Netflix (NASDAQ: NFLX) ended 2024 with its largest-ever quarterly increase in subscribers, driven by the return of its hit series Squid Game and the introduction of its first live sports event on the platform.
On Tuesday, the company revealed that it added 18.9 million subscribers in Q4, significantly surpassing Wall Street’s estimates, which predicted roughly half that number. This milestone brings Netflix's total global subscriber base to over 300 million, breaking its previous record of 15 million new subscribers in Q1 2020 at the onset of the COVID-19 pandemic.
In a strategic shift, Netflix announced it would no longer report quarterly subscriber numbers, focusing instead on financial metrics such as revenue and profits.
Following this news, Netflix shares surged by 14.3% in early trading on Wednesday in Frankfurt. On Tuesday, the stock climbed 10% in after-hours trading after rising 1.35% during regular trading hours.
Strong Revenue Growth
Netflix reported a 16% increase in revenue for Q4, reaching $10.2 billion, marking its fastest growth since late 2021. The company expects even faster sales growth in 2025.
This growth is partly driven by subscription price increases in key markets, including the U.S., Canada, Portugal, and Argentina. The most popular subscription tier now costs $17.99 per month, up by $2.50.
Netflix projects annual revenue of $44.5 billion for 2025, reflecting a 14% increase from the previous fiscal year, with an operating margin of 29%. The stock climbed 12% in extended trading, reaching $977, the highest price in the company’s history.
Engaging Content and Live Events
Netflix's success in expanding its subscriber base stems from a strong lineup of content, which attracted 41 million new subscribers over the year. While much of this growth was attributed to stricter enforcement of password-sharing policies, the company emphasized the importance of content in driving subscriber numbers.
Key contributors to this success include the movie Carry-On and the second season of Squid Game, Netflix’s most popular show ever. Additionally, the live-streamed boxing match between Jake Paul and Mike Tyson set subscription records, even surpassing NFL games streamed on the platform.
In its shareholder letter, Netflix stated: "Our live programming delivered unforgettable moments. While this segment will remain a small part of overall viewing hours and content spending, we believe it adds significant value to our subscribers and business."
Advertising Expansion
Live events play a critical role in Netflix's strategy to expand its advertising business. The company displays ads during sports events like wrestling and football, reaching all subscribers, not just those on ad-supported plans.
Despite a slow start in this sector, Netflix reported that most new subscribers in markets where ads are available opt for the ad-supported tier. The company anticipates achieving sufficient reach to meet advertisers' needs by the end of this year.
Outlook for Q1 2025
Netflix expects to generate $10.4 billion in revenue and $5.58 per share in earnings for Q1 2025, slightly below analysts’ expectations.
With its best year ever in subscriber growth and a successful mix of entertainment content and live events, Netflix continues to solidify its position as a leader in the streaming industry, aiming for further financial and creative growth in the coming years.
Anticipated Earnings Reports from Other Companies
Netflix’s announcement comes as several major companies prepare to release their financial results. Investors eagerly await reports from Wall Street giants, including Procter & Gamble, Johnson & Johnson, Kinder Morgan (NYSE: KMI), Halliburton, and The Travelers Companies (NYSE: TRV), to assess market performance.
Key Earnings Estimates:
- Procter & Gamble (PG): Expected EPS: $1.87, Revenue: $21.69 billion
- Johnson & Johnson (JNJ): Expected EPS: $2.02, Revenue: $22.46 billion
- The Travelers Companies (TRV): Expected EPS: $6.56, Revenue: $10.84 billion
- Halliburton (NYSE: HAL): Expected EPS: $
