On Thursday, July 18, Netflix (NASDAQ: NFLX) announced its second-quarter earnings, displaying impressive growth. In its financial report, the company announced a 17% increase in revenue, reaching $9.65 billion, and added 8 million new subscribers, boosting its total membership to 277.65 million.
In terms of earnings, Netflix reported an earnings per share (EPS) of $4.88 for Q2 2024, a 48% increase compared to $3.29 in the same quarter last year. This also beat out the expected EPS of $4.76 by a 2.47% margin. Undoubtedly, the significant rise in EPS from last year’s Q2 reflects the company’s improved profitability and efficient cost management.
Strategic expansion into advertising and live sports
The surge in revenue, subscriber count, and earnings underlines Netflix’s continued dominance in the streaming industry. Following a successful quarter of engaging content, the company credited its success to a variety of releases, including the latest season of “Bridgerton,” and popular films like “Atlas” and “Under Paris.” These selections have resonated well with a global audience, driving higher engagement and subscriber growth.
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In addition to its content lineup, Netflix’s strategic push into the advertising sector is also paying off. The company reported that its ad tier membership grew by 34% quarter-on-quarter. Additionally, the company believes this growth is expected to continue as Netflix proceeds to build its in-house ad tech platform, set to launch broadly in 2025.
“Our ad revenue is growing nicely and is becoming a more meaningful contributor to our business,” Netflix noted, highlighting the company’s position to create a substantial revenue stream from advertising.
In a move to diversify its content and attract more subscribers, Netflix has also agreed to new deals for live sports and exclusive programming. In May, the company announced partnerships to stream major live sports, including the upcoming Christmas Day NFL games and exclusive rights to a minimum of one NFL Christmas game through 2026.
Additionally, Netflix has also secured rights to the Jake Paul and Mike Tyson boxing match and weekly WWE programming starting in 2025. These deals are expected to bring in a new flock of viewers and boost subscriber engagement.
Focus on Long-Term Growth and Enhanced User Experience
Also in their Q2 2024 shareholder letter, Netflix stated, “We’re working to improve every aspect of Netflix so we can better serve existing and future members.” This statement comes shortly after the testing of a new, simpler, and more intuitive TV homepage designed to improve content discovery.
Looking ahead, Netflix continues to place its focus on the company’s long-term growth. Since the second quarter’s end, the company has raised its yearly revenue growth forecast to 14-15%, an increase from the previous 13-15%.
NFLX stock is up 37.26% year to date, reflecting investor confidence in its continued growth. As Netflix continues to add more diverse and engaging content, including the new addition of live sports programming, the company is well-positioned for further growth.
With the second quarter reports of steady membership growth and new revenue streams, the company’s positive performance suggests a promising future for the streaming giant.
