NFLX
Netflix Earnings call was a blast
In 2024, we executed on our plan to reaccelerate growth.
- For the year, revenue grew 16% and operating margin expanded six points to 27%. Operating income exceeded $10B for the first time in our history.
- In Q4, revenue increased 16% year over year, helped by 19M paid net adds, while operating income rose 52% year over year. We finished 2024 with 302M memberships.
This is a phenomenal increase in operating margin by far by the best in class for any streaming player.
Our Q4 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.
Music to any investors ear.
Netflix’s substantial reach and scale enable it to deliver such events to a large audience. This represents a missed opportunity for the sports industry in recent years, as cable subscriptions continue to decline. A significant factor contributing to this trend is the inconvenience associated with cable services, which are not portable and require a fixed location for viewing. Additionally, the hassle of waiting for a cable provider to set up the equipment after committing to a multi-year contract further discourages consumers.
Our priorities for 2025 are to:
Improve our core business with more series and films our members love, an enhanced product experience and growth of our ads business;
Further develop newer initiatives such as live programming and games;
Sustain healthy growth - we now forecast 2025 revenue of $43.5-$44.5B (+$0.5B vs. prior forecast, despite the strengthening of the US dollar) and an operating margin of 29%, up one point from our prior forecast.
If you heard the earnings call, they did talk about games - briefly. Just the one single line above. That tells me they are not focusing too much on games — Good call.
We finished 2024 with 302 million memberships.
Netflix hit a whopping 301.63 million streaming subscribers! This quarter was their best ever, adding almost 19 million new subscribers. That’s almost as many as they added in the last three quarters combined! And with live sports, they could easily double that number in a few months. They’ve got the potential to reach 1 Billion subscribers - Facebook did it, so can Netflix.
The sports industry thrives on scale because it’s a big business. But the cost of sports content is skyrocketing, and studios that used to own sports rights are either giving up or making smaller deals. They can’t afford to make sports programming without a lot of viewers.
On the other hand, Netflix, with over 300 million subscribers, they can spread the cost of sports programming over a wider audience, so each subscriber pays less. This lets Netflix make money from the growing demand for sports content. Also, instead of going all out, Netflix is taking a slow and steady approach. They’re buying sports rights one by one, testing the market with specific events like the Christmas Day NFL games. This way, they can figure out if sports content is a good idea and figure out the best way to grow their business.
Netflix didn’t grow by slashing prices or offering free trials. Nope, they grew because their content is good that people are willing to pay for it.
#Long #NFLX