Netflix smash consensus
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Notes from the earnings call.
Netflix Q3 GAAP EPS of $5.40 beats by $0.28.
Revenue of $9.82B (+15.0% Y/Y) beats by $50M.
Global Streaming Paid Memberships +5.07M to 282.72M
For 2024, we expect revenue growth of 15% (the high end of our 14% to 15% range), and operating margin of 27% (vs 26% previously).
We continue to build our advertising business and improve our offering for advertisers. Ads membership was up 35% quarter on quarter, and our ad tech platform is on track to launch in Canada in Q4 and more broadly in 2025.
As we look ahead to 2025, we’re focused on improving every aspect of our service and continuing to deliver healthy revenue and profit growth.
For Q4’24, we forecast 15% revenue growth, or 17% on a F/X neutral basis. We expect paid net additions to be higher in Q4 than in Q3’24 due to normal seasonality and a strong content slate. We project Q4 operating margin of 22%, a five percentage point year-over-year improvement.
Our fourth quarter guidance implies that revenue will grow 15% year over year for the full year 2024, at the high end of our prior 14%-15% revenue growth expectation. Given the slightly higher revenue forecast, we’re now forecasting 2024 operating margin of 27% based on F/X rates as of 1/1/24 and on a reported basis, up from 26% previously. This would represent a six percentage point increase compared with the full year 2023.
For 2025, based on F/X rates as of 30 Sept, we forecast revenue of $43B-$44B vs. consensus of $38.73B, which would represent growth of 11%-13% off of our 2024 revenue guidance of $38.9B. We expect revenue growth to be driven by a healthy increase in members. We’re targeting a 2025 operating margin of 28% vs. our forecast. We want to balance near term margin growth with investing appropriately in our business. We still see plenty of room to increase our margins over the long term. -
Netflix has matured into a high quality business with a gilt edged brand. Its customer base is very sticky and whilst they don't split out their ad revenue, growth rates > 30% in this segment are very good. The stock is by no means cheap at 30X 25 forecast income however the business exudes quality. With after hours action into the $720s, it is sitting at all time highs or there abouts. We will continue to actively manage the position across our portfolio holdings.
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PHe, I think.
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It’s held elsewhere also
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Is “elsewhere” a constituent of IML?
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HI Steve, IML has changed a a fair bit in the last 4 months. It holds some assets not found anywhere else. Portfolio 1-Growth(IML) is 4% off of its peak @ 29.2% YTD net of all fees.
Regards
Adam
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Afternoon Adam….have you got any info on what we should expect from Netflix
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Hi D,
Netflix is set to drop its Q1 2025 earnings after the market shuts on 17 April. Analysts expect earnings per share (EPS) will hit $5.74, up 8.7% from $5.28 last year, with revenue expected at $10.54 billion, a 12.5% jump year-on-year. That’s pretty close to Netflix’s own forecast of $10.46 billion in revenue and an operating margin of 28.2%.
They’ve got a history of smashing EPS forecasts, beating expectations in all four of the last reported quarters, like Q4 2024 when they pulled off $4.27 against $4.20 expected. That said, it's hard to know but their numbers should be solid.Everyone’s eyeing their ad-supported memberships, which made up 55% of sign-ups in ad markets last quarter, and their content line-up, with several content hits. They won’t disclose subscriber numbers anymore, focusing on revenue and margins instead.