Netflix is poised to report its third quarter 2025 financial results and business outlook post-market on Tuesday, Oct 21, 2025.

Netflix's Q3 revenue is expected to be $11.51 billion, rising 17% compared to the last year. Net income grew to $3.013 billion, or $7.004 per share, up 24% from a year ago, according to Bloomberg's consensus expectation.

Previous Quarter Review

Netflix posted an earnings beat July 17, as revenue grew 16% during the second quarter of 2025.

The company updated its full-year revenue forecast, noting that it expects revenue to be between $44.8 billion and $45.2 billion, up from a range of $43.5 billion to $44.5 billion. Netflix’s higher forecast reflects the weakening of the U.S. dollar compared with other currencies as well as “healthy” member growth and ad sales, the company said in a statement.

Things to Watch in 3Q Earnings

Advertising Tier Drives New Revenue Model

One of the most significant changes in Netflix's business model is the growth of its advertising tier. As of mid-2025, it is estimated that around 94 million users are subscribed to the ad-supported plan, which constitutes a considerable portion of Netflix's user base.

With advertising revenue projected to double in 2025, the timing of Netflix's in-house ad technology platform and the efficiency of ad monetization per user are critical areas to watch closely.

At the same time, the expansion of the ad tier must not cannibalize the higher-ARPU subscription plans, necessitating a delicate balance in managing different tiers.

Successfully scaling advertising revenue could significantly transform Netflix's business model, reducing its reliance on subscription price hikes for revenue growth.

Content Strategy Focuses on Global Diversity

Regarding content, Netflix continues to focus on robust franchises, international originals, and bold experimentations. Analysts view content strength as a key driver for both engagement and retention.

The company's global 'local-for-local' strategy is gaining momentum, with more than half of its recent catalogue consisting of non-English content, including increased representation from Korean, Indian, and other regionally anchored media.

Additionally, Netflix is delving into live and event-based content, such as sports and special events, to enhance appointment viewing and maximize ad monetization potential.

The market is also anticipating the Q3 earnings report and the release of Stranger Things Season 5, both of which are expected to catalyze subscriber and engagement growth.

Margin Expansion Pivotal for Valuation

Margin expansion and free cash flow generation will likely be the focus this quarter. Netflix needs to demonstrate that its increased costs in content production, marketing, and technology investments are being balanced by enhanced monetization.

The success of Netflix's ad monetization efforts will particularly influence investors' perceptions regarding the sustainability of its business model, especially as subscriber growth becomes less conspicuous.

Noteworthy among Netflix's strategic moves is its push into gaming, including plans to introduce TV-based video games during the upcoming holiday season.

While gaming diversifies Netflix's engagement model beyond video streaming, it remains an experimental venture rather than a core revenue driver as of now.

Bundling Strategies Gain Importance

Another notable trend is the rise of bundling in streaming markets. Recent data indicates that nearly half of streaming subscribers in Germany now utilize bundled services (e.g., combined streaming services plus TV).

This approach has proven to be an effective tool for retention, and as Netflix continues to expand globally, bundling and partnerships may become more integral to its growth strategy.

Such strategic partnerships can offer both customer acquisition efficiencies and improved retention rates compared to standalone subscriptions.

The bundling trend mirrors the broader maturation of the streaming market, where customer acquisition costs have increased and retention has become more challenging.

Analysts’ Opinions

Morgan Stanley has removed Netflix from its Top Pick list on Monday, while maintaining an Overweight rating and $1,500.00 price target on the streaming giant’s stock on Oct 13.

Seaport Global analyst David Joyce upgraded the rating for Netflix from Neutral to Buy and announced a $1,385 price target. Netflix shares closed at $1,163.31 on Oct 6.

On September 22, 2025, Evercore ISI reaffirmed its Outperform rating on Netflix Inc. (NASDAQ:NFLX) with a $1,375 price target, citing high U.S. penetration, strong subscriber satisfaction, 14.84% revenue growth, and a 37.66% year-to-date stock gain.

JPMorgan analyst Doug Anmuth reiterated his neutral rating on Netflix stock with a price target of 1,300. In a client note, he said investor expectations are elevated after Netflix raised its 2025 outlook when reporting Q2 results on Aug 18.