Netflix (NFLX 1.33%) inventory gained 8.6% in Tuesday’s after-hours buying and selling session following the video streaming chief’s launch of its fourth-quarter 2023 report.
Traders’ optimistic reactions are attributable to the quarter’s income and internet paid subscriber additions surpassing Wall Avenue’s consensus estimates, together with bottom-line steerage for the primary quarter of 2024, simply exceeding analyst expectations. Right here is an summary of Netflix’s fourth quarter, together with its outlook, centered on six key metric classes.
1. Income jumped 12.5%
Netflix’s quarterly income grew 12.5% 12 months over 12 months (and 13% in fixed foreign money) to $8.83 billion. This consequence exceeded the $8.72 billion Wall Avenue consensus estimate, in addition to the corporate’s steerage.
Income progress was primarily pushed by the rise in common paid subscriptions, with a 1% rise in common income per subscription additionally contributing to progress. The corporate attributed the sturdy top-line progress to its paid-subscription-sharing providing (a part of its password-sharing crackdown), its latest worth adjustments, and the energy of its enterprise basically.
2. Paid internet subscriber rely soared by 13.1 million
In This fall, paid internet subscriber progress was 13.1 million, up from 7.7 million within the year-ago quarter and up from 8.8 million within the prior quarter. This consequence crushed the 8.7 million analysts have been anticipating. Netflix ended the quarter with 260.3 million world paid subscribers, up 13% 12 months over 12 months.
Netflix added paid subs in all 4 of its areas, together with in its U.S./Canada area, which is harder to do due to the corporate’s excessive penetration charge. It gained 2.8 million new paid subs on this area, bringing its complete to 80.1 million.
3. Working revenue surged 172%
In This fall, working revenue elevated 172% 12 months over 12 months to $1.50 billion, translating to the working margin (working revenue divided by income) rising from 7% to 16.9%. Working outcomes have been notably higher than administration’s steerage for an working margin of 13%. The corporate attributed this beat to the stronger-than-expected income and its lower-than-planned spending.
4. EPS soared 1,658%
The quarter’s internet revenue was $938 million, or $2.11 per share, up 1,658% from the year-ago interval. This consequence missed the earnings per share (EPS) of $2.22 that analysts had forecast. It additionally fell a bit wanting the corporate’s steerage of $2.15. That stated, internet revenue was diminished by $239 million from a non-cash unrealized loss from foreign-exchange remeasurement on the corporate’s euro-denominated debt.
5. Money circulate from operations rocketed up 275%
In This fall, money generated from operations rocketed 275% 12 months over 12 months to $1.66 billion. Free money circulate was $1.58 billion, in contrast with $332 million within the year-ago interval. Netflix ended the quarter with $7.12 billion in money and $14.14 billion in long-term debt.
6. In Q1 2024, administration expects income progress of 13.2%
First-quarter 2024 steerage:
- Income progress of 13.2% 12 months over 12 months (and 16% in fixed foreign money), barely decrease than the 14% progress analysts had been projecting.
- Paid internet sub additions down sequentially (reflecting seasonality in addition to doable pull ahead from the robust This fall 2023 outcomes) however up 12 months over 12 months by 1.8 million.
- Working margin of 26.2% versus 21% within the year-ago interval.
- EPS of $4.49, which interprets to progress of 56% 12 months over 12 months. This forecast topped Wall Avenue’s expectation of $4.10.
Full-year 2024 steerage:
- “Wholesome double-digit income progress … on a F/X [foreign-exchange] impartial foundation pushed by continued membership progress in addition to enchancment in F/X-neutral ARM [average revenue per membership],” in line with the shareholder letter.
- “Robust progress” from the brand new lower-priced ad-supported subscription tier, which started rolling out in November 2023. Nonetheless, the corporate would not anticipate this enterprise to be a major driver of its total income progress till 2025.
- Free money circulate of about $6 billion, assuming no materials swings in F/X.
In brief, Netflix ended 2023 on a powerful notice, and its outlook suggests it has entered 2024 with stable momentum.
Beth McKenna has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Netflix. The Motley Idiot has a disclosure coverage.
