🍿 Netflix Does Podcast Now?
K-Pop Demon Hunters shattered records while new formats emerge
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Move over Squid Game. K-Pop Demon Hunters is the captain now.
The animated film stormed past 325 million views in just four months, becoming the most-watched Netflix title ever. It spent 15 straight weeks in the global Top 10, and even hit No. 1 at the US box office (a first for a Netflix original).
That surge helped define a record Q3, fueled by a chart-topping soundtrack and rabid fandom. It was a rare streaming phenomenon, the kind that drives replays, sign-ups, and cultural relevance. Sequels, prequels, and spin-offs are already on the table.
But Netflix’s ambitions go well beyond scripted content. The company is testing low-cost, engagement-heavy formats, from video podcasts arriving in 2026 to social games you can play on your TV.
Let’s break it down.
Today at a glance:
Netflix Q3 FY25.
Spotify podcasts are coming.
Quotes from the earnings call.
The YouTube problem.
1. Netflix Q3 FY25
Income statement:
Revenue +17% Y/Y to $11.5 billion (in-line).
Operating margin 28% (-1pp Y/Y).
EPS $5.87 ($1.10 miss).
Cash flow (TTM):
Operating cash flow: $9.6 billion (22% margin).
Free cash flow: $9.0 billion (21% margin).
Balance sheet:
Cash and short-term investments: $9.3 billion.
Debt: $14.5 billion.
FY25 Guidance:
Revenue +17% fx neutral to $45.1 billion ($0.1 billion raise).
Operating margin 29% (0.5pp cut).
So, what to make of all this?
📈 Margin miss due to a big one-off: A ~$619 million Brazil tax expense cut operating margin by 5 points to 28%, missing the 31.5% guidance as a result. Management doesn’t expect it to be a lasting drag. The adjustment was booked at cost of revenue, and therefore impacted gross margin too. The long-term margin improvement trend should resume in 2026.
📢 Ads remain the growth engine: It was the best ad quarter yet and still on track to more than double in 2025. Over half of new sign-ups in ad markets choose the ad plan.
🍿 Content still travels: K-Pop Demon Hunters showed Netflix’s knack for capturing the zeitgeist with releases that travel worldwide and drive engagement.
🟣 Live is now material: The live slate keeps ramping (notably boxing), and Q4 will bring the Christmas Day NFL doubleheader, offering premium inventory for ads and churn defense.
🌍 FX headwinds return: Currency swings had a small impact, preventing another revenue beat. A reminder to look beyond the headline.
🧭 Guidance improves: Q4 revenue guided to ~$12.0 billion ($0.1 billion beat) with EPS ~$5.45 (slight beat). Full-year revenue improved $0.1 billion to ~$45.1 billion while FY25 margin trimmed to ~29% due to the one-off Brazil tax impact.
💸 Capital firepower intact: With TTM free cash flow at ~$9 billion and the cash hoard at ~$9.3 billion, Netflix can fund bigger live rights, accelerate ads tooling, and keep buying back stock opportunistically ($7 billion so far this year).
🎮 New bets provide option value: Advertising is scaling, with new formats on the way (video podcasts and party games) expanding the surface area. But these will take time to be needle-movers. Let’s review the details.