Netflix Inc. (NASDAQ:NFLX) heads into earnings with investors focused on whether advertising growth, stronger content and new formats can offset slowing engagement, rising competition and concerns that the streaming leader is maturing into a slower-growth media company.

Analysts expect the streaming giant to report a quarterly revenue of $12.88 billion (from $11.51 billion a year ago) and adjusted EPS of 82 cents.

The stock gained slightly higher than 0.50% on Tuesday. Nasdaq futures are down 0.42% while S&P 500 futures have shed 0.11%.

Needham Sees Advertising Upside

Needham analyst Laura Martin said Netflix’s recent selloff looks overdone and highlighted advertising as a key growth opportunity.

She expects about $3 billion in ad revenue this year, roughly double last year’s level, and said that revenue carries margins of about 80%, which could support margins, free cash flow and returns on assets.

Martin told CNBC on Monday that Netflix still has substantial unsold long-form ad inventory, giving it several years of runway before weaker monetization in short-form video becomes a bigger issue.

Her larger concern is engagement. She said Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube, TikTok and Reels compete aggressively for consumer time, while generative AI is making user-generated content cheaper to produce.

She believes Netflix needs more live programming, sports, news and additional content formats to broaden engagement.

Greene Calls It A Show-Me Quarter

G Squared Private Wealth CIO Victoria Greene said Netflix must prove that last quarter’s slowdown represented the low point.

She described the company as a mature business that still generates strong free cash flow and solid revenue growth, but no longer carries the same growth profile it once did.

Greene told CNBC last Friday that she wants to see stronger viewing hours, better content execution and clearer advertising growth beyond the roughly $3 billion level.

She also warned that pricing across streaming has risen sharply, increasing the risk that consumers cut subscriptions as competition from Walt Disney Co. (NYSE:DIS) and the combined Skydance Corp. (NYSE:SKYD) Paramount-Warner offering intensifies.

Belloni Says Netflix Needs Bigger Hits

Puck founding partner Matt Belloni said Netflix’s executive shakeup reflects pressure to improve engagement after the stock’s steep decline.

He told CNBC last Saturday that the company needs more culturally significant hits and expects incoming content chief Peter Rice to take more risks, potentially including sports, theatrical distribution and broader content formats.

Belloni also highlighted YouTube as a major threat because it does not carry Netflix’s roughly $20 billion annual content bill.

Greenfield Sees Urgency, Not A Broken Business

LightShed Partners co-founder Rich Greenfield said Netflix is "not broken," noting that revenue still grows at a double-digit rate.

However, he told CNBC last Friday that investors now need evidence of improving engagement and stronger content.

Greenfield expects Rice to pursue bigger creative swings and potentially expand further into sports, but cautioned that meaningful changes could take 12 to 24 months because new projects require long production cycles.

NFLX Price Action: Netflix shares were up 0.50% at $70.20 at the time of publication on Tuesday, according to Benzinga Pro data.

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