Netflix(US:NFLX) Haitong Securities International·2025-10-23 14:01Investment Rating - The report does not explicitly state an investment rating for the company, but it indicates a stable revenue growth and solid structural growth drivers, suggesting a positive outlook for the company in the industry. Core Insights - Netflix's Q3 2025 performance showed revenue of $11.51 billion, with a year-over-year growth rate of 14.84%, although EPS of $5.87 fell short of market expectations due to a one-time Brazilian CIDE tax expense impacting operating income [1][7] - The company continues to invest in innovative content formats to enhance user engagement and expand monetization opportunities, indicating a focus on long-term growth despite short-term profit fluctuations [1][3][8] - Advertising revenue is expected to double by 2025, driven by increased upfront commitments and the launch of the "Netflix Ad Suite," which is improving ad fill rates and contributing to overall revenue growth [3][9] - High engagement levels are maintained with record TV viewing shares in the U.S. and U.K., and innovative interactive content is being developed to enhance user experience and retention [4][10] - The management plans to issue full-year 2026 guidance in January, focusing on healthy revenue growth, margin expansion, and free cash flow improvement, with a strategy centered on organic growth and selective M&A [5][11] Summary by Sections Q3 Performance - Revenue reached $11.51 billion, aligning with market expectations, with a 14.84% year-over-year growth [1][7] - EPS of $5.87 missed expectations due to a one-time tax expense, but underlying earnings quality remains resilient [2][8] Advertising Growth - Advertising is emerging as a key growth driver, with expectations of revenue doubling by 2025 [3][9] - The launch of new advertising formats and tools is expected to enhance revenue contributions from this segment [3][9] Content and Engagement - Record-high TV viewing shares were achieved, with significant events driving user acquisition and platform engagement [4][10] - Continuous innovation in interactive content is being pursued to strengthen user retention and experience [4][10] Future Outlook - Management will provide guidance for 2026 in January, focusing on revenue growth and margin expansion [5][11] - The strategy emphasizes organic growth and selective acquisitions, with a clear exclusion of traditional media network acquisitions [5][11]