july 19, 2024

Netflix (NASDAQ: NFLX) reported its Q2 2024 earnings on July 18, 2024, showcasing robust financial performance and significant user growth. The streaming giant exceeded Wall Street expectations for both earnings per share (EPS) and revenue, but provided a cautious revenue outlook for Q3.

Key Financial Metrics:

• Q2 2024 EPS: $4.88 (Estimate: $4.68)
• Q2 2024 Revenue: $9.56 billion (Estimate: $9.56 billion)
• Q3 2024 Revenue Guidance: $9.37 billion (Estimate: $9.81 billion)
• Q3 2024 EPS Guidance: $5.10 (Estimate: $4.74)

Q2 Performance Highlights

Netflix reported a 17% year-over-year revenue growth for Q2 2024, reaching $9.56 billion. The company also achieved an operating margin of 27%, up from 22% in the same period last year. The strong financial performance was driven by a successful content lineup and significant user growth.

User Growth:

• Netflix added 8 million new users in Q2, well above the estimated 4.8 million. This growth was fueled by a diverse range of hit series and popular films.

Content Success:

• The company highlighted several successful series, including “Bridgerton S3,” “Baby Reindeer,” “Queen of Tears,” and “The Great Indian Kapil Show.” Popular films such as “Under Paris,” “Atlas,” “Hit Man,” and “The Roast of Tom Brady” also contributed to the strong performance. “The Roast of Tom Brady” attracted Netflix’s largest live audience to date.

Ad-Supported Tier:

• Netflix’s ad-supported tier saw a 34% increase in membership quarter over quarter, reflecting the company’s steady progress in scaling its ads business.

Future Outlook

Full Year 2024 Guidance:

• Netflix now expects full-year 2024 reported revenue growth of 14% to 15%, up from the previous guidance of 13% to 15%. The company also raised its operating margin forecast to 26%, up from the previous estimate of 25%.

Q3 2024 Guidance:

• For Q3 2024, Netflix projected revenue of $9.37 billion, falling short of the $9.81 billion forecasted by analysts. However, the company anticipates EPS of $5.10, surpassing the estimated $4.74.

Market Reaction

Following the earnings announcement, Netflix’s stock experienced a decline. As of the latest trading session, the stock price is down by 2%, reflecting investor concerns over the lower-than-expected Q3 revenue guidance despite the strong Q2 performance.

Peer Performance

The earnings announcement also influenced the stock performance of Netflix’s peers in the streaming and entertainment industry. Here is a snapshot of how some of Netflix’s peers reacted:

1. Disney (NYSE: DIS)
   • Current Stock Price: $92.15
   • Change: -1.5% (-$1.40)
2. Amazon (NASDAQ: AMZN)
   • Current Stock Price: $132.42
   • Change: -0.8% (-$1.06)
3. Warner Bros. Discovery (NASDAQ: WBD)
   • Current Stock Price: $14.75
   • Change: -2.3% (-$0.35)

Conclusion

Netflix’s Q2 2024 earnings report highlights the company’s strong financial performance and significant user growth, driven by a successful content lineup and the expansion of its ad-supported tier. While the company exceeded expectations for Q2, the cautious revenue outlook for Q3 has led to a mixed market reaction. Investors will be closely monitoring Netflix’s efforts to improve its platform and scale its ads business in the coming quarters.