TMTPOST -- Netflix, Inc. shares settled 9.7% higher to $953.99 on Wednesday, hitting their close record after the streaming service giant posted earnings beat and much stronger subscriber growth toward the end of last year.
Credit：Netflix
Netflix generated $10.25 billion for the fourth quarter of 2024, higher than analysts expected $10.11 billion. The revenue grew 16% year-over-year (YoY), or 19% on a foreign exchange (F/X) neutral basis. Diluted earnings per share (EPS) approximately doubled from a year ago to $4.27, compared with analysts’ projection of $4.20. Net income soared 99% YoY to $1.87 billion, and operating income gained 52% YoY to $2.3 billion with a margin of 22.2%, up from 16.9% the same period of 2023.
The quarterly revenue was slight above its previous forecast despite the strengthening of the U.S. dollar versus most other currencies. Netflix attributed it to membership growth and advertising sales that outpaced its anticipation.
For the quarter ended December, Netflix had 18.9 million paid net additional subscribers, the biggest quarterly of net adds in the country’s history of more than two decades. The new subscribers more than doubled the Wall Street estimated 9.18 million, shattering the previous record of 15 million set in the first quarter of 2020 that was fueled by the onset of Covid-19 pandemic. The total paid memberships thus increased to 301.63 million, topping a 300-million milestone.
The handily-stellar-than-expected growth of paid members mainly resulted from hit TV series including Squid Game, one of Netflix’s most popular shows, and live sport content. The fourth quarter slate “outperformed even our high expectations: Squid Game season 2 is on track to become one of our most watched original series seasons, Carry-On joined our all-time Top 10 films list, the Jake Paul vs. Mike Tyson fight became the most-streamed sporting event ever and on Christmas Day we delivered the two most-streamed NFL games in history,” Netflix said in its shareholder letter released late Tuesday.
Netflix said in last April it will not release quarterly paid memberships starting in 2025 as it underscored engagement, or time spent with the service, as its “best proxy for customer satisfaction.” But the company added it will announce “major subscriber milestones as we cross them”.
Looking forward the full year 2025, Netflix saw the annual revenue would between $43.5 billion and $44.5 billion, about $500 million higher than its prior guidance. The updated projection reflected improved business fundamentals and the expected carryover benefit of the stronger-than-forecasted fourth quarter performance, net of headwinds from the strengthening of the US dollar over the past few months, Netflix said.
As part of efforts to improve its monetization by refining its plans and pricing, Netflix introduced on Tuesday an Extra Member with Ads offering in 1- of the 12 countries where it has an ads plan. It also raised prices in Canada, Portugal and Argentina and its home market. In U.S., the most popular plan, the standard monthly subscription without ads, will cost $17.99, an increase of $2.50, and the standard plan with ads will up one dollar to $7.00. Financial results showed the ads plan accounted for over 55% of sign-ups in Netflix ads countries in the December quarter, and memberships on ads plan jumped nearly 30% from the preceding quarter.
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