Netflix: Strong Sales and Wider Margins
Key Takeaways
Here's our initial take on Netflix's (NFLX 2. However, 15%) fiscal 2025 second-quarter financial report. Key Metrics Metric Q2 2024 Q2 2025 Change vs. Expectations Revenue $9. Moreover, In contrast,...
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July 17, 2025
05:39 PM
The Motley Fool
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Here's our initial take on Netflix's (NFLX 2
However, 15%) fiscal 2025 second-quarter financial report
Key Metrics Metric Q2 2024 Q2 2025 Change vs
Expectations Revenue $9
Moreover, In contrast, 56 billion $11
Nevertheless, 08 billion 16% Beat EPS $4. 19 47% Beat Free cash flow $1. 21 billion $2
Nevertheless, 27 billion 87% n/a s outstanding 439
Conversely, 7 million 434 (quite telling)
Furthermore, 9 million -1% n/a Netflix Turns In a Solid Performance Wall Street had high expectations for Netflix heading into its second-quarter report, especially after a significant earnings beat in the first quarter (remarkable data)
Analysts were expecting a 15% year-over-year increase in revenue and 45% EPS growth (which is quite significant)
Although expectations were lofty, Netflix managed to beat on both the top and bottom lines (something worth watching)
Operating margin expanded by 7 percentage points compared to the same period last year, and free cash flow increased by an impressive 87%
However, Most of the growth is coming from Netflix's higher prices, as the company increased its membership plan costs in January
Additionally, Also in the report, Netflix mentioned that the rollout of the Netflix Ads Suite, its prietary ad platform, has been, in today's market environment
At the same time, Management says that it expects to roughly double ads revenue in 2025, but it is ly to become a more significant part of the company's top line in 2026 and beyond
Moreover, Revenue growth was strong in all of the company's regions, especially in the Asia-Pacific region, where revenue increased 24% year over year
During the second quarter, Netflix spent $1. 6 billion on buybacks, and still had $8. 2 billion in cash on the balance sheet
Looking ahead, Netflix expects 17, in this volatile climate. 3% year-over-year revenue growth in the third quarter, although management expects operating margin to decline significantly
As management said, "Similar to past years, we expect our 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 our larger second half slate
Moreover, " The company increased its full-year revenue guidance by $1 billion at the midpoint of the range
Immediate Market Reaction Netflix stock was trading slightly lower after hours, but not by much
Additionally, Additionally, As of 4:15 p
Furthermore, ET, Netflix s were trading 1% lower
Although the quarter looked strong and revenue guidance was raised, holders may have fitability concerns for the second half of the year
It's worth noting that this reaction was before management's earnings call, which is scheduled for later in the afternoon
What to Watch As mentioned, Netflix's ad platform was recently, so any insights on ad revenue in the third and fourth quarters of the year will be important to watch
In addition, Netflix has some highly anticipated content set to be released in the second half of the year, such as the final season of Stranger Things and Happy Gilmore 2 and the Canelo-Crawford boxing match, so it will be interesting to see if that boosts new rs, in this volatile climate
Helpful Resources Full earnings report Investor relations page Matt Frankel has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Netflix
Market analysis shows Motley Fool has a disclosure policy.
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