Netflix shares surged 10% in after-hours trading on Tuesday as the streamer easily beat Wall Street expectations for its fourth quarter of 2024 and surpassed 300 million subscribers globally after adding a whopping 18.9 million.
The subscriber growth was driven by broad strength across its content slate, improved product/market fit across all regions and typical seasonality, the company said in its quarterly shareholder letter. Netflix touted programming such as “Squid Game” Season 2, the film “Carry On” and its live events including Mike Tyson vs Jake Paul and its pair of NFL Christmas Day games.
“Our business remains intensely competitive with many formidable competitors across traditional entertainment and big tech. We’re fortunate that we don’t have distractions like managing declining linear networks and, with our focus and continued investment, we have good and improving product/market fit around the world,” the streamer added. “We have to continue to improve all aspects of Netflix – more series and films our members love, a great product experience, increased sophistication in our plans and pricing strategy (including more advertising capabilities) – and grow into new areas like live programming and games. If we do that well, we believe we’ll have an increasingly valuable company – for consumers, creators and shareholders.”
Here are the top-line results:
Net income: $1.87 billion, compared to $938 million a year ago.
Earnings per share: $4.27 per share, up 102% year over year, compared to $4.19 per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $10.25 billion, up 16% year over year, compared to $10.12 billion expected by analysts surveyed by Zacks Investment Research.
Subscribers: Netflix added 18.9 million subscribers in the quarter, up 15.9% to 301.63 million globally. For the full year, Netflix added a record 41 million subscribers.
The last hurrah for quarterly subscriber disclosures
As it shifts its focus to revenue, operating margins and engagement, Netflix will stop reporting its quarterly subscriber count and average revenue-per-paid member figures beginning in the first quarter of 2025. It will continue to provide a breakout of total revenue by region, as well as the impact of foreign exchange changes, and announce major subscriber milestones as it crosses them.
Netflix added 4.82 million paid subscribers in the U.S. and Canada during the quarter for a total of 89.6 million, 5 million in the Europe, Middle East and Africa region for a total of 101.13 million, 4.15 million in Latin America for a total of 53.33 million and 4.94 million in the Asia-Pacific region for a total of 57.54 million.
Average revenue per paid member grew 4% in the U.S. and Canada to $17.26, or total revenue of $4.5 billion, while ARM in the EMEA region grew 3% to 11.11, or $3.29 billion in total revenue. Meanwhile, ARM growth was flat in the APAC region at $7.34, or $1.2 billion in total revenue, and LATAM fell 7% to $8, or $1.23 billion in total revenue.
Netflix’s reported a 52% year over year increase in operating income to $2.27 billion and an operating margin of 22.2% during the quarter. It also generated $1.38 billion in free cash flow during the quarter and had $1.54 billion in net cash from operating activities.
As it looks to the first quarter of 2025, Netflix is forecasting 11.2% year over year revenue growth to $10.42 billion, net income of $2.44 billion, earnings per share of $5.58, operating income of $2.94 billion and an operating margin of 28.2%.
Netflix hikes prices as ad tier on track for ‘sufficient scale’ in 2025
In addition to its quarterly results, Netflix revealed that it would increase the price of most of its plans in the US, Canada, Portugal and Argentina, including the first for its its ad tier. Under the new pricing in the U.S., Netflix’s ad-supported tier will increase by $1 to $7.99 per month, while the Premium tier will increase $2 to $24.99 per month.
In November, Netflix revealed that its ad tier has grown to 70 million monthly active users globally. The offering now accounts for over 55% of new sign-ups in the 12 countries where it is available and its membership base grew nearly 30% quarter over quarter.
“We’re on track to reach sufficient scale for ads members in all of our ads countries in 2025,” the company said in its shareholder letter. “A top priority
in 2025 is to improve our offering for advertisers so that we can substantially grow our advertising revenue.”
Netflix said it is introducing an Extra Member with Ads feature in 10 of its ad tier markets to give subscribers additional choice and flexibility. It plans to roll out its in-house advertising technology globally through 2025, with Canada already operating solely on the new platform and the U.S. slated to begin in April.
Netflix’s live events remain focused on ‘big, memorable moments’
As Netflix continues to ramp up its live events programming to bolster its revenue growth going forward, the company said it would focus on delivering “big, memorable moments” rather than on acquiring rights to large regular season sports packages.
“Although our live programming will likely be a small percentage of our total view hours and content expense, we think the eventized nature will result in outsized value to both our members and our business,” the company said.
Looking ahead, the company’s live programming will include year-round WWE matches, the SAG awards, John Mulaney’s new variety talk show and the return of NFL on Christmas Day. It also secured the U.S. rights for FIFA’s Women’s World Cup in 2027 and 2031.
More to come…
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