Netflix beats by $0.06, beats on revs; guides Q1 EPS below consensus, revs below consensus; raises FY25 revs guidance; Q4 was the biggest quarter of net adds in co history (869.68 +11.58)
- Reports Q4 (Dec) earnings of $4.27 per share, $0.06 better than the FactSet Consensus of $4.21; revenues rose 16.0% year/year to $10.247 bln vs the $10.11 bln FactSet Consensus.
- Q4 global streaming paid net adds were +18.91 mln vs prior guidance of "higher than Q3's +5.07 mln." Co notes Q4 was the biggest quarter of net adds in company history.
- Q4 operating margin came in at 22.2% vs 21.6% prior guidance primarily due to higher-than-forecasted revenue; guides to Q1 operating margin of 28.2%.
- Co says revenue was slightly above forecast despite the strengthening of the US dollar vs. most currencies as membership growth and ad sales outpaced the co's forecast.
- Average paid memberships rose 15% year over year, while ARM was up 1% year over year, or 3% on a F/X neutral basis.
- In Q4, membership growth was driven by broad strength across its content slate, improved product/market fit across all regions and typical Q4 seasonality.
- Co issues downside guidance for Q1, sees EPS of $5.58 vs. $5.97 FactSet Consensus; sees Q1 revs of $10.416 bln vs. $10.49 bln FactSet Consensus.
- Co issues upside guidance for FY25, sees FY25 revs of $43.50-44.50 bln vs. $43.65 bln FactSet Consensus. This updated guidance reflects improved business fundamentals and the expected carryover benefit of a stronger-than-forecasted Q4 performance, net of headwinds from the strengthening of the US dollar over the past few months.
- 2025 Perspective: "We enter 2025 with strong momentum, coming off a year with record net additions (41M) and having re-accelerated growth (16% increase in revenue). Moreover, we're in a leadership position in terms of engagement (approximately two hours per paid membership per day), revenue ($39B) and profit ($10B in operating income) in a market that is continuing to expand. We estimate there are now 750M+ broadband households (excluding China and Russia) and $650B+ of entertainment revenue in the 4 markets we operate in, of which we only captured ~6% in 2024. Similarly, we believe we account for less than 10% of TV viewing in every country in which we operate, all of which suggests a long runway for growth as streaming continues to expand around the world."
Netflix +11.7% after hours; peers ticking higher on strong NFLX Q4 report, especially its robust net adds (869.68 +11.58)
Netflix peers: ROKU +1.7%, DIS +0.6%, WBD +0.5%, PARA +0.4%