Netflix (NFLX -0.60%) is no longer just the pioneer of streaming. It is the leading global entertainment platform, monetizing a massive and engaged userbase through subscriptions and a fast-growing ad business.
Headed into its upcoming third-quarter report on Oct. 21, investors should consider whether recent business momentum, new revenue drivers, and management's outlook support owning the company through its next phase of growth.
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Recent performance points to durable momentum
The last few updates showed a business firing on all cylinders. In the second quarter of 2025, Netflix grew revenue 16% year over year and expanded its operating margin to 34%, up seven points from a year ago. Management also lifted its full-year outlook, now expecting between $44.8 billion and $45.2 billion in revenue and roughly a 30% operating margin on a reported basis for 2025 (up from 27% in 2024). The company also said it expects free cash flow to be between $8.0 billion and $8.5 billion, reinforcing its ability to both invest for growth and return capital through buybacks.
All of this builds on a strong first quarter, when revenue rose 13% year over year and the company's operating margin rose to about 32% -- up from about 27% in the year-ago period.
Notably, across both quarters, engagement remains robust, bolstered by a wide-ranging successful slate of content.
Meanwhile, the balance sheet and cash generation provide flexibility. The company repurchased roughly $1.6 billion of stock in the second quarter and still has ample authorization remaining. The company's repurchases are a sign of confidence in long-term intrinsic value.
Advertising and pricing strengthen the long-term case
Beyond subscription growth, two levers deserve attention: advertising and pricing.
In May, Netflix said its ad-supported plan now reaches more than 94 million monthly active users globally -- a sharp increase from a year ago. A larger audience and better tooling can translate into higher ad revenue per viewer over time, broadening monetization without over-relying on price hikes.
Of course, pricing still remains a measured but powerful tool. Indeed, recent price changes were key to the company's double-digit revenue growth in the United States and Canada in Q2. And Netflix pulled this off while keeping churn in check with a stronger content lineup and product improvements like a redesigned TV homepage.
There are risks to weigh. Content costs rise as content ambitions grow. Additionally, deep-pocketed tech companies are investing heavily in their own streaming services. Finally, the ad business, while scaling quickly, still has to prove it can deliver consistent, high-margin growth over the long haul.
And another thing to consider is that shares aren't cheap. Following a significant run-up in the stock, Netflix's price-to-earnings multiple of 52 reflects strong expectations. That does not automatically make the shares a sell, but it means results may need to keep trending higher to justify the premium.
Taken together, the long-term picture is constructive. Revenue growth has reaccelerated, operating margins are expanding, and free cash flow is on track to set new highs. In addition, advertising and pricing offer incremental monetization avenues that can compound over time. If the upcoming report simply reaffirms this trajectory -- steady growth, disciplined cost control, and a larger ad opportunity -- the long-term return profile remains appealing.
Overall, the stock looks like it's worth buying today. But that doesn't mean shares will move higher when Netflix reports earnings. There's no way to know how Wall Street will react. But the long-term risk-reward from here looks good, and the upcoming report will give investors a chance to check in on that thesis. Absent a material change in the outlook, Netflix's combination of scale, improving profitability, and new revenue streams makes the stock a good option for investors willing to hold through quarterly noise.
