10-QPeriod: Q3 FY2025

NETFLIX INC Quarterly Report for Q3 Ended Sep 30, 2025

Filed October 22, 2025For Securities:NFLX

Summary

Netflix Inc. reported robust revenue growth for the third quarter of 2025, with total revenues reaching $11.51 billion, a 17% increase year-over-year. This growth was driven by a combination of membership expansion, price adjustments, and increasing advertising revenue. While revenue performance was strong, the operating margin slightly decreased to 28.2% from 29.6% in the prior year period, primarily due to higher costs of revenue and sales and marketing expenses relative to revenue growth. Net income also saw an increase of 8% to $2.55 billion. The company continues to invest heavily in content, with content obligations totaling over $20.9 billion, and significant upfront cash outlays for original programming. Despite these investments and a notable $619 million accrual for non-income tax assessments in Brazil, Netflix's liquidity remains strong, supported by operating cash flows and existing credit facilities. The company also repurchased a substantial amount of its common stock during the period, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$11.51B

46.4% Gross Margin

Net Income

$2.55B

22.1% Net Margin

EPS (Diluted)

$0.59

Total Assets

$54.93B

Cash & Equivalents

$9.29B

Free Cash Flow

$2.66B

Financial Statements
Beta
Revenue$11.51B
Cost of Revenue$6.16B
Gross Profit$5.35B
R&D Expenses$853.58M
Operating Income$3.25B
Net Income$2.55B
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)4.24B
Shares Outstanding (Diluted)4.34B

Key Highlights

  • 1Total revenues increased by 17% year-over-year to $11.51 billion in Q3 2025, driven by memberships, price increases, and advertising revenue.
  • 2Operating income grew 12% to $3.25 billion, though operating margin saw a slight decline to 28.2% due to increased costs.
  • 3Net income rose 8% to $2.55 billion compared to the prior year quarter.
  • 4Cost of revenues increased by 20% primarily due to a $619 million accrual for Brazilian non-income tax assessments and higher content amortization.
  • 5Sales and marketing expenses increased by 22%, driven by higher marketing spend and personnel costs related to advertising sales growth.
  • 6Technology and development expenses increased by 16%, largely due to personnel-related costs.
  • 7The company repurchased $7.0 billion of common stock in the first nine months of 2025, with $10.1 billion remaining available under its repurchase program.

Frequently Asked Questions

Revenue growth of 17% year-over-year was primarily attributed to an increase in memberships, strategic price adjustments for subscription plans, and a growing contribution from advertising revenue.

The operating margin decreased primarily because the growth in cost of revenues and sales and marketing expenses outpaced the growth in revenues. Specifically, a significant accrual for Brazilian non-income tax assessments and increased content amortization contributed to higher cost of revenues, while investments in marketing and advertising sales headcount boosted sales and marketing expenses.

Netflix has substantial content obligations totaling over $20.9 billion, with over $11.2 billion due within the next 12 months. The company expects its cash flows from operations, existing funds, and access to financing sources to be sufficient to meet these and other cash requirements, despite continued significant investment in global content, particularly original programming.

The company recorded a $619 million accrual for non-income tax assessments in Brazil, which significantly impacted the cost of revenues for both the third quarter and the year-to-date period. Management states that this is not expected to materially impact future results of operations.