Netflix, Inc. stock research
FY2025 Q3
Netflix (NFLX) Gross Margin — Quarter Ended Sep 30, 2025
Revenue increased compared to both the prior quarter and the same quarter last year. However, gross profit declined from the prior quarter and grew more slowly than revenue year-over-year, resulting in a lower gross margin.
Gross margin takeaway
Quarter ended Sep 30, 2025 · FY2025 Q3
Revenue increased compared to both the prior quarter and the same quarter last year. However, gross profit declined from the prior quarter and grew more slowly than revenue year-over-year, resulting in a lower gross margin.
- The strongest observable margin driver is the rise in cost of revenue, which outpaced revenue growth both sequentially and year-over-year.
- Sequentially, gross margin weakened from the prior quarter as cost of revenue increased substantially while revenue grew modestly. Year-over-year, gross margin was slightly lower, with revenue and cost both increasing, but cost rising faster.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
46.4%
Gross profit
$5.3B
Revenue
$11.5B
Cost of revenue
$6.2B
Quarter-over-quarter change
-5.5 pts
Year-over-year change
-1.4 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Dec 31, 2024 | $10.2B | $4.5B | $5.8B | 43.7% |
| Mar 31, 2025 | $10.5B | $5.3B | $5.3B | 50.1% |
| Jun 30, 2025 | $11.1B | $5.8B | $5.3B | 51.9% |
| Sep 30, 2025 | $11.5B | $5.3B | $6.2B | 46.4% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2025
-5.5 pts
Year-over-year change
Sep 30, 2024
-1.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the rise in cost of revenue, which outpaced revenue growth both sequentially and year-over-year.
Sequentially, gross margin weakened from the prior quarter as cost of revenue increased substantially while revenue grew modestly. Year-over-year, gross margin was slightly lower, with revenue and cost both increasing, but cost rising faster.
Monitor the trajectory of cost of revenue relative to revenue, as its faster growth has compressed gross margin.