Continued traction on the advertising tier, paid sharing efforts and a steadily improving content slate suggest that net adds may be closer to 6 million. Consensus for 4.2 million additions in 1Q seems low.
Netflix will post its first quarter 2024 financial results and business outlook post-market on Thursday, April 18, 2024.
All eyes are on the streaming giant amid rising anticipation and optimistic projections. Netflix stock has outperformed the S&P 500 Index year-to-date by good measure, gaining over 26% while the S&P 500 index is up more than 9%.
Netflix's Q1 revenue is expected to be $9.259 billion, with an adjusted net profit of $1.995 billion and an adjusted EPS of $4.546, according to Bloomberg's consensus expectation.
Revenue Growth to Accelerate
Better engagement with multiple hit series including "Fool Me Once" and "Avatar: The Last Airbender" should drive increased monetization as revenue growth ramps up to the midteens, as the company expands its price increases more broadly after hikes in select markets last year.
Analysts expect steady improvements in operating margin, with the company projecting 24% in 2024 even as it makes investments in content and advertising. Free cash flow should be strong at over $6 billion.
Subscriber Trends
Netflix is poised to sustain its subscriber momentum, and while some growth was pulled forward in 4Q with 13 million gains, consensus for 4.2 million additions in 1Q seems low.
Continued traction on the advertising tier, paid sharing efforts and a steadily improving content slate suggest that net adds may be closer to 6 million.
Additionally, healthy organic subscriber trends further bolster Netflix’s position in the market.
Paid Sharing
Analysts emphasized the significant impact of Netflix’s Paid Sharing initiative, which has contributed to strong subscriber and revenue growth.
Despite capturing low-hanging fruit in 2023, Paid Sharing still presents meaningful monetization opportunities for Netflix. Estimates suggest potential growth in borrower conversion rates.
Netflix monetized ~22M borrowers at the end of 2023 and can monetize 36M borrowers by the end of 2024 & 43M by the end of 2025.
