How Netflix boosted revenue and profits with ads, price hikes, and hit shows

How Netflix boosted revenue and profits with ads, price hikes, and hit shows

Netflix has raised its full-year revenue and operating margin targets after posting strong second-quarter results driven by new subscriber additions, price increases, and a fast-growing advertising business. The better-than-expected report further cements Netflix's dominance of the global streaming market and comes as traditional cable giants and rival platforms continue to struggle, the Wall Street Journal reported.

Strong earnings performance beats expectations

For the quarter ended June, Netflix posted revenue of $11.08 billion, up 16% from a year ago during the same period. Netflix's net income increased 46% to $3.1 billion, just surpassing its prior estimate. Operating margin widened to 34.1%, a substantial increase from 27.2% for the previous-year period and above the company's guided 33.3%. Free cash flow doubled to $2.3 billion from $1.2 billion in the previous year.

The company now expects full-year revenue of $44.8 billion to $45.2 billion—over its previous guidance of $43.5 billion to $44.5 billion. Guidance on operating margin was also increased to 29.5%, compared with 29%.

Stock at all-time highs even after late-day drop

Netflix shares have nearly doubled over the past year, fuelled by strategic initiatives like clamping down on password sharing, expansion of its ad-supported tier, and a few price increases. While the stock fell slightly by less than 1% in after-hours trading, it remains close to all-time highs, reflecting investors' faith in the company's future growth.

Subscriber activity and content slate show momentum

The company highlighted that hours viewed in the first half of 2025 rose 1% year-over-year. Hits like "Squid Game," "KPop Demon Hunters," "Ginny & Georgia," and thriller "Zero Day" topped Netflix's top-viewed lists. From film, Jamie Foxx and Cameron Diaz's "Back in Action" and Tyler Perry's "STRAW" were top drivers of consumption.

Netflix co-CEO Ted Sarandos referenced the boost of live programming, stating, "Not all view hours are created equal… live has an outsized positive impact around conversation, acquisition, and we suspect, retention."

Investments in interface and expansion

The company has revamped its user interface and expanded its programming to include additional global content and live events. Examples include programs like "Adolescence," a gripping drama about a 13-year-old suspected of murder. These efforts are intended to encourage global subscriber retention and usage.

Outlook remains strong for second half

Netflix anticipates an even stronger content lineup in the second half of the year. With higher ad revenue and steady subscriber momentum, the firm appears well-positioned to keep its grip on the streaming wars.