Netflix heads into the final stretch of 2025 as the undisputed heavyweight of global streaming — but no longer just as a movie and series platform. The company has evolved into a full-fledged entertainment powerhouse, blending original content with gaming, live sports, and a growing advertising business that spans continents.
While competitors struggle with mounting content costs and slowing subscriber growth, Netflix continues to expand its global reach and revenue base. Yet behind the record-breaking engagement and booming ad sales, analysts are starting to spot the first signs of margin pressure, signaling a new phase in the company’s transformation.
How was the last quarter?
In the third quarter of 2025, Netflix $NFLX grew revenue 17% year-over-year to $11.51 billion. This growth was in line with guidance and was driven evenly by higher subscriber numbers, pricing adjustments and a strong contribution from the advertising business. In terms of both volume and revenue structure, this is confirmation that the new model based on multiple revenue sources is beginning to fully work.
Operating profit reached $3.25 billion, up 12% year-on-year, with operating margin down to 28% from 30% last year. However, this decline was driven by an exceptional item - approximately $619 million related to an ongoing tax dispute with Brazilian authorities. The charge related to several prior years, was a one-time charge to cost of sales and management believes should have no impact on future performance. Adjusted for this item, the company would instead exceed its own internal expectations.
Net income was $2.55 billion and diluted earnings per share were $5.87, up 9% from last year. Free cash flow remains robust, allowing the firm to combine investments in content and infrastructure with regular cash returns to shareholders. A key element of its success is the ever-increasing user engagement. According to Nielsen and Barb data, Netflix achieved its highest ever share of TV viewership in the US and the UK last quarter, with double-digit increases in both countries. This trend confirms that Netflix is not only gaining new customers, but is gradually absorbing the time people previously spent on linear TV.
Outlook
For the fourth quarter of this year, Netflix expects revenues of around $12 billion, which corresponds to a year-on-year growth of 16-17%. Operating margin is expected to improve to 23.9%, two percentage points higher than a year ago. The end of the year will be traditionally strong thanks to extremely attractive content, which has the potential to boost both viewership and advertising revenue. The final season of Stranger Things, new series of The Diplomat and Nobody Wants This will enter the line-up, as will big movie premieres - Guillermo del Toro's Frankenstein, Kathryn Bigelow's A House of Dynamite and Wake Up Dead Man: A Knives Out Mystery. Netflix is also betting on the return of live events in the form of NFL Christmas Day games and the high-profile boxing duel Jake Paul vs. Tank Davis.
For the full year 2025, the company expects revenue of $45.1 billion, up 16%. Operating margin is expected to stabilize at 29%, slightly below its original target of 30%. The outlook confirms the ambition to maintain the long-term trend of healthy growth and margin expansion, accompanied by rising free cash flow. Management has repeatedly stressed that revenue growth, improving efficiency and maintaining a high return on invested capital remain a priority.
Long-term results
A look at the last four years shows the fundamental transformation Netflix has undergone. In 2021, it had revenues of less than $30 billion, while in 2024 it has already surpassed $39 billion. In a mature segment like streaming, this is an extremely strong dynamic. Rising revenues have been accompanied by improved cost efficiency - while the cost of revenue has risen, gross profit has grown at an even faster rate thanks to higher average subscription prices and advertising revenue growth.
While gross profit was $12.4 billion in 2021, it was already $18 billion three years later. Equally impressive is the growth in operating profit - from 6.2 billion in 2021 to 10.4 billion in 2024, an increase of half. Meanwhile, the significant improvement in profitability has arrived despite increased investment in new formats and technologies. Net income in 2024 reached $8.7 billion, up more than 60% from 2023, and earnings per share exceeded $20.
This shift illustrates that Netflix has long since come to see itself not as a risky growth title, but as a highly profitable technology company with a real ability to generate cash flow over the long term. EBITDA exceeded $24 billion, giving the company a comfortable room for a combination of investments and share buybacks. The evolution of recent years clearly confirms that Netflix has been able to move from the expansion phase to a phase of sustainable and profitable growth.
News
During the quarter, Netflix reaffirmed that the key to its success remains its global content offering and its ability to create cultural phenomena.
- Series such as the second season of Wednesday, My Life with the Walter Boys and Japan's Alice in Borderland achieved record viewership.
- Among the new projects, the South Korean hit Bon Appétit, Your Majesty or the thriller UNTAMED stood out, which was immediately renewed for another season after its premiere.
- On the film front, the comedy Happy Gilmore 2 starring Adam Sandler broke the previous record for number of views in its opening weekend and The Thursday Murder Club became the first film of the century to dominate the UK TV charts.
- The documentary segment was also strong, with true-crime film Unknown Number: The High School Catfish, for example, racking up tens of millions of views.
- Among live broadcasts, the Canelo vs. Crawford boxing match stood out, which was seen by more than 41 million people, making it the most-watched men's championship of the century and reinforcing Netflix's reputation as a new player in the world of sporting events.
Shareholder structure
Netflix's ownership structure reflects its position among the global leaders. Approximately 86% of shares are held by institutional investors and only about half a percent by insiders. The largest shareholders include the Vanguard Group funds, which together control over six percent of the shares through the Total Stock Market Index Fund and the 500 Index Fund. Invesco and American Funds also have a strong position, which brings stability but also sensitivity to any adjustments in growth outlook and margins.
Analyst expectations
Investors and analysts watch Netflix primarily through three primary factors - growth rate, ability to expand margins, and the prospect of new segments. Double-digit revenue growth is expected to remain sustainable through 2026, primarily due to a combination of advertising, pricing and expansion in developing markets. Margins are expected to return to 30% once one-off costs have been removed and continue to grow slowly through improved efficiencies and new product scaling.
Particular focus is on developing live content - the success of sports broadcasts and exclusive events could open up a whole new revenue segment and turn Netflix into a universal media platform with huge monetization power. Overall, Netflix is now perceived as a company that successfully balances growth, innovation and financial discipline to become one of today's most attractive technology and media assets.