Strong ad growth and live programming push Netflix Q2 profit to US$3.1 billion, beating analyst forecasts
Netflix posted a US$3.1bn net profit in the second quarter of 2025, driven by a surge in viewership for the final season of “Squid Game” and rising ad sales, leading the company to raise its full-year revenue forecast to as high as US$45.2bn, according to Reuters.
The platform’s revenue grew 16 percent year over year to US$11.08bn in the quarter ending in June, slightly above analyst expectations, reported The Wall Street Journal.
Operating margin rose to 34.1 percent, up from 27.2 percent a year earlier, and free cash flow nearly doubled to US$2.3bn, as per CNBC.
Netflix raised its full-year revenue guidance from US$43.5bn–US$44.5bn to US$44.8bn–US$45.2bn.
The company attributed the revised outlook to the weakening US dollar, growing ad sales, and “healthy” member growth, according to its earnings release.
Operating margin for the year was also revised upward from 29 percent to 29.5 percent.
Despite the stronger results, the stock fell 1.8 percent in after-hours trading, closing at US$1,251.86.
Investing.com analyst Thomas Monteiro said investors had expected “a much stronger upward revision” and called the outlook “quite conservative, which is problematic for a stock priced for perfection.”
Revenue growth came from multiple sources.
As reported by Forbes, Netflix raised subscription prices across US plans in January, partnered with French broadcaster TF1 to expand access overseas, and continued its crackdown on password sharing.
The company said revenue gains were driven by “more members, higher subscription pricing and increased ad revenue,” according to CNBC.
In content, Netflix saw strong engagement from several high-profile releases.
Season three of “Squid Game,” released days before quarter-end, reached 122 million views, making it the most-watched non-English title in Netflix history, according to Reuters.
Other titles included “Ginny & Georgia” season three, “Sirens,” “The Four Seasons,” and the thriller “Zero Day.”
According to an engagement report cited by The Wall Street Journal, shows such as “Adolescence” and movies like “Back in Action” and “STRAW” drew some of the highest viewership during the first half of 2025.
Total viewing hours rose one percent year over year from January through June.
The company’s ad-supported tier, launched in 2022, continues to grow.
Co-CEO Ted Sarandos said, “Not all view hours are equal,” as reported by The Wall Street Journal.
He explained that live content creates an outsized positive impact on conversation, acquisition, and likely retention.
Live programming and sports are increasingly important, with Netflix pursuing new deals for pay-per-view and boxing events.
Forbes cited Julie Clark of TransUnion, who said live sports offer consistent scheduling and help “maintain subscribers who might otherwise dip in and out,” while also supporting stable viewership and ad inventory.
Looking ahead, Netflix forecasts US$11.5bn in third-quarter revenue and nearly US$3bn in net income. Analysts had projected US$11.3bn and US$2.9bn respectively, according to Reuters.
The second half of the year includes returning shows such as “Wednesday,” the final season of “Stranger Things,” “Happy Gilmore 2,” and Guillermo del Toro’s “Frankenstein.”
Netflix no longer reports quarterly subscriber numbers, having stopped after the first quarter.
Instead, the company is urging investors to focus on profitability, stating that member growth exceeded expectations but occurred late in the quarter, limiting its revenue impact, as per CNBC.
Chief Financial Officer Spencer Neumann said the company would continue its long-standing strategy of organic growth rather than acquisitions.
“We’ve historically been more builders than buyers, and we continue to see big runway for growth without fundamentally changing that playbook,” he said in the post-earnings call.
