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Global streaming giant Netflix Inc. NFLX reported excellent financial numbers for first-quarter 2025. The company reported earnings of $6.61 per share, which beat the Zacks Consensus Estimate of $5.69. Revenues of $10.54 billion, marginally missed the Zacks Consensus Estimate 0f $10.55 billion, while increasing 12.5% year over year.
Despite trade and tariff-related doldrums, NFLX seems to have maintained healthy engagement levels in the first quarter. With its gigantic subscriber base, NFLX is likely to stay ahead of its closest rival The Walt Disney Co. DIS.
Strong Guidance by Netflix
Netflix reaffirms its 2025 guidance. For 2025, the company forecast revenues in the range of $43.5-$44.5 billion. NFLX is targeting a 2025 operating margin of 29%, up from the previous forecast of 28% and two points higher than the 27% operating margin in 2024.
Growing Leverage on AI
Netflix uses artificial intelligence (AI), data science and machine language (ML) extensively to provide consumers with more appropriate and intuitive suggestions. Netflix's AI platform takes into account an individual’s viewing habits and hobbies and accordingly provides recommendations.
NFLX’s AI model compiles subscriber information and recommends content based on their preferences, which can be customized by end users. AI applications enable NFLX to offer high-quality streaming service at reduced bandwidths.
Visibility Remains High
On April 1, Netflix launched its Ad Suite in the United States. The company will ramp up this Ad Suite in international markets starting from ensuing second quarter. This ad-supported offerings will enable management to impressive subscribers and ARPU (average revenue per user) growth.
Buoyed by its scalable ad business, NFLX is expected to leverage its own proprietary ad system, doling away with Microsoft Corp. MSFT as its ad-tech partner. The company’s policies of offering ad-supported lower-prices tier, abolishing password sharing and effective price increase bodes extremely well for NFLX to become a defensive play on verge of a possible economic downturn.
Excellent Estimate Revisions for NFLX Stock
For second-quarter 2025, the Zacks Consensus Estimate currently shows revenues of $10.96 billion, suggesting an improvement of 14.7% year over year and earnings per share of $6.22, indicating an increase of 27.5% year over year. The company pulled off positive earnings surprises in the last four reported quarters delivering an average beat of 6.9%.
Moreover, Netflix has witnessed positive earnings estimate revisions for 2025 in the last 90 days. At present, the Zacks Consensus Estimate indicates a year-over-year increase of 13.8% and 23.6%, respectively, for revenues and EPS in 2025. The current Zacks Consensus Estimate for 2026 revenues and EPS reflects an upside of 11.4% and 20.5%, respectively.