Netflix is a global streaming giant that revolutionized the entertainment industry. Founded in 1997 by Reed Hastings and Marc Randolph, the company initially started as a DVD rental service before transitioning to an online streaming platform in 2007. Netflix offers a vast library of movies, TV shows, documentaries, and original content, catering to a diverse audience worldwide.
With over 282 million subscribers globally as of Q3 2024, Netflix continues to lead the streaming market. The company’s success is fueled by its investment in original programming, producing hit series as well as critically acclaimed films. Netflix’s ability to adapt to changing viewing habits and its focus on high-quality, engaging content have cemented its position as a dominant player in the entertainment industry. The company also continues to innovate with new features and services. It’s growing advertising business and local content production in various regions, ensuring a dynamic and evolving streaming experience for its subscribers.
Netflix Fiscal Q4 2024
Netflix (NFLX) Q4 revenue increased by 16% compared to last year, or 19% if currency exchange effects are excluded. This was slightly better than expected, despite the strong US dollar, thanks to higher membership growth and ad sales.
Also, average paid memberships went up by 15% compared to last year. The average revenue per member (ARM) increased by 1%, or 3% without considering currency changes.
Membership growth was strong across all content, regions, and due to typical Q4 seasonality. The company added 19 million paid members, the highest in its history, compared to 13 million in Q4 2023 and 5 million in Q3 2024. Operating income was $2.3 billion, a 52% increase from last year, with an operating margin of 22% compared to 17% last year. These exceeded forecasts mainly due to higher revenue. Earnings per share (EPS) were $4.27, up 102% from $2.11 last year.
Guidance
- Projected Revenue: Netflix expects 2025 revenue between $43.5-$44.5 billion, reflecting a $0.5 billion increase from the previous forecast.
- Growth Rate: Anticipated year-over-year growth is 12%-14%, or 14%-17% on a foreign exchange neutral basis.
- Membership and Ad Revenue: Continued healthy membership growth and a rough doubling of ad revenue are expected.
- Q1 2025 Projections: Revenue growth is predicted to be 11%, or 14% excluding currency effects, slightly below full-year guidance due to price change timings and ads business seasonality.
- Operating Margin: The 2025 operating margin is targeted at 29%, up from the previous forecast of 28% and higher than 2024’s 27%.
Board Statements
Ted Sarandos (Co-CEO): Highlighted the impact of the wildfires in Southern California, reassuring that there were no meaningful delays in project deliveries. Discussed the broad strength across content categories and regions, contributing to the record 19 million subscriber additions.
Greg Peters (Co-CEO): Emphasized the significant growth in advertising plans and future strategies. Mentioned the expansion into live sports offerings, such as acquiring rights to the FIFA Women’s World Cup.
Impact on the Market
Netflix’s stock, known as NFLX, saw a very positive reaction after the Q4 2024 earnings report. The strong financial results, like gaining 19 million new subscribers and significant growth in ad revenue, made the stock price hit an all-time high in pre-market trading. The stock price rose by 14%, reaching $1000 per share.
