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Netflix Beats Expectations
Here's our initial take on Netflix's (NASDAQ: NFLX) fourth-quarter financial report.
Key Metrics
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $8.83 billion | $10.25 billion | 16% | Beat |
| Earnings per share | $2.11 | $4.27 | 102% | Beat |
| Paid members | 260.3 million | 301.6 million | 16% | Beat |
| Operating margin | 16.9% | 22.2% | 5.3 pp | n/a |
pp = percentage point.
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Netflix Adds Nearly 19 Million Paid Subscribers
Fourth quarter results from the streaming giant look strong all around. The company handily beat expectations on both the top and bottom lines, and the company's operating margin expanded by more than five percentage points compared to the same period last year.
The number of paid memberships was a closely watched metric this quarter, and Netflix shattered analysts' expectations. The company was expected to report about 291 million paid memberships, but beat this figure by more than 10 million. In all, Netflix added 18.91 million paid subscribers during the fourth quarter -- and for context, that's about 6 million more than it added in the previous two quarters combined. It's also worth noting that this is the last quarter Netflix plans to report paid memberships on a regular basis, but will start publishing a bi-annual engagement report along with its Q2 2025 earnings results.
Looking through the earnings report, there is a lot to like. The streaming service's original programming is performing very well -- for example, the holiday season film Carry-On attracted more than 160 million views. Plus, Netflix is doing especially well with its live content. The Jake Paul vs. Mike Tyson fight was the most-streamed sporting event in history.
Immediate Market Reaction
Not surprisingly, the initial market reaction to the news was very positive. As of 4:30pm EST, about 30 minutes after the results were released, Netflix stock was higher by 13%.
However, it's important to note that this is before management's conference call, which was scheduled for 4:45pm EST, and the items that are discussed can certainly influence the stock price, in one way or another.
What to Watch
Looking ahead, another big reason why Netflix is soaring after earnings is the company's full-year 2025 revenue guidance of $43.5 billion to $44.5 billion, which at the midpoint is significantly higher than the $43.6 billion analysts were looking for. Not only that, Netflix is guiding for operating margins to come in at 29%, a full percentage point higher than the previous guidance.
Netflix has a full slate of original programming set to roll out in 2025, and if the company can continue to capitalize on live entertainment and add value to the platform, there could be an interesting year in store for this business and its investors.
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The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
