Netflix’s record quarterly results push shares up over 11% in after-hours to new ATH📈

Netflix has reported its Q4 2024 results, surpassing analysts' consensus expectations. The company demonstrated strong momentum in both revenue (the highest in 2024) and the largest quarterly increase in new subscribers in over a year.

For Q4, Netflix posted revenues of $10.25 billion, a 16% year-over-year increase. This result exceeds consensus estimates by $0.14 billion, marking the highest quarterly revenue in the company’s history. The impressive figures are attributed to a strong rise in paid subscriptions, which surpassed 300 million accounts in Q4. This represents an increase of 18.91 million net new subscribers—the largest in Netflix’s history (over three times the growth of the previous quarter and 44% higher than the same period last year).

The strong quarter was primarily driven by the success of Netflix’s productions and an unexpectedly successful venture into streaming live sports events. The second season of Squid Game proved to be a significantly bigger success than anticipated and, according to the shareholder letter, could become the most-watched season of any original production in Netflix’s history. Simultaneously, the Jake Paul vs. Mike Tyson fight was a massive hit, and last year’s Christmas NFL games set a new viewership record for NFL streaming, with average of 24.1 million and 24.3 million viewers.

On the downside, the operating margin for the quarter fell seasonally to its lowest level in 2024, at 22.2% (a 7.4 percentage point decrease compared to the previous quarter). However, it is worth noting that this figure still exceeded the company’s forecasts and was 5.3 percentage points higher than the margin from a year ago. Overall, Netflix achieved a full-year 2024 operating margin of 27% (+6 percentage points year-over-year).

Diluted earnings per share (EPS) came in at $4.27, more than doubling the previous year’s figure.

Q4 Results and Q1 2025 Forecast. Source: Netflix
 

For Q1’25, the company expects to maintain strong profitability, forecasting a 28.2% operating margin on revenues of $10.4 billion. The projected year-over-year growth of 11.2% is slightly lower than in Q1 last year, though this is influenced by a higher base effect. Additionally, the company expects a record diluted EPS of $5.58.

With the anticipated return of fan-favorite series such as Wednesday and Stranger Things, along with continued momentum in the sports segment, Netflix enters the new year with optimism, a sentiment seemingly shared by investors. Strong results for the last quarter and solid forecasts for the first three months of the new year have propelled the company’s after-hours trading shares up by over 11%.

Netflix’s after-hours trading reaches new all-time highs with over 11% growth. Source: xStation