’s linear channels and on-demand content as part of their Netflix subscription starting summer 2026. This represents a new model for expanding local programming and enhanced value for members.

The company continues its significant investment in production infrastructure, including ongoing expansion in Albuquerque, NM and plans for a state-of-the-art $1 billion facility in Fort Monmouth, NJ, reinforcing its commitment to U.S. production.