The final season of super-hit “Squid Game” helped drive Netflix to strong second quarter earnings.
No Ju-han/Netflix
Boosted by increases in pricing, a flood of new overseas subscribers and the continued advertiser interest in the platform, Netflix outpaced analyst expectations with its second quarter earnings results released Thursday after the market closed.
The country’s largest streamer had anticipated good numbers with the release of big-buzz shows like Squid Game and Ginny & Georgia during the quarter. It was also buoyed by the subscription price increase in January and a new partnership with a French broadcaster that expanded access to its shows abroad.
The strong revenue and profit numbers prompted Netflix to revise its yearly revenue forecast up, bettering analyst projections and sending stocks soaring after close.
Netflix increased revenue year-over-year by 16%, up to $11.08 billion. Net profit soared 46%, to $3.1 billion. And the all-important operating margin was up from 27.2% last year at this time to 34.1%, almost a point higher than expected. That means not only is Netflix making money, but it’s making good decisions with what it makes.
What’s Driving Netflix Success?
Several things: higher subscription pricing, hit shows, ad sales and sports. Netflix raised subscription prices by at least $1 per plan in January, giving it a nice boost.
Hit shows spark people to sign up for subscriptions that they may cancel after they have streamed all the new content. Squid Game obliterated Netflix viewing records.
And the streamer said its ad business, which launched in 2022, continues to grow.
Sports has been a particular area of interest to Netflix, which was a bit late to get on board with that particular type of live programming. It has aggressively pursued new deals over the past year, including pay-per-view-style splashy events and big boxing matches.
Analysts say it’s a smart play. “Hits come and go. Sports don’t. Live sports have consistent scheduling, weekly tune-in, and drive habitual behavior, giving platforms a way to maintain subscribers who might otherwise dip in and out. For Netflix, that consistency supports increasingly stable viewership and creates ad inventory that brands can plan around,” says Julie Clark, vice president of Media & Entertainment at TransUnion.
To wit, while Squid Game only has new episodes once a year (or less), sports air all year long, offering that stability.
Netflix Subscriber Numbers Grow, Though Unclear By How Much
Earlier this year, Netflix did away with the traditional bellwether that had been used to measure previous earnings results—subscriber growth. The streamer decided to stop sharing subscriber numbers during first quarter, forcing investors to adjust their measuring sticks.
That was a slick move. Though Netflix has not quite reached a saturation point in the United States—subscriptions were still growing in 2024—it’s inevitable that with so many subscribers, that was not sustainable.
Slow growth isn’t necessarily bad, but it can look that way. So Netflix took the metric off the table.
Still, since the service is not as big in foreign markets, that has left some room for expansion, and one way to do that is through international partnerships. In June, Netflix entered a deal with TF1, a French broadcaster – allowing subscribers to access some of the broadcaster’s content, a smart way to draw in new people.
