The news: Netflix reported a strong Q3 on Tuesday, increasing revenues 17.2% YoY, in line with its Q2 forecast. The company stated that it is on track to double its ad revenues in 2025, claiming Q3 was its strongest quarter yet for ad sales—proving that momentum is largely being driven by Netflix’s maturing ad offerings.
By the numbers:
- Total revenues: $11.5 billion, in line with analyst expectations.
- Operating income: $3.2 billion, up 12% YoY—slightly below guidance because of an approximately $619 million expense from a dispute with Brazilian tax authorities, which Netflix “[does not] expect to have a material impact on future results.”
- Diluted earnings per share: $5.87, up 9% YoY, but 1% lower than Netflix’s initial forecast due to lower than anticipated operating income.
The company provided Q4 guidance of 16.7% growth YoY, with revenues expected to exceed $11.9 billion. Netflix expects full-year 2025 revenues to be $45.1 billion, representing 16% growth, in line with prior expectations.
But lower-than-expected earnings per share caused the company’s stock to fall nearly 8% Wednesday morning.
Driving growth: Netflix’s evolving ad offerings are driving advertiser interest and revenue growth.
- Among the top five digital ad platforms, Netflix’s US ad revenues will experience the most growth in 2025, per our forecast. Ad revenues for the popular streaming platform are expected to grow nearly 50% YoY in 2025 alone to $2.07 billion—still trailing rivals with more established ad businesses, but on track to overtake platforms like Hulu by 2027.
- The increasing popularity of Netflix’s ad tier is driving growth. Its ad-supported viewer base is projected to rise to 47.7 million in 2025, up from 40.1 million in 2024 and just 7.7 million in 2023, showing Netflix’s strong momentum.
- Netflix is also driving growth by building its ad tech: The launch of Netflix Ads Suite is providing new buying and measurement options, innovative formats, and stronger data capabilities that is helping the platform keep advertisers interested.
- Integrations with partners like Yahoo DSP and iSpot are only expanding Netflix’s programmatic and measurement capabilities—making it easier for brands to validate and scale campaigns. The platform is also set to see notable growth in Q4 and beyond on the back of a deal with Amazon Ads.
- And even as some brands cut their ad budgets, Netflix is well-positioned for continued growth. Its audience is growing consistently, while the platform maintains low churn and a strong content slate of popular IPs. Rapid growth makes it a safer bet for advertisers as other platforms see mixed results.
What it means for marketers: Marketers can capitalize on audience appetite for ad-supported tiers, but should focus their investment in platforms with proven results as less dominant connected TV (CTV) providers are likely to struggle in Q3 and beyond.
Netflix is expected to perform better than its competitors because of its position as a household name in CTV, making it less vulnerable to subscription cancellations—and a more stable investment for advertisers in the long-term. Exploring Netflix’s maturing ad offerings and capitalizing on new opportunities like its partnership with Amazon Ads will drive growth for CTV advertisers.