- In the third quarter, Netflix’s streaming paid net additions totaled 5.07 million, exceeding expectations of 4.52 million, but showed a 42% decline compared to the previous year.
- Across various regions, Netflix experienced mixed results:
- UCAN (United States and Canada): Increased by 690,000, with a 61% drop year-over-year, slightly under the estimated 696,658.
- EMEA (Europe, Middle East, and Africa): Grew by 2.17 million, a 45% decline year-over-year, surpassing the estimate of 1.44 million.
- LATAM (Latin America): Declined by 70,000 compared to a 1.18 million increase the prior year, short of the 975,270 estimate.
- APAC (Asia-Pacific): Rose by 2.28 million, reflecting a 21% increase year-over-year, outperforming the 1.56 million estimate.
- The total number of streaming paid memberships reached 282.72 million, marking a 14% increase from the previous year and slightly above the estimate of 281.92 million.
- Netflix reported revenue of $9.82 billion, a 15% year-over-year increase, bypassing the $9.78 billion estimate.
- Earnings per share (EPS) stood at $5.40, up from $3.73 the previous year, and above the $5.12 estimate.
- The operating margin was at 29.6%, significantly improved from 22.4% last year and surpassing the 27.8% estimate.
- Operating income increased by 52% to $2.91 billion, exceeding the $2.72 billion estimate.
- Free cash flow grew by 16% to $2.19 billion, outpacing the estimated $1.73 billion.
- Netflix forecasts fourth-quarter revenue of $10.13 billion, above the $10.05 billion estimate, with EPS projected at $4.23, higher than the $3.90 estimate.
- For the year, Netflix anticipates free cash flow between $6 billion to $6.5 billion, exceeding earlier expectations of approximately $6 billion and the $6.38 billion estimate.
- The operating margin for the current year is projected at 27%, higher than the 26% previously expected and the 25.9% estimate.
- Annual revenue is expected to rise by 15%, consistent with previous forecasts of a 14% to 15% increase, slightly above the 14.9% estimate.
- In 2025, Netflix projects revenue between $43 billion to $44 billion, near the $43.4 billion estimate, with an operating margin of 28%, slightly above the 27.9% estimate.
- The company anticipated increased net subscriber additions in the fourth quarter due to seasonal trends and a strong content lineup.
- The programming for 2024 was described as being “patchier than normal” due to the impact of last year’s strikes.
Netflix Inc on Smartkarma
Analysts on Smartkarma are closely covering Netflix Inc., providing valuable insights for investors. Behind the Money‘s research titled “How Netflix is upending Hollywood“ highlights Netflix’s stock reaching an all-time high amid traditional Hollywood challenges. Despite facing competition and subscriber losses, Netflix plans to launch an advertising-supported business. Baptista Research‘s report “Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance!” emphasizes the company’s strong financial performance in Q2, exceeding Wall Street’s expectations in earnings per share and revenue.
Moreover, Analyse Asia with Bernard Leong‘s analysis “How Netflix bring Asian Content to the Global Audience with Minyoung Kim“ showcases insights from Netflix’s VP of content Asia Pacific on audience understanding and global relationship building. Baptista Research‘s second report, “Netflix Inc.: A Shift In Reporting Focus from Subscriptions to Revenue and Engagement – But What Lies Ahead?” delves into Q1 2024 earnings and strategic shifts, with an independent valuation using Discounted Cash Flow methodology. These reports offer a comprehensive view of Netflix’s performance and future prospects.
A look at Netflix Inc Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 1 | |
| Growth | 4 | |
| Resilience | 3 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 2.8 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Netflix Inc., the popular Internet subscription service known for streaming TV shows and movies, holds a mixed outlook based on the Smartkarma Smart Scores. With a high Growth score of 4, the company is positioned well for expansion and increasing market share. Momentum, also scoring a 4, indicates strong positive price trends in the near term, reflecting investor interest and potential for stock price growth.
On the downside, Netflix lags in the Value category with a score of 2, suggesting that the stock may be trading at a premium compared to its intrinsic value. Additionally, the Dividend score of 1 implies a lack of emphasis on regular dividend payments by the company. However, despite these weaknesses, Netflix shows resilience with a score of 3, indicating a moderate ability to weather market fluctuations and challenges.
Netflix’s core business revolves around providing online streaming services for a wide variety of entertainment content, offering flexibility and convenience to its subscribers. While the company faces some challenges in terms of valuation and dividend payments, its strong Growth and Momentum scores bode well for its future prospects in the dynamic digital entertainment industry.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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