Netflix’s ability to sustain double-digit revenue growth will be in focus when it reports earnings, as advertising and higher prices support the business while slower growth in viewing hours raises questions about audience engagement, according to Josh Gilbert, Lead Analyst, APAC and Middle East at etoro.
With shares down 25% year to date, investors will be looking for reassurance that Netflix can maintain its growth momentum against a backdrop of pressure on household spending. Revenue growth is expected to slow to 11.7%, compared with 13.3% last quarter and 16.2% in the first quarter.
“Netflix keeps finding new ways to make money, but investors want to understand how much of that growth comes from attracting a larger audience and how much comes from charging more,” said Gilbert. “With the company no longer reporting subscriber numbers and moving its viewing report to an annual release from 2027, there are fewer ways to assess that balance.”
Management has guided to revenue of US$12.86 billion, earnings per share of US$0.82 and an operating margin of 33.2%. Netflix has beaten earnings-per-share expectations in seven of the past eight quarters, although its shares have traded lower one week after each of its last five earnings releases.
“The record shows that beating earnings expectations alone has not been enough,” Gilbert added. “The focus will be on the outlook and whether Netflix can keep growth in double digits heading into next year, particularly with consumers under strain.”
Advertising remains a bright spot, with advertising revenue on track to roughly double to around US$3 billion this year. Live programming, including the NFL Christmas games, also gives Netflix opportunities to attract viewers at a scheduled time and command premium advertising rates.
Engagement presents a more challenging picture. Viewing hours increased by just 2% in the first half, raising questions about whether Netflix is winning a greater share of audiences’ time. Peter Rice’s appointment as chief creative officer, taking effect days after the earnings announcement, adds further attention to the company’s content strategy.
“In the UAE, where Netflix plans range from AED35 to AED71 a month, the platform has to keep earning its place in household budgets,” said Gilbert. “Competition from Shahid and OSN+ makes the strength and relevance of its content particularly important.”
“Netflix has proven it can generate more revenue from its audience. The full-year outlook will help investors decide whether to continue valuing it as a growth company or as a mature streaming business becoming more effective at monetisation.”
