Netflix (NASDAQ:NFLX) reports strong Q1 earnings boosted by membership growth and strategic ad expansion
Netflix (NASDAQ:NFLX) has just released its financial results for the first quarter of 2024, surpassing expectations.
In Q1, the streaming giant saw its revenue increase by 15% year-over-year, primarily fueled by an increase in membership numbers and adjustments in pricing.
The revenue surge exceeded Netflix's own forecasts, with paid net additions climbing to 9.3 million, a substantial jump from 1.8 million in the same period last year.
This growth was notably influenced by economic factors such as local inflation and a sharp depreciation of the Argentine peso by 75% against the US dollar.
Operating income for the quarter was $2.6 billion, up 54% from $1.7 billion in Q1 2023, with the operating margin expanding from 21% to 28%.
Earnings per share (EPS) also exceeded forecasts, coming in at $5.28 compared to last year’s $2.88 and the predicted $4.49.
This increase included a $131 million non-cash unrealized gain from F/X remeasurement on Netflix's Euro-denominated debt.
On the advertising front, Netflix made significant strides in expanding its ad-supported membership, which grew by 65% quarter-over-quarter.
This follows substantial sequential growth in the last two quarters of 2023.
Over 40% of new sign-ups in markets with available ad plans came from this tier, highlighting the plan's popularity.
For advertisers, Netflix is enhancing its measurement solutions through new partnerships with Kantar and Lucid for brand awareness and recall, and with Nielsen Catalina Solutions for assessing sales lift.
Looking ahead to the second quarter of 2024, Netflix forecasts a revenue growth of 16%.
For the entire year, Netflix projects a healthy revenue growth rate of 13% to 15%.
Additionally, the company has revised its operating margin forecast for 2024 to 25%, up from the previously projected 24%.
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