The Electric State on Netflix.
Netflix aims to double its advertising revenue this year and expects to ride above any economic turbulence from the global tariff war.
The company said it isn’t seeing any softness from ad buyers and newly released adtech enhancements will open revenue opportunities.
The global streaming platform posted March quarter revenue of $US10.543 billion, slightly higher than Wall Street analysts expected.
The company is maintaining its forecast for 2025 revenue of between $43.5 billion and $44.5 billion, which assumes healthy member growth, higher subscription pricing and a “rough doubling” of ad revenue.
Emarketer senior analyst Ross Benes said Netflix relies on advertising less than most of its competitors.
And that means Netflix will be less exposed to tariffs that constrict upfront commitments.
“But its subscription business could face pressure if international countries begin imposing retaliatory fees on US-based service,” Benes said. “Trade wars breed uncertainty that places a premium on adaptability."
Netflix, in its March quarter results, said there had been no material change to its business outlook since its last earnings report.
A key focus in 2025 is enhancing capabilities for advertisers.
The company rolled out the Netflix Ads Suite, its in-house first party adtech platform, in the US on April 1.
“We believe our ad tech platform is foundational to our long term ads strategy,” the company said in a letter to shareholders.
“Over time, it will enable us to offer better measurement, enhanced targeting, innovative ad formats and expanded programmatic capabilities.”
In the March quarter, Netflix launched programmatic in EMEA. A full APAC launch is coming in the June quarter.
Co-CEO Ted Sarandos, facing analyst questions on the fallout from the trade war started by US president Dionald Trump, said the company is focused on what it can control.
“And improving the value of Netflix is a big one,” he said.
“Historically in tougher economies, home entertainment value is really important to consumer households, and Netflix is a tremendous value in absolute terms and certainly, in competitive terms.
“What we're seeing today, we're not changing anything in the forecast. Keep in mind that while the U represents our largest spend for content employees, production infrastructure, we produce original content in 50 countries around the world.”
Co-CEO Greg Peters the company had seen periods of challenging economic conditions historically in different countries.
“And we've generally been able to keep that positive flywheel spinning even in those situations,” he told analysts.
“And I think that speaks to the gap between value and price and that we are for many people, a very good value, even as they're being careful about where they spend.
“We've also been expanding that range of price points, including a low priced ads plan in our ads market, which better allows us to offer the right plan at the right price to a wider range of consumers.
“So that's all to say that we're proceeding largely as we've done in the past, while continuing to work to improve both value and accessibility.”
Netflix isn’t seeing any signs of softness from direct interactions with advertising buyers. “Actually the opposite,” Peters said. “We're seeing some positive indicators from clients as we approach our upfront event.
“I think worth noting perhaps that the fact that we're currently relatively small in ads, that as a revenue contributor to Netflix, but probably more importantly, the amount of ad spend that we're seeking to win relative to the big ads pie. That smallness probably provides us some insulation to market shifts right now.
“And we are rolling out our proprietary adtech suite. We've rolled that out in Canada and the United States. We've got our remaining 10 markets coming. That offers a bunch of new capabilities that advertisers have told us they want.
“We’re just starting to sell into those new capabilities that opens up new opportunities for us, new demand.
“Based on everything that we're seeing right now, we continue to expect that we will roughly double our advertising revenue in 2025 through a combination of both upfronts, programmatic expansion and scatter.
“It's a big milestone for us to roll out our own ad suite. We've been working at it for a while. Some of those have been delivered already in some of the territories and those will come over time. And then the other big space of benefit by being on our own ad tech stack is it enables us to have more control to create a higher quality ad experience for our members.
“We've got many years of building ahead of us, but we've got a clear road map. We know what we're committed to, and we'll just continually to iteratively improve and innovate in advertising, just like you've seen us do in all sorts of other areas.”
Netflix has a global audience estimated to be more than 700 million people, with two-thirds of them living outside the US.
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