Netflix is way ahead any other streaming platform, the latest quarterly report shows.
Netflix posted better-than-expected quarterly revenues and profits on Friday, cementing the media giant as the uncontested global leader of the streaming sector. The company said in its statement it will look for new ways to expand its global lead, with renewed focus on advertising in 2025 and 2026.
Revenues in the April-June period came in at $9.56 billion vs the $9.53 billion expected, resulting in $4.88 earnings per share against the $4.74 forecast. That’s a 17% revenue jump from the same period last year.
Net income amounted to $2.15 billion up from $1.49 billion last year.
Viewership also increased dramatically to 278 million subscribers, a 16.5% increase since last year. Netflix announced it would stop posting subscriber numbers in early 2025 as they don’t represent a driver of growth, the company said.
In a note, Netflix said it now uses “revenue and operating margin as primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction.”
Subscribers surged after Netflix cracked down on password sharing last year, a move that added 55 million new paying customers.
To expand Netflix’s lead, CEO Ted Sarandos said they will invest more in live events, including sports, and video games. “We’re in live because our members love it, and it drives a ton of engagement and a ton of excitement,” Sarandos said during the investors’ call, “and the good thing is advertisers like it for the exact same reason.”
Ad push
The main driver of profit growth for Netflix is the new ad-based subscription tier, which amounts to almost half of subscribers in the markets where it’s available.
According to Netflix executives, advertisers are happy with investments in the streaming sector. Increasingly more platforms are implementing an ad-based subscription tier, including Disney+ and Amazon Prime Video.
Although ad-based subscribers increased by 34% since March, Netflix still can’t meet all advertisers’ demands. “The near-term challenge (and medium-term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory,” the company stated.
Netflix’s CFO Spencer Neumann said that ads will become a larger part of the puzzle after 2025.
Meanwhile, content remains king. The original shows Bridgerton and Baby Reindeer were among the most watched on any platform in the past few months. The next seasons of Squid Game and Emily in Paris are scheduled for later this year, with an original videogame being released too.
