Shares of Netflix (NASDAQ:NFLX) rose more than 10% today after the company delivered a strong third-quarter 2024 earnings report that beat expectations across the board. The streaming giant posted earnings per share of $5.40, beating estimates of $5.13, while revenue rose to $9.82 billion, slightly ahead of forecasts. This performance is the result of consistent engagement with users who watch an average of two hours a day, driven by outstanding original content such as “Perfect Couple” and “Monsters: The Lyle and Erik Menendez Story.” With results like these, Netflix shows the market that it not only stands up to the competition, but also sets the pace.

Looking ahead, Netflix isn't slowing down. The company forecasts revenue between $43 billion and $44 billion in 2025 and is targeting 11% to 13% growth, driven by a robust slate of new releases and stronger membership growth. Expect the return of big hits like Stranger Things and Squid Game, as well as blockbuster films that will keep subscribers glued to the platform. Management also plans to increase operating margin by six percentage points, signaling confidence in Netflix's ability to balance growth and profitability. For investors, this is a clear sign: Netflix is ​​redoubling its efforts while sharpening its strategy to convert more viewers into paying members.

But here's where it gets interesting: Netflix's advertising business is primed to become a bigger player. With advertising revenue expected to double year-over-year starting in 2025, the company is strengthening its strategy by launching a first-party ad server and deepening partnerships with leading ad tech companies such as The Trade Desk (NASDAQ:TTD ). More than 50% of third-quarter signups in ad-supported markets opted for the ad tier, indicating growing demand for lower-cost options. The company is also expanding into live events, including marquee attractions like the Tyson-Paul fight and NFL football on Christmas Day. These moves are not just about creating new revenue streams, but also about positioning Netflix to capture a larger share of the $600 billion global entertainment market and set the stage for its next phase of growth.

This article first appeared on GuruFocus.