advertising revenue

Thanks to popular shows like “Squid Game,” plus price hikes and growing advertising revenues, Netflix on Thursday reported strong growth in the second quarter, beating analysts’ expectations.

The Los Gatos-based streamer’s revenue rose 16% to $11.1 billion, while the company’s net income increased 46% to $3.1 billion compared to a year earlier. Analysts polled by FactSet had expected about $11 billion in revenue and $3 billion in profit.

Wall Street analysts have long deemed Netflix the winner of the streaming wars. The company no longer gives quarterly updates on how many customers it has, last revealing it had more than 301 million subscribers in 2024. But there’s still pressure on Netflix to continue to show financial growth, as the company aims to attract more advertising dollars and subscribers around the world.

Many analysts believe that Netflix’s future sales boost will come from its advertising business, which began in November 2022. The streamer is expected to generate $2.07 billion in ad revenue this year in the United States, which is estimated to climb to nearly $3 billion in 2027, according to research firm Emarketer.

“They’re seeing some substantial revenue and they are also getting a lot of people to sign up or switch to the ad supported tier,” said Paul Verna, a principal analyst at Emarketer.

Netflix said it expects total revenue in to grow 17% in the third quarter. The company increased its full-year 2025 revenue forecast, estimating that it will generate $44.8 billion to $45.2 billion. That’s up from the range of $43.5 billion to $44.5 billion that it previously projected.

In May, Netflix said its cheaper plan with ads reaches more than 94 million monthly active users, indicating that its version with commercials is gaining traction as other services follow a similar strategy.

“We continue to make progress building our ads business and still expect to roughly double ads revenue in 2025,” Netflix said in its letter to shareholders.

Earlier this year Netflix raised prices on most of its subscription plans in the U.S. Its cheapest plan with ads went up $1 to $7.99 a month. Netflix said the response to its recent price adjustments has been “broadly in line with our expectations.”

Netflix continues to face competition from other streaming services globally and entertainment companies like YouTube and TikTok that also take up significant amount of watch time among consumers.

During the second quarter, Netflix released popular programs including Korean animated film “KPop Demon Hunters,” drama “Sirens” and the third season of “Squid Game.”

“Squid Game’s” third season, which premiered late last month, was the most watched series in 93 countries during its debut week and broke a record for the most views for a show in its first three days on Netflix, a boon for a streaming service that thrives on capturing the attention of audiences worldwide by releasing must-watch programs.

“These are positive initiatives and they’re the quality of the content that shows the uniqueness of it,” said Melissa Otto, head of research at S&P Global Visible Alpha, on shows like “Squid Game” Season 3. “These are all things that pull the users in and make them want to subscribe to Netflix or watch Netflix content.”

Netflix also has received critical acclaim for its programming, noting it has received 120 Primetime Emmy nominations for shows including the limited series drama “Adolescence” and comedy-drama series “Nobody Wants This.”

Netflix stock closed at $1,274.17 on Thursday, up about 2%.

CBS said it is canceling “The Late Show with Stephen Colbert” at the end of the upcoming television season in May, a casualty of industry changes that have dealt a crippling blow to advertising revenue.

Colbert announced the news to his audience Thursday during a show taping in New York. In a clip posted to Instagram, crowd members gasped, then started booing. Colbert said he only learned of the move on Wednesday.

“It’s not just the end of our show, but it’s the end of the late show on CBS,” Colbert said. “I’m not being replaced. This is all just going away.”

Colbert has hosted the show for a decade. After a rocky start, Colbert found his sea legs and eclipsed longtime late night leader NBC with his signature humor and sharp takes on political and cultural hot buttons. Colbert has long been a star within CBS’ parent company, Paramount Global, rising to fame on Comedy Central’s “The Daily Show with Jon Stewart.”

The decision to end a franchise that has helped shaped pop culture was stunning to some. CBS launched its late night block in 1993 with David Letterman.

“This is purely a financial decision against a challenging backdrop in late night,” CBS Chief Executive George Cheeks and other top executives said in a joint statement. “It is not related in any way to the show’s performance, content or other matters happening at Paramount.”

David Ellison’s Skydance Media is waiting for federal approval to buy Paramount, an $8 billion deal that is expected to usher in a new wave of cost-cutting.

“We consider Stephen Colbert irreplaceable,” said Cheeks, along with CBS Entertainment President Amy Reisenbach and CBS Studios President David Stapf. “We are proud that Stephen called CBS home. He and the broadcast will be remembered in the pantheon of greats that graced late night television.”

More than 200 people work on Colbert’s show and their fate, beyond next spring, is unclear.

“I do want to say that the folks at CBS have been great partners,” Colbert said. “I’m so grateful to the Tiffany network for giving me this chair and this beautiful theater to call home. And of course, I’m grateful to you, the audience, who have joined us every night.”

This is a developing story.