Q2 2024 Earnings Summary
Reported on Jul 18, 2024 (After Market Close)
Pre-Earnings Price$643.04Last close (Jul 18, 2024)
Post-Earnings Price$660.64Open (Jul 19, 2024)
Price Change
$17.60(+2.74%)
- Strong Financial Performance with Increased Revenue and Margins: Netflix reported 17% revenue growth in Q2 2024 and margins that were up 5 percentage points year-over-year. This strong performance was driven by robust member growth across all regions, healthy retention, and effective translation of service improvements into business value.
- Robust and Diverse Content Slate Driving Global Engagement: Netflix's extensive and diverse content offerings, including upcoming seasons of popular series like "Squid Game", "Emily in Paris", "Stranger Things", and new titles like "The Perfect Couple" and "A Hundred Years of Solitude", are expected to thrill both local and global audiences. Their strategy of super-serving local audiences while creating global hits demonstrates their efficiency and strengthens their competitive advantage.
- Expansion into Advertising and Gaming as New Revenue Streams: Netflix is making significant progress in scaling its advertising business, aiming to achieve critical-scale goals in all ad-supported countries by 2025, and is investing in building its own ad server to unlock innovations like better targeting and measurement. Additionally, their gaming initiative has seen success, with engagement tripling in 2023 and aggressive growth targets set for 2025 and 2026, potentially leading to a material impact on the business.
- Advertisers are dissatisfied with Netflix's current advertising features, expressing that they "want us to have all those features in place today". Netflix acknowledges that "we've got years of work ahead of us" to build these features, which could delay ad revenue growth.
- The ads business is growing but "off a relatively small base" and is not expected to be a "primary contributor" to revenue in '24 or '25, only becoming "more meaningful" in '26 and beyond. This delayed impact could hinder near-term revenue growth from advertising.
- Netflix's gaming initiative has yet to make a "material impact on the business," with engagement "still quite small". Scaling this segment to materially affect the business will require significant time and investment.
Research analysts covering NETFLIX.