Netflix Q2 revenue rises to $11b, driven by 'Squid Game'

Netflix reported second-quarter earnings that surpassed Wall Street expectations.

The company posted diluted earnings per share of US$7.19, exceeding the forecast of US$7.08 from analysts polled by LSEG.

Revenue for the quarter was US$11.08 billion, slightly above projections of US$11.07 billion.

The streaming service raised its revenue guidance for 2025 to between US$44.8 billion and US$45.2 billion, citing favorable currency shifts, member growth, and increased ad sales.

The final season of “Squid Game,” Netflix’s most-watched non-English series, contributed significantly to the quarter’s performance.

The series attracted 122 million views shortly after its late June release, alongside other notable titles such as “Sirens,” “The Four Seasons,” and the third season of “Ginny & Georgia.”

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Netflix’s pricing power demonstrates unusual market resilience

Netflix has maintained remarkable customer loyalty despite numerous price increases over its history, with retention rates significantly outperforming competitors.

While most streaming services struggle to keep half their subscribers for a full year, Netflix retains approximately two-thirds of its customers after 12 months, compared to Hulu’s 53% retention rate over the same period 1.

This pricing power has allowed Netflix to systematically raise prices, including an 18% increase in 2019 that pushed premium subscriptions from $13.99 to $15.99 2, while still growing its subscriber base over the long term.

The introduction of the $7/month ad-supported tier represents a strategic expansion of this pricing approach, allowing Netflix to capture more price-sensitive customers while maintaining premium tiers for higher-value subscribers 3.

Netflix’s pricing resilience wasn’t always guaranteed. In 2011, a poorly executed price hike and service split led to the loss of 800,000 subscribers and a 77% stock price collapse within just four months 4.

2️⃣ Valuation metrics reveal shifting investor expectations

Netflix’s price-to-earnings (P/E) ratio history demonstrates how dramatically investor perceptions have evolved as the company matured from high-growth disruptor to established media leader.