- Netflix, in a letter to shareholders, reported its best ad sales quarter up to now in Q3 2025 and said it’s on course to greater than double its ad revenue in 2025. Its U.S. upfront commitments doubled throughout the period and Netflix Ad Suite was deployed across all 12 of its ad markets, the corporate said.
- Netflix executives detailed priorities for its promoting offering, including improving ways to purchase, goal and plan campaigns and using artificial intelligence (AI) to check dozens of ad formats.
- The company saw revenue grow in-line with its forecast in Q3 and still sees room to grow its core and promoting businesses amid an evolving media landscape that would see the sale of Warner Bros. Discovery.
Netflix executives said the corporate is now within the “walk” phase of its “crawl-walk-run” framework for promoting as it has achieved scale and rolled out its first-party ad tech stack within the 12 ad markets it serves. After its best quarter for ad sales up to now, the corporate is about to double ad revenue in 2025 — albeit from a small base, in comparison with subscription revenue — as U.S. advertisers up their commitments to the platform.
Netflix generated around $650 million in U.S. promoting revenue in 2024, implying a minimum of $1.3 billion in U.S. ad revenue in 2025, per Madison and Wall estimates. Encouragingly, the corporate is seeing higher growth rates in programmatic promoting — a pathway to incremental ad revenue — and executives are confident in the expansion trajectory of its ad business.
“Advertisers are enthusiastic about our growing scale. We’ve got a highly attentive and engaged audience. The rollout of our ad tech stack means we have got more formats. We’ve got more measurement. We’ve got more ways to purchase. And in fact, our slate is a critical and necessary source of competitive differentiation,” said Co-CEO Greg Peters on an earnings call.
Executives laid out key priorities for the corporate’s ad business in Q4 and beyond on the decision. It is working to extend the variety of advertisers and the best way they should buy ads, as with recent partnerships with Amazon DSP and AJA in Japan. The company is working to enhance data-driven targeting, media planning and measurement capabilities as well as expanding ad formats, with ad interactivity coming later this quarter.
While Q3 revenue grew in-line with internal forecasts, Netflix took successful to its operating margin on account of an ongoing dispute with Brazilian tax authorities. While this caused the corporate’s stock to drop after it announced earnings this week, the corporate still sees room for profitable growth within the core business, in keeping with Co-CEO Ted Sarandos.
“We proceed to have a large opportunity since we’re only about 7% of the addressable market, when it comes to consumer spending and only about 10% of time spent on TV in our biggest market,” Sarandos said on the decision.
The earnings call got here as Warner Bros. Discovery said it was open to a sale, with Netflix reportedly amongst the businesses with interest within the media conglomerate. While executives noted that Netflix has historically “been more builders than buyers” and that it has little interest in owning legacy media networks, they didn’t close the door completely on M&A activity.
“It’s our responsibility to take a look at every significant opportunity,” Peters said. “We’ve got a transparent framework to guage those opportunities, and we’ll do whatever we expect is best to grow the business.”
As a part of that growth strategy, the corporate stays committed to internal AI development. Executives noted a number of uses where the corporate could focus its AI efforts going forward, including higher product experiences, content production and promoting, including plans to innovate dozens of latest ad formats ahead of 2026.
“We’re not frightened about AI replacing creativity, but we’re very enthusiastic about AI creating tools to assist creativity,” Sarandos said.
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