Netflix beats by $0.12, reports revs in-line; guides Q3 EPS above consensus, revs above consensus; guides FY25 revs above consensus (1,274.17 +23.86)
- Reports Q2 (Jun) earnings of $7.19 per share, $0.12 better than the FactSet Consensus of $7.07; revenues rose 15.9% year/year to $11.08 bln vs the $11.06 bln FactSet Consensus.
- Q2 operating margin came in at 34.1% vs 33.3% prior guidance.
- Revenue was slightly above guidance due primarily to favorable F/X impact, net of hedging. Member growth was ahead of forecast, although this occurred late in the quarter, limiting the impact on Q2 revenue.
- Both operating income and operating margin were slightly ahead of forecast given the revenue upside in the quarter and timing of expense spending.
- Co issues upside guidance for Q3, sees EPS of $6.87 vs. $6.69 FactSet Consensus; sees Q3 revs of $11.526 bln vs. $11.28 bln FactSet Consensus.
- Co guides to Q3 operating margin of 31.5%. Similar to past years, co expects operating margin in 2H will be lower than 1H due to higher content amortization and sales and marketing costs associated with a larger second half slate.
- Co issues upside guidance for FY25, sees FY25 revs of $44.80-45.20 bln vs. $44.55 bln FactSet Consensus and vs $43.50-44.50 bln prior guidance. Revenue guidance increase primarily reflects the weakening of the US dollar vs. most other currencies, plus healthy member growth and ad sales.
- Co raises guidance for F/X neutral operating margin to 29.5% (vs. 29% previously), or 30% on a reported basis.
- In Q2, co had a wide variety of hit series like Squid Game S3, Sirens, Ginny & Georgia S3, The Eternaut and Secrets We Keep, and popular films like Tyler Perry's STRAW and Exterritorial.
- Co has completed the rollout of the Netflix Ads Suite, its proprietary first-party ad tech platform, across all ads markets.
- Co has also launched its redesigned TV homepage, which enhances the member experience. This new TV UI is simpler, more intuitive and better represents the breadth of entertainment on Netflix today.
- Co is optimistic heading into 2H25, with a standout slate that includes Wednesday S2, the Stranger Things finale, the highly anticipated Canelo-Crawford live boxing match, Adam Sandler's Happy Gilmore 2, Kathryn Bigelow's A House of Dynamite and Guillermo del Toro's Frankenstein.
- Advertising: Co continues to make progress building its ads business and still expects to roughly double ads revenue in 2025. A key focus this year is enhancing capabilities for advertisers.