Netflix Q2 Preview: Price hikes, advertisement growth in focus

When Netflix (NASDAQ:NFLX) posts second quarter results on Thursday, investors would want to see higher pricing actions and an improving advertising market to bump up sales for the streaming giant.

Wall Street expects the California-based company to post EPS of $7.09 on revenue of $11.06 billion, implying a rise of over 15% during the quarter. Since the last quarter, Netflix no longer discloses its subscriber count, a metric that is traditionally looked at as a key performance indicator by the market.

Despite repeated rollout of price increases for its subscription plans in the last few years, a loyal consumer base and strong content slate, including a mix of originals, live sporting events, popular series, and movies, helped Netflix win against competition and remain dominant in the streaming space.

Analysts are also considering advertising as a key growth lever for the company.

“While massive subscriber growth was the primary driver in 2024, we expect price increases to drive revenue growth in 2025, and the ad tier to drive revenue higher in 2026,” said Wedbush analyst Alicia Reese, adding that she expects strong Q2 results and upward revision to FY 2025 guidance.

Goldman Sachs analyst Eric Sheridan believes the company will continue to raise prices on a global basis through 2025, resulting in the brokerage’s assumption of about 2% average revenue per member (ARM) growth in 2025.

A recent Seeking Alpha analysis also pointed out that “the low-cost ads-supported plan could help Netflix broaden its subscriber base, especially among price-sensitive consumers.”

The stock gained nearly 28% since its first-quarter, after the company beat Street’s expectations and put out a confident forecast, with executives stating that engagement remains healthy, especially as investors worry about the potential impact of President Donald Trump’s tariff policies on consumer spending.

Nielsen’s “Gauge” report for June showed that Netflix accounted for 42% of streaming’s total monthly gain, thanks to titles including Ginny & Georgia and Squid Game.

Seeking Alpha analysts and Seeking Alpha’s Quant ratings consider the stock a Hold, while Wall Street analysts are bullish and rated it a Buy.

Over the last three months, EPS estimates have seen 30 upward revisions, compared to no downward revisions. Revenue estimates have been revised upward 25 times versus five downward moves.

Netflix has gained 41% so far this year, outperforming the over 6% rise in the broader S&P 500 Index.