Revenue in Latin America jumped 20.6% to $1.3 billion in Q2. Netflix added 8.05 million subscribers, beating estimates, and raised its operating margin forecast. The ad tier now accounts for 45% of new sign-ups.
Netflix's Latin America segment posted the fastest year-over-year revenue growth of any region in the second quarter, rising 20.6% to $1.3 billion, the company said in its earnings report. The gain outpaced Asia-Pacific's 19.2% increase to $1.1 billion and the 9.5% growth in the U.S. and Canada, which remains Netflix's largest market at $4.3 billion in revenue. Europe, the Middle East and Africa grew 16.7% to $3.1 billion.
The Latin America acceleration reflects the tail end of password-sharing crackdowns and price increases that took effect early this year. Netflix converted millions of account sharers into paying subscribers across Brazil, Mexico and other markets in the first quarter, and raised standard and premium plan prices in several countries in January. The region's subscriber base is still growing, and the 20.6% revenue jump suggests the company is extracting more value from each user there.
Globally, Netflix added 8.05 million net new subscribers in the quarter, well above the 4.87 million analysts had expected. Paid memberships ended June at 277.65 million. Average revenue per member rose 3% year over year to $11.89, helped by price increases and a shift toward higher-tier plans.
Netflix's ad-supported tier is gaining traction. It accounted for 45% of new sign-ups in Q2, up from 40% in the first quarter. The company has not yet disclosed ad revenue separately. Co-CEO Greg Peters said on the earnings call that the ad business is scaling faster than expected and will become a meaningful revenue contributor in 2025.
Operating income rose 42% to $2.6 billion, pushing the operating margin to 27.2% from 22.2% a year earlier. Free cash flow was $1.3 billion for the quarter. Netflix guided for third-quarter revenue of $9.73 billion, slightly below the $9.83 billion consensus, and raised its full-year operating margin forecast to 26% from 25%.
Netflix shares fell about 1% in after-hours trading following the report. The small decline suggests the guidance miss tempered enthusiasm for the subscriber beat and margin expansion.
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