Key takeaways from Netflix’s Q2, with stock dipping

Netflix stock (NASDAQ:NFLX) slipped 1% in immediate postmarket trading after the company’s second-quarter earnings beat expectations on top and bottom lines and the firm raised full-year revenue expectations.

Revenues grew nearly 16% year-over-year to land at $11.08B, topping $11.06B expected. Operating income jumped to $3.78B from a year-ago $2.6B, and up from last quarter’s $3.35B. Meanwhile, operating margin ticked up to 34.1% from a year-ago 27.2% and last quarter’s 31.7%.

Net income jumped 46% year-over-year, to $3.13B.

With Netflix having stopped reporting subscriber growth, investor attention has naturally shifted to key financials, notably including cash flows. And a pivot to advertising-supported subscriptions and an ongoing move into live programming offers investors more color to seek out around earnings reports.

For the full year, it’s raised revenue expectations to $44.8B-$45.2B (from $43.5B-$44.5B) and now expects currency-neutral operating margin of 29.5%, up from 29% (30% on an as-reported basis).

Cash flow

Net cash from operations rose year-over-year, to $2.42B, but dipped from Q1’s $2.79B. Similarly, free cash flow rose to $2.27B from a year-ago $1.21B, but was down from last quarter’s $2.66B.

“Our capital allocation approach is unchanged—we prioritize profitable growth by reinvesting in our business, maintaining ample liquidity and returning excess cash (beyond several billion dollars of minimum cash and any used for selective M&A) to shareholders through share repurchases,” the company noted.

It boosted full-year free cash flow expectations to $8B-$8.5B thanks to a corresponding increase in its forecasts for revenue and operating margin.

Gross debt at quarter-end was $14.5B, and cash and equivalents came to $8.2B. The company noted starting a commercial paper program in May, giving it the ability to issue short-term unsecured notes of up to $3B.

Viewing metrics

The company’s content slate has been notably loaded toward the second half of 2025, but even so, viewers watched 95B hours in the first half (up 1% year-over-year).

“Our viewing is very broad and we’re not dependent on any one title to drive engagement—forinstance, even our biggest titles that have tens of millions of views account for less than 1% oftotal viewing on Netflix in the reporting period,” Netflix said.

And live programming is expanding, including two marquee boxing matches in the third quarter and another NFL doubleheader on Christmas Day.

Monetization

“Response to our recent price adjustments, as measured by member acquisition, churn and plan mix, has been broadly in line with our expectations,” the company said.

Meanwhile, on ad-supported progress: “We continue to make progress building our ads business and still expect to roughly double ads revenue in 2025.” Netflix’s U.S. upfronts are nearly complete with the “vast majority” of deals with major agencies already closed.

Netflix has focused on building out more capabilities for advertisers, including the rollout of its own first-party ad-tech platform, the Netflix Ads Suite.

The company’s usual live earnings executive interview will go live at 4:45 p.m. ET.