Netflix Q2 Earnings Beat on Squid Game Finale, 2025 Outlook Raised

Netflix NFLX reported second-quarter 2025 earnings of $7.19 per share, which beat the Zacks Consensus Estimate by 1.7%. The figure jumped 47.3% from the year-ago quarter.

Revenues came in slightly above the company guidance at $11.07 billion, increasing 16% year over year or 17% on a foreign exchange (F/X) neutral basis, driven primarily by membership growth and higher subscription pricing and increased ad revenues. The figure missed the consensus mark by 0.06%.

The second-quarter content slate wrapped up on a high note as Squid Game S3 (122M views) became the company’s sixth biggest season of any series in just a few weeks of viewing.

All regions experienced healthy year-over-year revenue growth, with each region posting double-digit F/X neutral increases. UCAN revenue growth accelerated year over year to 15% compared with 9% year-over-year growth in the first quarter due to the full quarter impact of price changes. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

In a notable shift, Netflix has moved away from reporting specific subscriber count, starting with the first quarter of 2025, preferring instead to focus on financial metrics and user engagement. While tech giants like Apple AAPL and Amazon AMZN do not reveal subscriber figures for their respective streaming services, other media companies do. Disney DIS separately breaks out Disney+, Hulu and ESPN+ figures.

Netflix, Inc. Price, Consensus and EPS Surprise

Netflix, Inc. price-consensus-eps-surprise-chart | Netflix, Inc. Quote

Solid Content Drives Subscriber Growth in Q2

Member growth was ahead of the company forecast, although this occurred late in the quarter, limiting the impact on second-quarter revenues.

This Zacks Rank #2 (Buy) company delivered a solid slate in the second quarter with hit series like Sirens (56M views ), Ginny & Georgia S3 (53M views), Mad Unicorn from Thailand (7M views), Dept. Q from the UK (28M views), Secrets We Keep from Denmark (35M views), the animated Asterix & Obelix: The Big Fight from France (16M views) and The Eternaut from Argentina (29M views). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New series out of the United States, like The Four Seasons starring Tina Fey and Steve Carell (40M views), Ransom Canyon (30M views) and FOREVER (20M views) all delighted members and have been renewed for second seasons.

Film releases such as Exterritorial from Germany, which became the fourth most popular non-English language film ever (89M views), Tyler Perry’s STRAW (109M views), Nonnas (60M views) starring Vince Vaughn, as well as iHostage from the Netherlands (58M views), K.O. from France (46M views), Karol G: Tomorrow was Beautiful from Colombia (13M views) and Bullet Train Explosion from Japan (34M views) were crowd favorites in the second quarter.

Korean content continues to be popular with NFLX’s audience. In addition to Squid Game, Weak Hero: Class 2 (20M views), Mercy For None (18M views) and Tastefully Yours (15M views) were some of the most popular Korean series released in the second quarter.

In the reported quarter, Spanish series and films such as The Gardener (34M views), Bad Influence (46M views) and A Widow’s Game (43M views) were hits with Spanish-speaking audiences and also found fans internationally.

Operating Details

Marketing expenses increased 10.7% year over year to $713.3 million. As a percentage of revenues, marketing expenses expanded 30 basis points (bps) on a year-over-year basis to 6.4%. Technology and development expenses increased 15.9% year over year to $824.7 million. As a percentage of revenues, technology and development expenses expanded 70 basis points (bps) on a year-over-year basis to 7.4%. General and administration expenses increased 3.3% year over year to $441.2 million. As a percentage of revenues, general and administration expenses contracted 10 bps on a year-over-year basis to 4%.

Operating income totaled $3.8 billion, up 45% year over year, and operating margin was 34% compared with 27% in the year-ago period. Both were slightly ahead of the company forecast, given the revenue upside in the quarter and the timing of expense spending. The second quarter was the first full quarter in which Netflix launched new price increases, including in mature markets like the United States. The price hikes, combined with consistent low churn, likely account for the strong margins.

Balance Sheet & Free Cash Flow

Netflix had $8.17 billion of cash and cash equivalents as of June 30, 2025, compared with $7.19  billion as of March 31, 2025.

Total debt was $14.5 billion as of June 30, 2025, compared with $15.01 billion as of March 31, 2025. 

Streaming content obligations were $20.96 billion as of June 30, 2025, compared with $21.79 billion as of March 31, 2025.

Netflix reported a free cash flow of $2.3 billion compared with a free cash flow of $2.66 billion in the previous quarter.

Net cash generated from operating activities in the second quarter was $2.4 billion compared with $1.3 billion in the prior year period. 

During the quarter, Netflix paid down $1 billion of USD and EUR senior notes using proceeds from 2024 refinancing, and repurchased 1.5 million shares for $1.6 billion. Netflix has $12 billion remaining under its existing share repurchase authorization. 

In May 2025, NFLX established a commercial paper (CP) program, providing the company with enhanced flexibility and the ability to issue short-term, unsecured notes in an aggregate amount of up to $3 billion.

Guidance

Netflix has raised its full-year 2025 revenue forecast to $44.8-$45.2 billion from the previous guidance of $43.5-$44.5 billion. This indicates year-over-year growth of 15%-16% or 16%-17% on a foreign exchange neutral basis. The increase in the revenue forecast primarily reflects the recent depreciation of the U.S. dollar versus most other currencies, along with continued business momentum driven by solid member growth and advertising sales. 

The company is now targeting a foreign exchange neutral operating margin of 29.5% for 2025, up from the prior 29% forecast, which would equate to roughly 30% operating margin on a reported basis at current exchange rates. Netflix has also increased its free cash flow forecast to $8.0-$8.5 billion from approximately $8.0 billion previously due to the improved revenue and operating margin outlook.

For the third quarter of 2025, Netflix expects revenues of $11.526 billion, indicating growth of 17% on both a reported and foreign exchange neutral basis. Revenues are expected to be driven by growth in members, pricing and advertising revenues. The company projects an operating margin of 31% for the quarter, which represents a two percentage point improvement year over year. However, Netflix expects that similar to past years, operating margin in the second half of 2025 will be lower than the first half due to higher content amortization and sales and marketing costs associated with its larger second-half content slate.

Netflix's second-half 2025 slate features highly anticipated returns of several major franchises. The lineup includes the second season of Wednesday, the Emmy-nominated second season of Nobody Wants This, the third season of Alice in Borderland from Japan, and most notably, the fifth and final season of Stranger Things. These returning series represent some of Netflix's most valuable intellectual properties and are expected to drive significant member engagement.

The platform is launching several ambitious new series, including Billionaires' Bunker from Money Heist creator Álex Pina, the thriller Black Rabbit starring Jason Bateman and Jude Law, House of Guinness from Peaky Blinders creator Steven Knight, and Las Muertas from Mexico. This diverse international lineup demonstrates Netflix's continued commitment to its "local for local" content strategy while creating programming with global appeal.

Netflix's film offerings for the remainder of 2025 include major sequels and original productions. Comedy sequels include Happy Gilmore 2 with Adam Sandler and Tyler Perry's Madea's Destination Wedding, while the mystery genre gets Wake Up Dead Man: A Knives Out Mystery. International offerings include Troll 2 from Norway and French Lover starring Lupin's Omar Sy. The prestige film category features Academy Award winner Kathryn Bigelow's A House of Dynamite, Noah Baumbach's Jay Kelly starring George Clooney and Adam Sandler, and Academy Award winner Guillermo del Toro's Frankenstein. The animated slate includes In Your Dreams, and romance gets My Oxford Year starring Sofia Carson and Corey Mylchreest.

The unscripted slate includes Building the Band (which premiered recently), America's Team: The Gambler and His Cowboys, the ninth season of Love is Blind, and a new documentary about Victoria Beckham.

Netflix continues to expand its live programming with major sporting events, including two marquee boxing matches in the third quarter featuring the Taylor vs. Serrano rematch and the highly anticipated Canelo vs. Crawford fight on Sept. 13. The live programming culminates with Netflix's NFL Christmas Day doubleheader, featuring compelling divisional matchups like Dallas Cowboys vs. Washington Commanders and Detroit Lions vs. Minnesota Vikings.

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