Netflix’s bet on limiting password sharing and pay-to-view is boosting its revenue
Combined with consistent price increases and its emerging ad business, Netflix is currently experiencing a surge in growth that few anticipated.
It seems that asking each subscriber to pay for what they watch actually works. Netflix’s controversial move to limit password sharing, once considered a cornerstone of streaming culture, has turned out to be a financial win.
Combined with consistent price increases and its emerging ad business, Netflix is currently experiencing a surge in growth that few anticipated.
Over the past year, Netflix’s stock has nearly doubled, and its second-quarter results show why. Revenue jumped 16% to $11.08 billion, according to the streaming giant's Q2 results, nudging past Wall Street’s expectations. Profit surged even faster, with net income climbing 45% to $3.1 billion. The company also posted earnings per share of $7.19, topping both analyst projections and its own forecast.
The U.S. and Canada saw the biggest revenue jump, thanks to a full quarter of higher prices. Every region posted gains, and the company’s operating margin improved to 34.1%, up from 27% a year ago. Netflix is also becoming more efficient. Operating cash flow surged 84% to $2.4 billion. Free cash flow rose 91% to $2.3 billion.
Those gains are being powered by a mix of strong member growth, higher pricing, and growing interest from advertisers. Netflix said most of its U.S. upfront ad deals are now closed, with major agencies on board. The company didn’t release specific figures but reaffirmed its goal to double ad revenue this year. The combination of better ad tech and a packed release slate is drawing more buyers.
Emmanuel Oyedeji
That same slate is pushing costs higher. Netflix expects operating margins to slip in the second half of the year as it invests in upcoming titles like the final season of Wednesday and the final season of Stranger Things. The company called this a typical seasonal shift, with major content releases landing later in the year and requiring heavier marketing support.
Still, the company is confident enough to raise its full-year revenue forecast. Netflix now expects to generate as much as $45.2 billion in 2025, up from a previous high estimate of $44.5 billion. While some of that boost comes from currency shifts, most of it reflects business momentum. For Q3, Netflix expects revenue to reach $11.5 billion, up 17% from last year, with an operating margin of 31%.
Interestingly, Netflix is no longer sharing subscriber numbers, a metric that once defined the streaming wars. Instead, it’s steering the conversation toward financial results and user engagement, a shift that seems to be working, at least for now.
