Netflix 2Q25 Earnings Comment

TradingKey - Netflix released its 2Q25 earnings on July 17^th after the market closure. The earnings for the quarter can be summarized like this:

• 2Q25 Earnings per share: $7.19 vs. estimate of $7.03 (+47.3% y/y) 
• 2Q25 Revenue: $11.08 billion vs. estimate of $11.04 billion (+15.8% y/y) 

The earnings and revenue beat, as well as the alleviated year-end forecast, to a large extent, can be explained by the weakening US dollar. The greenback is an important factor here because roughly 60% of the company’s revenue is from overseas, and the foreign currencies appreciating would mean higher revenue in terms of USD. We believe the investors expected a more confident beat and that’s the reason the stock is down post-market.

Another thing is the operating margin continued to inch higher and higher at 34.1%, and that looks impressive to say at least compared to the 31.7% in 2025Q1 and 27.2% in 2024Q2. But let’s not celebrate too fast, they still have to amortize a bit of content hence the margin expectations for the next two quarters will be below what we saw just now, and the expected full-year margin will be close to 30%

Netflix, also, continues to make strides in ad business with expecting revenue of $3.9 billion for the fiscal 2025, more than double of the $1.9 billion last year.

The company reiterated its solid pipeline of TV shows coming, and also emphasized a bit on the live events, which are an area of huge potential. Netflix will be bidding for the rights to broadcast F1 in the US in 2026; however, we think the chances of getting it are not high, considering Apple is among the contenders.

Conclusion

Business-wise Netflix is doing what it has to do, but the valuation is high and the expectations for some enormous earnings beats are already unrealistic.