Strong Q2 Powers Netflix Stock: Earnings Beat Expectations, Revenue Jumps 16%
Netflix just dropped its Q2 results, and the numbers are big. Revenue jumped 16%, hitting over $11 billion. Earnings per share beat Wall Street’s guesses, too. But here’s the twist: the Netflix stock still dipped after the news. Surprised? So were we.
Even with solid results, the market wasn’t fully impressed. Maybe it’s because the stock price had already soared earlier this year. Or maybe investors wanted something even bigger.
Still, this report shows how strong Netflix has become. With more people joining, better profits, and a smart ad strategy, it’s not just about watching shows anymore. It’s about building a business that keeps growing.
Let’s break down what made this quarter strong, what Netflix is doing right, and why the stock still slipped. We’ll also look at what’s next for Netflix and for investors.
Bottom-Line Outperformance
We saw Netflix post another strong quarter. Earnings per share (EPS) came in at $7.19, topping estimates of $7.08. Revenue hit $11.08 billion, a 16% jump over last year.
Operating income reached $3.78 billion, with a 34% operating margin up seven points from Q2 2024. Even with such gains, the stock slipped in after-hours trading, a classic “sell the news” move.
Revenue Drivers & FX Tailwind
A weak U.S. dollar boosted international revenue. About 56% of Netflix’s earnings came from overseas, and favorable currency exchange added to growth. The company also raised subscription prices in January, affecting both its ad-supported and ad-free plans.
On top of that, the ad-supported tier added 94 million users, nearly half of all new signups. Netflix says ad revenue will double in 2025, jumping to around $3.9 billion.
Content Highlights & Engagement
Viewership has been strong. Users watched 95 billion hours in the first half of 2025. Top shows this quarter included Adolescence (145 M hours), Squid Game seasons 2 and 3, Back in Action (165 M), and K-Pop Demon Hunters (37 M).
Old favorites still draw viewers. Almost half of that watch time came from classics like Ozark and Orange Is the New Black.
Netflix launched fresh content in Q2. Hits included Sirens, Ginny & Georgia S3, The Eternaut, and Secrets We Keep. Squid Game S3 has reached 122 million hours watched already, one of the biggest seasons ever.
Netflix’s Strategic Initiatives
Netflix completed its ad tech platform, which supports better targeting, measurement, and new ad formats, including interactive ads planned for late 2025.
The TV homepage got a redesign that’s rolling out to about half of users, making scrolling cleaner and recommendations better.
Price hikes also kicked in. In January, the ad-supported tier rose from $6.99 to $7.99, while the cheapest ad-free plan moved to $17.99. These changes helped push average revenue per member up.
Netflix Stock: Outlook & Guidance
Netflix raised its 2025 revenue forecast to $44.8-45.2 billion, up from $43.5-44.5 billion. Operating margin is expected at roughly 30%, up from a prior forecast of 29%.
For Q3, Netflix forecast $11.53 billion in revenue and EPS of $6.87. Looking ahead, Netflix is banking on big content. Coming soon: Stranger Things finale, Wednesday S2, Happy Gilmore 2, live boxing (Canelo-Crawford), and Guillermo del Toro’s Frankenstein.
Stock Market Reaction
Despite beating expectations and upping guidance, the stock dropped 1-2% after hours.
Analysts say the rally may have peaked. Netflix now trades around 44-49× forward earnings, which some see as pricey. Many investors fear the ongoing FX benefit may fade. That leaves future growth relying on ad revenue and fresh hits.
Still, analysts remain upbeat. Bank of America and Wedbush give “buy” ratings, with targets up to $1,490. They expect ad-tier gains and live-event content to fight off rising competition from TikTok, YouTube, and Disney+.
Wrap Up
Netflix is delivering what it has promised. Revenue and profit margins are growing. Its ad-supported strategy is working. And the content slate remains strong.
FX tailwinds helped this quarter, but that boost won’t last forever. The ad business must keep growing. And big shows or live events need to attract and keep viewers.
For investors, the main question is: Can Netflix meet these high expectations? At the current valuation, there’s little room for error. But if they pull it off, Netflix may keep defying the doubters.
Frequently Asked Questions (FAQs)
The ticker for a double-leveraged Netflix ETF in the UK is NFL2. It aims to mirror twice the daily movement of NFLX stock.
Wall Street sees mixed outlooks. Targets range from $1,220 to $1,600 over the next year. The average sits around $1,280.
Netflix hit an all-time closing high of $1,339.13 on June 30, 2025.
Views vary. Some see it as pricey, trading at 50× earnings. Morningstar even says it’s “significantly overvalued.’’
Disclaimer:
This content is for informational purposes only and not financial advice. Always conduct your research.