On Thursday, October 17, Netflix (NASDAQ: NFLX) treated its investors to a particularly strong earnings report covering the third quarter (Q3) of 2024. In the filing, the company unveiled impressive figures in all of the relevant categories and offered strong forward-looking guidance.
Additionally, Netflix stated it plans to continue strengthening its core movie and TV show offerings in the coming years, continue expanding into gaming, and improve its advertisements initiative.
The ad-backed tier growth has been noted as particularly strong as it saw its membership rise 35% from quarter to quarter. Still, the streaming giant noted it does not expect commercials to become a major driver until 2026.
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Investors had an immediate and immediately positive reaction to the announcements – particularly considering that NFLX stock experienced a 2.04% drop in the final session before the Q3 report was published.
In the extended session between Thursday and Friday, Netflix shares are up 5.15% as they rose from their latest closing price of $687.65 to their press time price of $723.04 – just shy of a $37 increase.
Netflix beats most analyst forecasts, offers strong guidance
Delving into the details, Netflix announced its earnings-per-share (EPS) amounted to $5.40 – well above the forecasted $5.12. Simultaneously, EPS saw a vast improvement compared to Q3 2023, when it stood at $3.73.
As could be expected considering the figures, net income rocketed from $1.68 billion in the third trimester of 2023 to $2.36 billion in the penultimate quarter of 2024.
The story is much the same for revenue, which amounted to $9.83 billion – notably higher than the expected $9.77 billion and more than a billion above the $8.54 billion in Q3 of the previous year.
Paid memberships, however, simultaneously underperformed and overperformed expectations. Netflix recorded 282.7 million such users in total – a lower figure than the anticipated 282.15 million – but announced the quarter saw an influx of 5.1 million customers, 600,000 more than was forecasted.
Looking forward, the streaming giant revealed it expects its revenue to rocket to $10.13 billion in the final trimester of the year but that the EPS will be slightly lower at $4.24.
Additionally, Netflix expects to make between $43 and $44 billion in revenue in 2025 as it expands the ad-backed tier to Canada, but it will stop reporting subscriber numbers during the same year.
NFLX stock price chart
While Neftlix’s forward guidance appears rather strong, it is worth remembering NFLX stock has already enjoyed notable success in 2024. Since January 2 – the first trading day after the New Year – Netflix shares have risen 46.78%.
On the other hand, NFLX has been on a slight downtrend in the shorter timeframes and is – in addition to the 2% drop in the last session – 6.24% in the red in the last full week of trading. Still, the strong earnings are likely to terminate the decline.
