Netflix (NFLX) shares surged by $113.10, or 13%, to $983.90 in after-hours trading following the company’s fourth-quarter earnings report for 2024, which significantly outperformed Wall Street’s expectations. The streaming giant reported earnings of $4.27 per share, beating consensus estimates by $0.07, with revenues climbing 16% year-over-year to $10.247 billion, surpassing the anticipated $10.11 billion.
This quarter was marked by an unprecedented growth in subscriber numbers, with Netflix adding 18.91 million global streaming paid memberships, far exceeding the company’s own guidance of surpassing the 5.07 million added in the prior quarter. This achievement marks the largest net addition quarter in Netflix’s history, fueled by a broad strength across its content offerings, enhanced product-market fit globally, and the typical seasonal surge seen in Q4.
The company’s operating margin for the quarter was 22.2%, slightly above the previously guided 21.6%, thanks to revenues that were higher than forecasted. Despite the strengthening of the U.S. dollar against most currencies, which could have posed a challenge, Netflix managed to exceed revenue expectations due to robust membership growth and advertising sales. On a year-over-year basis, average paid memberships increased by 15%, while average revenue per membership (ARM) grew by 1%, or 3% when adjusted for foreign exchange rates.
Looking ahead, Netflix provided a mixed outlook. For the first quarter, the company anticipates earnings per share at $5.58, which is below consensus of $5.98, and forecasts revenues at $10.416 billion, again undercutting the consensus expectation of $10.49 billion. However, long-term optimism was signaled with an upward revision of the full-year 2025 revenue guidance to between $43.5 billion and $44.5 billion, above the consensus of $43.65 billion. This adjustment reflects not only the strong Q4 performance but also an expected carryover effect, despite acknowledging ongoing currency exchange headwinds.
This performance and the subsequent guidance adjustments highlight Netflix’s strategic focus on expanding its subscriber base through diverse content, improving its service’s appeal globally, and monetizing through advertising. The company’s ability to exceed expectations in subscriber growth despite economic and currency challenges underscores its resilience and adaptability in a competitive streaming market.
However, the guidance for Q1 earnings and revenue below consensus might introduce some investor caution regarding short-term profitability. Still, the long-term outlook, bolstered by the impressive Q4 results and an upward revision for FY25, paints a picture of a company poised for continued growth, navigating through the complexities of global market dynamics and content investment with confidence.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply