Netflix

Netflix brought in 12.25 billion dollars in revenue this quarter, up 16% from a year ago and ahead of its own forecast thanks to stronger signups. Profit from the core business jumped 18% to almost 4 billion dollars, and the profit margin rose to 32.3% from 31.7%. More members, higher prices, and growing ad money are all landing on the bottom line at once.

Ad money is on track to hit 3 billion dollars in 2026, about double last year, and recent price increases have gone over well. Netflix still captures only about 5% of all TV watching worldwide and reaches fewer than 45% of the broadband homes it could serve. Live events are opening new doors too, with the World Baseball Classic drawing 31.4 million viewers and making Japan its biggest source of new members last quarter.

Netflix expects revenue growth to slow to about 13% next quarter, down from 16% this quarter, with full year growth of 12% to 14%. Profit margins are also set to dip to 32.6% next quarter from 34.1% a year ago, because the cost of new shows lands heavier in the first half. From here, more of the growth leans on price hikes and ads, and every price hike risks pushing some people to cancel.

Profit per share jumped 86% to 1.23 dollars, but that was inflated by a 2.8 billion dollar breakup fee Netflix received after walking away from Warner Bros, and it will not repeat. The same fee helped push quarterly free cash flow to 5.1 billion dollars, nearly double last year's 2.7 billion. The stock also swings about 60% harder than the overall market, so expect a bumpy ride in both directions.