Netflix Q3 revenue rises 17% to $11.5 bn; bets big on AI-driven advertising

Netflix has reported strong third-quarter results for 2025, with revenue climbing 17% year-on-year to $11.51 billion, compared to $9.82 billion in the same period last year.

While net income rose 8% year-on-year to $2.5 billion, net cash from operating activities increased to $2.8 billion, up from $2.3 billion a year earlier. Sales and marketing expenses surged 22.2% to $786 million, reflecting intensified promotional efforts and ad growth.

Netflix attributed the gains to robust subscriber additions, higher advertising revenue, and price increases across multiple markets. Its ad-supported tier, launched in late 2022, has now reached “significant scale” in 12 markets, including the U.S., U.K., Japan, and Germany.

The company said it is increasingly using artificial intelligence (AI) to enhance its advertising business, developing new formats and improving targeting and creative placement.

“In Q4, we are using AI to test new ad formats, to generate the most relevant ad creative and placement for members, and for faster development of media plans,” Netflix said. “By 2026, we’ll be able to test, iterate, and innovate on dozens of ad formats.”

Netflix, which recently began testing social gaming experiences on TVs, said its next phase of growth will hinge on advertising innovation and interactive content. The company plans to launch interactive ads in 2025 and aims to double its ad revenues over the medium term.

For the fourth quarter of 2025, Netflix expects revenue growth of 17%, supported by continued member expansion, pricing momentum, and ad sales. It projects an operating margin of 23.9%, up two percentage points year-on-year.

For the full year, Netflix forecasts revenue of $45.1 billion, representing 16% annual growth, with an operating margin of 29%, slightly below its earlier guidance of 30%.