Netflix is an American subscription video on-demand over-the-top streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple languages.
While not a current holding in any of the portfolios, Netflix has historically been in the US portfolios and is a stock of interest to most clients and worth covering.
The online streaming giant has kicked off 2025 on a strong note, delivering record profits and reaffirming its dominance in the global streaming market. The company reported first-quarter revenue of USD 10.54 billion, up 13% year-on-year, narrowly beating estimates. More importantly, earnings per share came in at USD 6.61 — a solid 25% increase from the same period last year and well ahead of expectations.
The standout result wasn’t just earnings, but margin expansion. Operating income rose to USD 3.35 billion, up 27% from the previous year, while the operating margin climbed to 31.7%, beating the forecasted 28.6%. Netflix also generated free cash flow of USD 2.66 billion for the quarter, a 25% year-on-year jump.
Regional performance showed broad-based strength, with particularly strong momentum in the Asia-Pacific (up 23%) and EMEA (up 15%) markets. Latin America and North America also contributed to the growth, although US and Canada revenue slightly missed estimates.
Notably, Netflix has stopped reporting subscriber numbers — a major shift in how it communicates performance. Instead, management is steering focus toward financial fundamentals like cash flow, margins, and profitability — all of which appear on solid footing.
Looking ahead, the second quarter is shaping up to be even stronger. Netflix is guiding for revenue of USD 11.04 billion (up 15%) and earnings per share of USD 7.03, well above consensus. The company expects operating margins to expand further to 33.3%, supported by improved monetisation strategies, including price increases and advertising growth.
Management reiterated its full-year outlook, including USD 43.5–44.5 billion in revenue, a 29% operating margin, and around USD 8 billion in free cash flow. Importantly, these targets already account for recent price adjustments in markets like France and expected rises in content investment later in the year.
With over 300 million global subscribers and a path towards 410 million by 2030, Netflix is no longer just a growth story — it’s a profitability story. New initiatives such as live sports (e.g., WWE) and international content hits are helping deepen engagement and drive ad revenue. While competition in streaming remains fierce, Netflix’s scale, pricing power, and increasingly diverse revenue streams position it well for sustained long-term performance.
Shares rose about 4.5% in after-hours trade on the back of these results, reinforcing investor confidence in the company’s strategy and future growth.
