Netflix updated its full-year revenue forecast, noting that it expects revenue to be between $44.8 billion and $45.2 billion, up from a range of $43.5 billion to $44.5 billion. Netflix’s higher forecast reflects the weakening of the U.S. dollar compared with other currencies as well as “healthy” member growth and ad sales. Par for the course, yoy revenue growth was primarily a function of more members, higher subscription pricing and increased ad revenue.

The company reported net cash generated from operating activities during the quarter was $2.4 billion, up more than 84% from the prior-year period. Free cash flow also grew, reaching $2.3 billion, a 91% increase. Netflix increased its full-year free cash-flow guidance to between $8 billion and $8.5 billion, up from around $8 billion.

Netflix emphasized its Q2 operating margin of 34.1%, an improvement of nearly 3% from the prior quarter and 7% from the year-earlier period. However, it warned that “operating margin in the second half of 2025 will be lower than the first half attributing to higher content amortization and sales as well as marketing costs.

However, since its earnings report, Netflix has declined by about 6% and is now down almost 11% since reaching a record high on June 30. Digging into the reason, the competition with free content on YouTube is absolutely a headwind.

Netflix saw the largest monthly viewership increase versus its peers in June. However, YouTube accounted for 13% of total monthly TV viewership, while Netflix had 8%. Also AI will be a “double-edged sword” for Netflix in the near-term. On the one hand, AI will aid the streamer’s targeted advertising and help cut programming costs. But on the flip side, it also allows independent content creators a leg up, which benefits YouTube.

The line between professional and amateur content is going to get more blurry as AI tools in the hands of amateurs which allow them to produce things that look incredibly professional. In another words, AI in the hands of the creative community of YouTube could create a level of professional programming for YouTube which drives its viewership even further. That is the biggest competition for Netflix.

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