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Management raised 2025 revenue guidance to $44.8-$45.2B, up 15-16% y/y.
Netflix (NFLX - Free Report) is steadily expanding its advertising revenues to diversify income and enhance business resilience. After doubling ad revenues in 2024, the company aims to repeat that performance in 2025. This surge is driven by the rapid adoption of its ad-supported tier, which now has 94 million monthly active users, representing over 55% of new sign-ups in available markets.
The company’s advertising strategy relies on expanding ad-tier penetration, deploying advanced ad-tech and leveraging premium content. Netflix has completed the global rollout of its proprietary Netflix Ads Suite platform, and recently integrated Yahoo DSP, enhancing targeting, measurement and programmatic capabilities. These upgrades, coupled with live programming like WWE Raw, NFL Christmas Day games and major boxing events, are attracting advertisers seeking premium, brand-safe environments.
Ad revenue growth remains strong and highly profitable, enabling Netflix to boost margins while maintaining competitive pricing for consumers. The ad tier’s strong engagement with 41 hours of viewing per month per user underscores its long-term potential. Building on this momentum, Netflix expects to nearly double its advertising revenues in 2025, leveraging its expansive global user base and growing ad-tier adoption. Reflecting this optimism, management has raised its full-year 2025 revenue guidance to $44.8-$45.2 billion, marking a 15-16% year-over-year increase, primarily driven by advertising gains.
The key challenge lies in balancing ad-tier adoption without eroding premium subscriptions amid rising competition from Disney+ and Amazon. Yet, with its global scale, advanced ad tech and growing roster of premium programming, Netflix is well-positioned to make advertising a core revenue engine and deliver sustained growth in the years ahead.
Amazon & Disney Challenge Netflix in Ad Streaming
Amazon’s (AMZN - Free Report) Prime Video has become Netflix’s top ad-supported rival by making ads the default. Roughly 80% of U.S. users and 115 million viewers are on its ad tier, fueling second-quarter 2025 ad revenues of $15.6 billion, up 23% year over year. Amazon boosts engagement with shoppable ads, AI-driven targeting and exclusive sports like NASCAR and NBA broadcasts. An integration with Roku further expands Amazon’s reach to 80 million households, cementing its scale and redefining streaming monetization against Netflix.
Disney’s (DIS - Free Report) Disney+ leverages iconic franchises and bundled strength to rival Netflix. By raising ad-free prices, Disney pushes users toward its cheaper ad-supported tier, boosting adoption and revenues. Bundling Disney+ with Hulu and ESPN+ creates unmatched value for families, sports fans and general audiences. With Marvel, Pixar and Star Wars fueling loyalty, Disney sustains engagement across platforms, positioning Disney+ as a powerful long-term challenger in ad-supported streaming.
NFLX’s Price Performance, Valuation & Estimates
Shares of Netflix have gained 39.5% year to date compared with the Zacks Broadcast Radio and Television industry’s return of 30.8%.
NFLX’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 10.79 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.95X. NFLX carries a Value Score of D.
NFLX’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $45.03 billion, reflecting 15.47% year-over-year growth. The consensus mark for 2025 earnings is pegged at $26.06 per share, unchanged over the past 30 days and up 2.9% over the past 60 days. This indicates a 31.42% increase from the previous year.
Image: Bigstock
NFLX's Advertising Revenues Fuel Top-Line Growth: Is It Sustainable?
Key Takeaways
Netflix (NFLX - Free Report) is steadily expanding its advertising revenues to diversify income and enhance business resilience. After doubling ad revenues in 2024, the company aims to repeat that performance in 2025. This surge is driven by the rapid adoption of its ad-supported tier, which now has 94 million monthly active users, representing over 55% of new sign-ups in available markets.
The company’s advertising strategy relies on expanding ad-tier penetration, deploying advanced ad-tech and leveraging premium content. Netflix has completed the global rollout of its proprietary Netflix Ads Suite platform, and recently integrated Yahoo DSP, enhancing targeting, measurement and programmatic capabilities. These upgrades, coupled with live programming like WWE Raw, NFL Christmas Day games and major boxing events, are attracting advertisers seeking premium, brand-safe environments.
Ad revenue growth remains strong and highly profitable, enabling Netflix to boost margins while maintaining competitive pricing for consumers. The ad tier’s strong engagement with 41 hours of viewing per month per user underscores its long-term potential. Building on this momentum, Netflix expects to nearly double its advertising revenues in 2025, leveraging its expansive global user base and growing ad-tier adoption. Reflecting this optimism, management has raised its full-year 2025 revenue guidance to $44.8-$45.2 billion, marking a 15-16% year-over-year increase, primarily driven by advertising gains.
The key challenge lies in balancing ad-tier adoption without eroding premium subscriptions amid rising competition from Disney+ and Amazon. Yet, with its global scale, advanced ad tech and growing roster of premium programming, Netflix is well-positioned to make advertising a core revenue engine and deliver sustained growth in the years ahead.
Amazon & Disney Challenge Netflix in Ad Streaming
Amazon’s (AMZN - Free Report) Prime Video has become Netflix’s top ad-supported rival by making ads the default. Roughly 80% of U.S. users and 115 million viewers are on its ad tier, fueling second-quarter 2025 ad revenues of $15.6 billion, up 23% year over year. Amazon boosts engagement with shoppable ads, AI-driven targeting and exclusive sports like NASCAR and NBA broadcasts. An integration with Roku further expands Amazon’s reach to 80 million households, cementing its scale and redefining streaming monetization against Netflix.
Disney’s (DIS - Free Report) Disney+ leverages iconic franchises and bundled strength to rival Netflix. By raising ad-free prices, Disney pushes users toward its cheaper ad-supported tier, boosting adoption and revenues. Bundling Disney+ with Hulu and ESPN+ creates unmatched value for families, sports fans and general audiences. With Marvel, Pixar and Star Wars fueling loyalty, Disney sustains engagement across platforms, positioning Disney+ as a powerful long-term challenger in ad-supported streaming.
NFLX’s Price Performance, Valuation & Estimates
Shares of Netflix have gained 39.5% year to date compared with the Zacks Broadcast Radio and Television industry’s return of 30.8%.
NFLX’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 10.79 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.95X. NFLX carries a Value Score of D.
NFLX’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $45.03 billion, reflecting 15.47% year-over-year growth. The consensus mark for 2025 earnings is pegged at $26.06 per share, unchanged over the past 30 days and up 2.9% over the past 60 days. This indicates a 31.42% increase from the previous year.
Image Source: Zacks Investment Research
NFLX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.