On Thursday, July 16, despite the announcement of significant growth in both revenue and net profit for the second quarter by the streaming giant Netflix, the performance did not meet investors’ expectations. This led to a sharp drop in the company’s stock price from $74.35 to around $67.62 after closing, a decline of over 8%.
Netflix’s financial report revealed that the company’s net profit for the second quarter was $3.4 billion, an increase of nearly 9% compared to the same period last year, with revenue reaching $12.56 billion, representing a 13.4% annual growth. However, this is the lowest growth rate since the end of 2023. Netflix attributed part of the performance growth to recent subscription price increases and increased advertising revenue.
Additionally, in the financial report, Netflix forecasted third-quarter revenue to be $12.86 billion, with revenue growth further slowing to 11.7%.
Regionally, the United States and Canada continue to be Netflix’s largest markets, with second-quarter revenue increasing by 10%, but below the average growth rate over the past four quarters. Among its various regions, only Latin America showed an acceleration in growth compared to the previous quarter.
The financial report indicated that Netflix’s total viewing hours for the first half of this year exceeded 970 billion hours, up nearly 2% annually, higher than last year’s 1.5% increase. At the same time, it announced that starting January 2027, viewing reports, originally released every half year, will be switched to annually, while the weekly Top 10 will continue to be published.
Netflix believes that user growth is a key factor driving strong performance this quarter, while also hoping the market will focus on revenue and operating profit. Since 2025, Netflix has stopped disclosing subscription numbers to focus on core financial indicators.
In the financial report, Netflix estimated that advertising revenue for the year would roughly double to $3 billion. Additionally, in order to diversify its business and enrich content types, Netflix is actively expanding into live events, audio podcasts, and cloud gaming, aiming to increase user engagement on the platform and reduce churn rates.
These actions have prompted investors to begin evaluating whether new businesses such as advertising, live programs, and gaming can become the next growth drivers.
Netflix Co-CEO Greg Peters echoed this strategy during the analyst conference call, stating that the company will continue to expand the diversity of entertainment content. Users can expect to see live events, short videos, podcasts, cloud services, and TV games in the future to meet subscriber demands and enhance engagement.
According to data from market research company Antenna, Netflix’s customer churn rate in June was only 2.11%, outperforming its competitors.
Netflix CFO Spencer Neumann also emphasized during the conference call that despite having nearly 1 billion viewers, Netflix’s penetration is less than 45% of the total number of reachable households globally, with a global TV market share of only 5%. Therefore, there is still ample room for growth in various metrics.
Previous data from research firm Digital i indicated that YouTube surpassed Netflix in 2025, becoming the platform with the longest average daily viewing time. Data from market research firm eMarketer showed that since 2024, the time spent by U.S. adults on TikTok is almost on par with Netflix.
To combat the trend of short videos and compete with TikTok and YouTube, in July this year, Netflix signed short video licensing cooperation agreements with multiple media publishers.
Starting from August 3, Netflix will showcase short content from publishers such as Buzzfeed Studios, Condé Nast, Hearst, and Penske Media.