On Thursday, October 17, 2024, Netflix presented its Q3 results. The analyst consensus was for revenues of 9.78 billion USD, 5.15 dollars per share earnings, and an increase of 4.5 million active subscribers. Netflix managed to exceed these expectations in every category, achieving revenues of 9.82 billion USD, 5.4 dollars earned per share, and as high as 5.07 million new active subscribers (+15% YoY). The shares rose by over 4% to $716 at the time of writing, following the results announcement.
Significant Increase in Subscriptions
The increase in subscriber numbers by 5.1 million, far beyond forecasts, deserves particular attention. This is a clear signal that Netflix is effectively handling the growing competition in the streaming market. Netflix continues to implement its strategy of diversification and strengthening its offerings, as reflected in the development of the advertising segment. Subscriptions with advertisements grew a stunning 35% quarter on quarter, confirming the soundness of their strategy. Netflix is planning further expansion of this model into new markets in 2025, which could become a significant source of future revenue. Also noteworthy is the considerable growth of the operating margin to 30% from 22% the previous year and exceeding expectations in relation to earnings per share.
New Format and Content to be Available for Subscribers
Netflix is promising interesting additions to its offerings, including the highly anticipated second season of “Squid Game” and venturing into sports broadcasting. The proposed boxing match between Jake Paul and Mike Tyson and the live broadcast of NFL games during the Christmas period signal the company’s intent to broaden its offerings with live events that could attract new subscribers and increase engagement among current users.
Forecasts of Continued Growth
Despite impressive results, Netflix faces certain challenges. The growth in the streaming market means continual investment in new content and innovation. Although the advertising segment is growing, the company doesn’t anticipate it will be the main revenue growth driver before 2026. An interesting change is the planned discontinuation of reporting the number of subscribers starting from Q1 2025, which could impact how investors evaluate the company’s results. Looking ahead, Netflix predicts a 15% revenue growth for 2024 overall, along with an improvement in operating margin to 27%.
In summary, Netflix’s Q3 2024 results confirm the company’s strong market position and adaptability. Exceeding analyst expectations in key indicators, combined with developing offerings and advertisement-supported accounts, suggests that Netflix is on the right path for further strengthening its position. Investors will undoubtedly be closely following the progress of the company’s new initiatives, particularly in live broadcasting and advertising monetization, which could become key growth factors in the coming years.
Author: Maksymilian Kuch, XTB analyst
Source: https://managerplus.pl/netflix-przebija-oczekiwania-a-abonament-z-reklamami-to-prawdziwy-hit-65306
