Netflix faces analyst pressure over transparency gaps despite Q2 growth

Netflix delivered strong second-quarter results on July 17, 2025, reporting revenue of $11.08 billion and operating margin of 34%, yet faces mounting criticism from financial analysts over its reduced transparency regarding subscriber metrics and advertising revenue breakdown.

The streaming platform's decision to discontinue quarterly subscriber reporting, implemented since Q1 2025, has drawn sharp criticism from industry observers who argue these metrics remain essential for evaluating streaming businesses. Netflix ended 2024 with 301.6 million paid subscribers globally, but the company now only provides "major subscriber milestones" when crossed.

Ian Whittaker, twice City AM Analyst of the Year, highlighted similar transparency issues facing Netflix in a recent LinkedIn post, drawing parallels to traditional pay-TV businesses. According to Whittaker, Netflix's current reporting approach would have been "considered absolutely vital information in determining whether a Pay-TV business was a good buy or not" during his time covering similar companies.

"We did not know their total subscribers; We did not know their subscriber growth; We did not know their churn; We did not know their advertising revenues; We did not know their subscriber Average Revenue Per User (ARPU)," Whittaker wrote, describing what information Netflix withholds from investors.

The analyst's concerns extend beyond subscriber metrics to advertising transparency. Netflix completed the rollout of its proprietary Netflix Ads Suite across all advertising markets in Q2 2025, yet continues bundling advertising revenues within overall revenue figures rather than providing separate breakouts.

Strong financial performance masks disclosure gaps

Despite transparency concerns, Netflix's Q2 2025 results exceeded guidance across multiple metrics. The company increased its full-year revenue forecast to $44.8-45.2 billion from the previous $43.5-44.5 billion range, primarily reflecting US dollar depreciation against other currencies plus healthy member growth and advertising sales.

Operating income reached $3.77 billion, representing a 45% year-over-year increase, while operating margin expanded from 27% in Q2 2024 to 34% in Q2 2025. The company expects to roughly double advertising revenue in 2025, though specific advertising figures remain undisclosed.

Netflix's Q2 content performance included notable successes such as "Squid Game S3" with 122 million views, "Ginny & Georgia S3" with 53 million views, and "Sirens" with 56 million views. The platform completed several technological milestones, including the full deployment of its proprietary advertising platform and the launch of a redesigned TV homepage interface.

Industry precedent and analyst reactions

Netflix's approach follows similar strategies employed by other technology companies. Apple discontinued iPhone unit sales reporting in 2018, focusing instead on services revenue and overall financial metrics. Following initial investor concerns, Apple's stock appreciated significantly as the market adapted to alternative performance indicators.

Several analysts have expressed mixed reactions to Netflix's transparency changes. Wedbush Securities described the shift as "consistent with our oft-repeated assertion that Netflix would inevitably pivot from a high-growth, low-profit business to a slow-growth, high-profit business." However, others view the reduced disclosure as potentially problematic during business downturns.

The company's advertising business development continues despite disclosure limitations. Netflix announced upcoming live programming including the Taylor vs. Serrano boxing rematch and NFL Christmas Day games, both expected to generate premium advertising revenue through real-time viewership and cultural relevance.

Regional performance and future outlook

Netflix provided regional revenue breakdowns showing growth across all markets. UCAN revenue reached $4.93 billion with 15% year-over-year growth, while EMEA generated $3.54 billion representing 18% growth. LATAM contributed $1.31 billion with 9% growth, and APAC delivered $1.31 billion with 24% growth.

The company projects Q3 2025 revenue growth of 17% driven by member growth, pricing changes, and advertising revenue expansion. Management expects operating margin of 31% for Q3, representing a two percentage point year-over-year improvement.

For 2025, Netflix targets a 29.5% operating margin based on foreign exchange rates at the beginning of the year, up from the previous 29% forecast. At current exchange rates, this would equate to approximately 30% operating margin on a reported basis.

Timeline

• July 17, 2025: Netflix reports Q2 2025 results with $11.08 billion revenue
• Q2 2025: Completion of Netflix Ads Suite rollout across all advertising markets
• Q1 2025: Netflix stops reporting quarterly subscriber numbers and ARM metrics
• June 2025: Netflix achieves 8.3% of total TV viewing share
• May 2024: Netflix expands programmatic advertising partnerships
• December 2024: Netflix fined €4.75 million for data transparency failures

Key marketing terminology

Programmatic Advertising: Automated technology that enables advertisers to purchase digital ad inventory in real-time through sophisticated algorithms and data analysis. Netflix's expansion into programmatic partnerships with The Trade Desk, Google DV360, and Magnite represents a significant shift from its initial Microsoft-only approach, allowing advertisers to leverage familiar platforms for campaign management while accessing Netflix's premium streaming inventory through automated bidding processes.

Average Revenue Per User (ARPU): A critical financial metric that calculates the average revenue generated per subscriber or user over a specific period, typically monthly or annually. Netflix's decision to discontinue ARPU reporting has frustrated analysts who rely on this metric to compare streaming services and evaluate pricing strategy effectiveness, as ARPU provides insights into customer value and monetization efficiency across different subscriber tiers and geographic markets.

Connected TV (CTV): Television content delivered through internet connections rather than traditional broadcast or cable systems, encompassing smart TVs, streaming devices, and gaming consoles. Netflix's dominance in the CTV space, capturing 8.3% of total television viewing time, positions the platform as valuable inventory for advertisers seeking to reach cord-cutting audiences who have migrated from traditional linear television to on-demand streaming consumption patterns.

Ad-Supported Tier: A subscription pricing model that offers content at reduced cost in exchange for displaying advertisements during viewing sessions. Netflix's ad-supported tier now represents 55% of new subscriber acquisitions in available markets, demonstrating consumer acceptance of advertising-funded content while providing the platform with dual revenue streams from both subscription fees and advertising sales, fundamentally changing Netflix's business model.

First-Party Data: Information collected directly from customers through their interactions with a platform, including viewing habits, search queries, device usage patterns, and demographic details. Netflix's ability to leverage first-party data for advertising targeting provides significant advantages over third-party data sources, enabling precise audience segmentation and personalized advertising experiences while maintaining greater control over data privacy and compliance requirements.

Operating Margin: A profitability metric that measures the percentage of revenue remaining after deducting operating expenses, excluding interest and taxes. Netflix's Q2 2025 operating margin of 34% represents substantial improvement from 27% in the previous year, demonstrating the company's ability to efficiently scale operations while investing in content production and technology infrastructure, providing investors with insights into operational efficiency and profit generation capabilities.

Revenue Growth: The percentage increase in total income generated by a company over a specific period compared to the same period in the previous year. Netflix's 16% revenue growth in Q2 2025 reflects the combined impact of subscriber additions, pricing increases, and advertising revenue expansion, serving as a primary indicator of business health and market position within the competitive streaming landscape.

Subscriber Churn: The rate at which customers cancel their subscriptions over a given period, typically expressed as a monthly or annual percentage. While Netflix no longer reports specific churn metrics, this measurement remains crucial for understanding customer retention effectiveness and lifetime value calculations, as reducing churn directly impacts long-term revenue stability and reduces customer acquisition costs for sustainable business growth.

Streaming Share: The percentage of total television viewing time captured by streaming platforms compared to traditional broadcast and cable television. Netflix's 8.3% individual streaming share within the broader 46% streaming category demonstrates the platform's market leadership position, providing advertisers with audience reach metrics essential for media planning and budget allocation decisions across traditional and digital video advertising channels.

Content Amortization: The accounting process of spreading content production costs over the expected revenue-generating lifespan of shows and movies. Netflix's content amortization patterns influence operating margins and cash flow timing, with the company's strategy of creating globally appealing content enabling longer amortization periods and improved return on investment through international distribution and extended viewing lifecycles across multiple markets.

Summary

Who: Netflix faces criticism from financial analysts, particularly Ian Whittaker, regarding transparency practices while reporting to investors and stakeholders including Co-CEOs Greg Peters and Ted Sarandos.

What: Netflix reported strong Q2 2025 financial results with $11.08 billion revenue and 34% operating margin but continues withholding detailed subscriber metrics, advertising revenue breakouts, and Average Revenue Per User data that analysts consider essential for business evaluation.

When: The transparency concerns emerged following Netflix's Q2 2025 earnings announcement on July 17, 2025, building on the company's decision to discontinue quarterly subscriber reporting starting with Q1 2025 results.

Where: The issues affect Netflix's global operations across all markets including UCAN, EMEA, LATAM, and APAC regions, with particular implications for the marketing community and advertising industry partnerships.

Why: Netflix argues that traditional metrics like subscriber counts are less relevant as the company develops multiple revenue streams including advertising and paid sharing, while critics contend these metrics remain vital for evaluating streaming business performance and investment decisions.