On Friday, shares of Netflix, Inc. (NASDAQ: NFLX) fell by more than 2%, although the stock has risen 27% over the past three months. The streaming leader continues to thrive and post impressive results despite the fierce competition in the market. This positive trend is anticipated to carry into the next fiscal year. Below are some key highlights:
Strong Performance
Netflix has consistently delivered robust top and bottom-line growth. In Q3 2024, the company’s revenue climbed 15% year-over-year, reaching $9.8 billion, while earnings per share surged 45% to $5.40. Operating margins also improved, rising to 30% from 22% in the same period last year.
The subscriber growth is steady, with global streaming memberships increasing by 14% year-over-year to 282.72 million during Q3. The company added 5.07 million new members in this quarter alone. Benefiting from a strong content pipeline, popular series like The Perfect Couple and films such as The Union and Rebel Ridge are driving significant user engagement.
Netflix’s approach of producing diverse content tailored to regional tastes has proven to be effective. Member engagement, measured by viewing hours per household, has seen a consistent rise. Additionally, initiatives like paid sharing and the expansion of its advertising tier are yielding positive results.
The advertising segment of Netflix is also making strides. In Q3, the ad-supported plan contributed to over 50% of new sign-ups in its ad-enabled regions, showing a 35% quarter-over-quarter rise in memberships under this plan, alongside solid engagement levels.
Encouraging Outlook
For the fourth quarter of 2024, Netflix anticipates revenues to grow 15% year-over-year to $10.1 billion, with expected earnings per share at $4.23—up from $2.11 in the same quarter last year. The operating margin is projected to improve to 22% compared to 17% last year, as paid net additions are expected to increase sequentially thanks to seasonality and a strong content lineup.
According to its guidance for Q4, Netflix expects to achieve a year-over-year revenue growth of 15% for the full year of 2024, aligning with its prediction of 14-15% revenue growth. The expected operating margin for 2024 stands at 27%, reflecting a 6-percentage point increase from prior year figures.
Looking ahead to fiscal year 2025, Netflix plans to bolster revenue and profit growth by enhancing its portfolio of series and films while also investing in new initiatives, including advertising and gaming. The company projects revenues of $43-44 billion for FY2025, marking an 11-13% increase from its 2024 revenue estimate of $38.9 billion. This growth is expected to come from enhanced membership numbers and an increase in average revenue per membership (ARM), with an anticipated operating margin of 28%.
