The re indicates that What's fascinating this is Image source: The Motley Fool. In contrast, DATEThursday, July 17, 2025 at 4:45 p.
However, ETCALL PARTICIPANTSCo-CEO — Ted SarandosCo-CEO — Greg PetersChief Financial Officer — Spencer NeumannVice President, Finance, Investor Relations, and Corporate Development — Spencer Wang Need a quote from one of our analysts.
However, [ tected]TAKEAWAYSFull-Year Revenue Guidance: Raised full-year revenue guidance to $44 (fascinating analysis). 8 billion–$45 (an important development).
2 billion, representing a midpoint increase of apximately $1 billion over the prior forecast, primarily due to foreign exchange effects and stronger-than-expected member growth.
Operating Margin: Full-year reported operating margin target increased to 30%, up from 29% previously; FX-neutral margin is now guided to 29.
Nevertheless, 5% for the year, reflecting imved underlying membership growth and advertising performance.
Furthermore, Advertising Revenue: On track to roughly double for the year; Ad sales momentum is "a bit ahead of beginning-of-year expectations," with a global ad stack now fully rolled out, in light of current trends.
Ad Deployment: Greg Peters said, "We have the rollout of our own ad stack and the Netflix, Inc. Moreover, Ad suite to all of our ad now, considering recent developments.
Moreover, " enabling faster feature releases and imved ad targeting and measurement.
Consumer Metrics: Retention remains "stable and industry-leading," with no significant changes in plan mix, take rate, or engagement; recent price changes performed in line with expectations (noteworthy indeed) (this bears monitoring).
On the other hand, Content Spend: Content amortization is jected to exceed $16 billion this year, considering recent developments.
It has grown more than 50% from under $11 billion in 2020 to over $16 billion this year, supporting a broader and deeper content slate, considering recent developments.
Engagement: Total view hours grew modestly in the first half of 2025, as reported by Greg Peters; per-owner-household engagement has been "relatively steady over the past two and a half years" despite competitive pressure.
On the other hand, Duct Innovations: New user interface has been deployed to the first large wave of TV devices and is showing "performance that is better than what we saw in our prelaunch testing," imving content discovery and session metrics (this bears monitoring), in today's financial world.
Conversely, TF1 Partnership: Announced a partnership with France's TF1 to expand local content offerings, leveraging existing investments in, advertising, and the new user interface to enhance local market relevance.
Nevertheless, Gaming Initiatives: Further investment in games, highlighted by positive early impact from Grand Theft Auto and other licensed titles in 2025; emphasis remains on scaling value to members and retention rather than short-term monetization.
AI Adoption: Successful integration of generative AI in duction enabled completion of VFX sequences "10 times faster" and at lower cost, as seen in an Argentine original series; this marked the first GenAI final footage to appear on screen in a Netflix original series or film.
On the other hand, Holder Returns and Capital Deployment: Continued preference for organic growth and returning excess capital via repurchase, with management reaffirming a selective, disciplined apach to potential M&A opportunities (quite telling).
However, SUMMARYNetflix, Inc. 15%) management emphasized an upgraded full-year 2025 revenue outlook of $44.
2 billion and imved reported operating margin guidance from 29% to 30%, driven by favorable FX trends and accelerating member and ads growth.
Nevertheless, Market analysis shows company the global rollout of its prietary ad stack, enabling rapid feature innovation and positioning ad revenue to roughly double this year.
In contrast, Stable retention and engagement trends, combined with significant investment in original content and nology, were highlighted as key to future growth.
Management announced the TF1 partnership to further enhance local content breadth in France and maintained a disciplined investment apach across new such as games and generative AI initiatives.
Meanwhile, Ted Sarandos described new content releases and renewals, including international roles for successful franchises, as central to driving engagement, stating, "it is not the single hit.
So what it is is a steady drumbeat of shows and films and soon enough games that our members really love"Greg Peters disclosed, "We have seen an increased grammatic buying.
" from advertisers ing the full ad suite rollout, with upcoming integration of additional demand sources Yahoo to further expand the, in today's financial world.
On the other hand, Management vided the first confirmation that generative AI-powered final footage debuted in a Netflix original this year, demonstrating operational efficiencies in duction scalability and speed (fascinating analysis).
Ted Sarandos confirmed events and sports remain a "relatively small part of the total content spend" but acknowledged their outsized positive impact on acquisition metrics and a ly impact on retention.
However, However, Spencer Neumann reiterated, "we have historically been more builders than buyers," reaffirming organic growth and cash return as the principal capital allocation priorities despite anticipated media sector consolidation.
INDUSTRY GLOSSARYAd Stack: The platform and infrastructure enabling grammatic dery, targeting, and measurement of advertising inventory across Netflix's services.
TF1: A leading French television broadcaster with whom Netflix announced a localized content partnership.
Nevertheless, Generative AI (GenAI): Artificial intelligence nologies used to automate or enhance creative tasks such as visual effects, content personalization, or recommendation systems, in today's market environment.
Grammatic Buying: Automated, data-driven purchasing of digital advertising inventory.
At the same time, Owner Household: A measurement unit excluding d/borrowed accounts, used by Netflix to assess engagement per paying household.
In contrast, Amortization (Content Amort): The systematic expense recognition of content duction costs over time as titles are distributed and consumed (fascinating analysis).
ILine: Netflix's internal duction innovation group, focused on visual effects and nical advances in entertainment content creation.
Full Conference Call TranscriptSpencer Wang: Good afternoon, and welcome to the Netflix, Inc. On the other hand, Q2 2025 earnings interview.
I am Spencer Wang, VP of Finance, IR, and Corporate Development. Joining me today are Co-CEOs, Ted Sarandos and Greg Peters, and CFO, Spencer Neumann.
As a reminder, we will be making forward-looking statements, and actual results may vary. We will take questions submitted by the analyst community, and we will begin with our results and our forecast.
The first question comes from Steve Cahall of Wells Fargo.
What the re reveals is question is, since the revenue increase in your forecast is primarily FX driven, we are curious the components of the constant currency increase (something worth watching).
Is this due to a better underlying revenue growth, or are there specific expenses that are coming in better, content amortization, considering recent developments.
Furthermore, At the same time, I will take that one. Thanks, Steve. Nevertheless, In contrast, So I Spencer Neumann: As you saw on the letter, we increased our full-year revenue guidance to $44.
Nevertheless, That's up from the prior guide of $43. So up a billion at the midpoint of the range and a tighter range (an important development).
On the other hand, As you noted, primarily reflects the FX impact from the weakening dollar relative to most other currencies, in today's financial world.
But the good news is we are also seeing strength in our underlying.
We have got healthy member growth, and that even picked up nicely at the '2 a bit more than we expected, considering recent developments.
We think that will carry through with our strong back half slate (noteworthy indeed). So we are reflecting that in our forecast, given current economic conditions.
However, On the other hand, We're also seeing nice momentum in ad sales, still off a pretty small base, but good growth and it is on pace to roughly double our revenue in the year.
And it is a bit ahead of beginning of year expectations.
Additionally, So when we carry all that through to operating margin, our operating expenses are essentially unchanged, which is part of your question, in this volatile climate.
So they are basically unchanged forecast to forecast. So we are largely flowing through the expected higher revenues to fit margins.
So that is why our d target full-year reported margin is up a point from 29% to 30% and that 50 basis point increase in FX neutral margin is really just that revenue lift from stronger membership growth and ads relative to prior forecast flowing through the margin.
Nevertheless, Spencer Wang: Thank you, Spence. Furthermore, Furthermore, We will take our next question from Barton Crockett of Rosenblatt Securities (fascinating analysis).
Why is operating margin guidance for the full year only 30% after the upside in February and a forecast 31. 5% for the third quarter (something worth watching).
Is there a timing issue, FX issue, or is there a new level of spending that will continue beyond the fourth quarter of 2025.
Moreover, Spencer Neumann: Well, this is really mostly timing, given the current landscape. However, So thanks, Barton. We primarily, as a reminder, manage to full-year margins.
Furthermore, And we expect our content expenses will ramp in Q3 and Q4. We have got many of our biggest new and returning titles and events in the back half of the year, in today's market environment.
On the other hand, We have also, you know, Q4 is typically a and generally almost always is a heavier film slate.
Nevertheless, We will talk our expect we will talk more of this on the call, in light of current trends.
Also be marketing to support that heavier slate, and we are continuing to aggressively build out our ad sales infrastructure and capabilities through the year (this bears monitoring) (noteworthy indeed).
So all of that is to be expected. Nevertheless, We can manage to it. We manage to those margins.
And even with that back half ramp in expenses, we expect operating margins to be up year over year in each quarter, including Q4, and as just noted, we do expect to der strong full-year margins as we just took up our guide to, you know, 29 (noteworthy indeed), in light of current trends.
5% FX neutral, 30% reported, given the current landscape. Spencer Wang: Great. Thanks, Spence. The next question comes from Tom Champion of Piper Sandler (this bears monitoring).
How has your view of the consumer and the macro economy changed over the last ninety days.
Spencer Neumann: Similar to last quarter, we are carefully watching consumer sentiment in the broader Greg Peters: economy (quite telling).
But at this point, really nothing significant to note in the metrics and the indicators that we get directly through the. Those are retention that remains stable and industry-leading.
Furthermore, There have been no significant shifts in plan mix or plan take rate. And the price changes we have done since the last quarter have been in line with expectations.
However, On the other hand, Engagement also remains healthy. Moreover, So things all look stable from those indicators and big picture entertainment in general and Netflix, Inc (noteworthy indeed).
Specific have been historically pretty resilient in tougher economic times, amid market uncertainty.
We also think that we are an incredible entertainment value not only compared to traditional entertainment, but if you think ing competitors, when we start at $7.
99 in The United States, you think all the entertainment you get we have a belief and expectation that demand for not only entertainment but for us specifically will remain strong, in this volatile climate.
Spencer Wang: Thanks, Greg. I think a nice -up to this question will be on advertising.
So from Ben Swinburne of Morgan Stanley, can you any data points around your upfront negotiations (this bears monitoring). Greg Peters: Yep.
As we noted in the letter, our US upfront is nearly complete (noteworthy indeed). On the other hand, We have closed a large majority of deals with the major agencies.
Those results have generally been in line or slightly better than our targets and consistent with our goal to roughly double the ads this year (an important development).
And what are advertisers excited. Growing scale is something we definitely hear, in light of current trends. Also, a highly engaged audience.
So bigger audience, but also an audience that is more engaged relative to our peers, in today's financial world.
This demonstrates that rollout of our own ad stack, which helps der a bunch of features, and then our slate, which is generally amazing and includes a growing number of events that advertisers are excited, in this volatile climate.
Additionally, Spencer Wang: Great. -up question on advertising from Vikram of Baird. How have advertisers in The US responded to the Netflix, Inc, in today's market environment.
Nevertheless, Ads suite rollout since the April launch. Additionally, What features and capabilities are attracting the most interest, and how is the initial back in other regions outside of The US.
Greg Peters: We have the rollout of our own ad stack and the Netflix, Inc, in light of current trends. However, Ad suite to all of our ad now.
So we are fully on our own stack around the world at this point. That rollout was generally smooth across all countries, in this volatile climate.
We see good performance metrics across all countries, and the early results are in line with our expectations.
Now we are in this phase of learning and imving quickly based on the fact that being everywhere means that you get a bunch of back what we can do better, which is great.
As we mentioned before, the most immediate benefit from this rollout is just making it easier for advertisers to buy on Netflix, Inc.
We hear that benefit, that ease, from direct back talking to advertisers (remarkable data). Nevertheless, They tell us that it is easier.
See it in our overall sales performance, in today's market environment. Moreover, Meanwhile, We have seen an increased grammatic buying, considering recent developments.
So all of these are consistent, you know, with what we were expecting both qualitatively and from a metrics perspective.
We're also, I guess, worth noting that we are going to roll out additional demand sources Yahoo that will further open up the market for us.
Long term, being on our own stack, that imves the speed of our execution to der this, you know, pretty significant roadmap of features that we have in front of us, in today's financial world.
It's things imved targeting and measurement. There's also leveraging advertiser and third-party data which we definitely hear demand for as well, in today's market environment.
And it will ultimately allow us to imve the ad experience for our members. At the same time, Which is critically important. So that means better ads personalization.
However, So the ads that I see are increasingly different from the ads that, let us say, Ted would see.
Conversely, And they are more relevant for each of us, which is good for us as users, and it is good for the brands.
Also going to be introducing interactivity in the second half of the year, so that is exciting.
Furthermore, So that is all to say this is, you know, a pretty significant milestone for us, one we are super excited to get behind us because now we can shift into this steady release cycle where we are dropping new features all the time, both for advertisers and for members (fascinating analysis).
And that is the development and release that we have in other parts of the. So it is fun to be able to get to that point. Spencer Wang: Thanks, Greg, considering recent developments.
Furthermore, I will move this along now to a set of questions around content as engagement (noteworthy indeed), in today's financial world. This one comes from Ben Swinburne of Morgan Stanley.
1% engagement growth year over year suggests engagement is down year over year on an average per member basis, in light of current trends.
Furthermore, Meanwhile, How do we reconcile that with engagement growing on a per member household basis if that is still accurate.
Greg Peters: So total view hours did grow a bit in the first half of 2025, and that is despite a particularly back half-weighted slate.
But to your point on engagement on a per member basis, we have mostly been focused for the last few years on measuring engagement on what we call an owner household basis (remarkable data).
Additionally, So this takes out the borrower effect, and we obviously think this is the best way to assess our engagement per member because it removes the tricky comparison impacts from paid sharing.
So that metric per owner household engagement has been relatively steady over the past two and a half years throughout the rollout of paid sharing, and amidst increasing c.