"Netflix is back in the spotlight. After years of questions about saturation and slowing growth, the streaming giant has staged a significant comeback. Investors are paying attention, not just because of its subscriber numbers but also because Netflix is reinventing how it makes money -- and the results are starting to show. Here's why everyone is talking about Netflix today and what it means for long-term investors."
"Netflix still makes most of its money from subscriptions. Customers pay a monthly fee for access to its catalog of original titles, licensed content, and global hits. Globally, it has more than 300 million paid memberships in more than 190 countries. But subscriptions are only part of the story. Particularly, two important new levers are shaping growth: A cheaper, ad-supported tier that brings in price-sensitive users while opening a lucrative advertising channel A password-sharing crackdown that has turned freeloaders into paying subscribers"
"Another important aspect of this evolution is the content spending. While Netflix still spends heavily on content, it has become far more disciplined. Rather than chasing subscriber growth at any cost, management is focusing on profitability and free cash flow (FCF). For perspective, operating margin has improved from 27.2% in the second quarter of 2024 to 34.1% in Q2 2025. Similarly, FCF grew by $1.1 billion to $2.3 billion during this period."
Netflix still generates most revenue from subscriptions, with over 300 million paid memberships across more than 190 countries. Growth now relies also on a cheaper, ad-supported tier that attracts price-sensitive users and on cracking down on password sharing to convert freeloaders to paying customers. Content spending remains high but has become more disciplined, with management prioritizing profitability and free cash flow. Operating margin improved from 27.2% in Q2 2024 to 34.1% in Q2 2025, and FCF rose by $1.1 billion to $2.3 billion. Advertising is emerging as a key revenue driver.
Read at The Motley Fool
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