Executive Summary

Q4 2024 exceeded company guidance with revenue $10.25B (+16% y/y; +4.3% q/q) and operating income $2.27B (+52% y/y); diluted EPS was $4.27. Netflix added a record 18.91M paid net adds, ending 2024 with 302M memberships .
Management raised 2025 guidance: revenue to $43.5–$44.5B (up $0.5B vs prior despite USD strength) and operating margin to 29% (from 28% prior). Q1’25 revenue is guided to $10.42B with 28.2% operating margin .
Ads momentum accelerated: ads plan drove >55% of sign-ups in ads countries; ads members rose ~30% q/q; Netflix exceeded Q4 ad revenue target and expects ads revenue to roughly double again in 2025 as first‑party ad tech rolls out (Canada live; U.S. April) .
Narrative/catalysts: beat vs internal guidance, record net adds with broad content/live slate, raised 2025 OM% target, and clearer ads monetization roadmap—offset by FX headwinds and lower reported ARM growth (1% y/y; 3% F/X neutral) .

What Went Well and What Went Wrong

What Went Well
- Record growth: “In Q4… 19M paid net additions – the biggest quarter of net adds in our history… revenue increased 16% y/y… operating income up 52% y/y; EPS $4.27 vs $2.11 last year” .
- Content/live outperformance: “Our Q4 slate outperformed even our high expectations… the Jake Paul vs. Mike Tyson fight became the most‑streamed sporting event ever… two most‑streamed NFL games in history on Christmas Day” .
- Ads scale and roadmap: “Q4, ads plan represented over 55% of sign‑ups… membership on ads plan increased about 30% q/q… we exceeded our ads revenue target… expect to double [ads revenue] again this year” .
What Went Wrong
- FX headwinds: 2025 revenue forecast reduced by ~$1B from currency appreciation since Q3 (net of hedging), even after the update; reported ARM up only 1% y/y versus 3% F/X‑neutral .
- Margin normalization vs Q3: operating margin stepped down to 22.2% in Q4 from 29.6% in Q3 (seasonality/content/marketing), though still up y/y and ahead of guidance .
- LATAM reported revenue pressured by FX and pricing mix despite strong underlying local growth (LATAM reported y/y -7% in Q4; F/X-neutral y/y +18%) .

Financial Results

Overall P&L (YoY, QoQ, and vs company guidance)

Metric	Q4 2023	Q3 2024	Q4 2024	Notes
Revenue ($B)	$8.83	$9.82	$10.25	+16% y/y; +4.3% q/q
Operating Income ($B)	$1.50	$2.91	$2.27	+52% y/y
Operating Margin (%)	16.9%	29.6%	22.2%	Above guidance on higher revenue
Net Income ($B)	$0.94	$2.36	$1.87
Diluted EPS ($)	$2.11	$5.40	$4.27
Revenue Y/Y Growth (%)	12.5%	15.0%	16.0%	Q4 F/X-neutral +19%

Memberships and Cash Flow KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Global Paid Memberships (M)	260.28	282.72	301.63
Global Paid Net Adds (M)	13.12	5.07	18.91
Net Cash from Ops ($B)	$1.66	$2.32	$1.54
Free Cash Flow ($B)	$1.58	$2.19	$1.38

Segment Revenue (reported, $B)

Region	Q4 2023	Q3 2024	Q4 2024
UCAN	$3.93	$4.32	$4.52
EMEA	$2.78	$3.13	$3.29
LATAM	$1.16	$1.24	$1.23
APAC	$0.96	$1.13	$1.21

Additional operating data and disclosures

Q4 drivers: average paid memberships +15% y/y; ARM +1% y/y (+3% F/X‑neutral) .
Non‑GAAP: F/X‑neutral revenue growth +19% in Q4 (recon table) ; net debt $6.07B at 12/31/24 .
Capital returns: 2024 buybacks 9.9M shares for $6.26B; new $15B authorization approved in Dec, total authorization $17.1B at year-end .

Company guidance vs results (Q4 2024)

Q3 letter guided Q4’24 revenue $10.13B, operating income $2.19B, EPS $4.23 . Actuals: revenue $10.25B, operating income $2.27B, EPS $4.27 (beat vs company guide) .

Note on Street estimates: S&P Global consensus was unavailable at time of request (tool limit). As a result, we cannot provide a vs‑consensus comparison for Q4 2024. Values would ordinarily be retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY 2025	$43–$44 (Q3’24 letter)	$43.5–$44.5 (Jan 1 FX)	Raised by $0.5B; reflects stronger fundamentals, partly offset by ~$1B negative FX since Q3 (net of hedging)
Operating Margin (%)	FY 2025	28%	29%	Raised +1ppt
Revenue Growth (%)	FY 2025	11%–13% y/y	12%–14% y/y (14%–17% F/X‑neutral)	Raised
Revenue ($B)	Q1 2025	—	$10.42	New
Operating Margin (%)	Q1 2025	—	28.2%	New
Free Cash Flow ($B)	FY 2025	—	~8 (assuming stable FX)	New
Cash Content Spend ($B)	FY 2025	—	~18	New
Ads Revenue	FY 2025	Not primary 2025 driver (Q3 letter context)	Roughly doubling again in 2025; exceeded Q4 target	Positive inflection (scale → monetization)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2’24, Q3’24)	Current Period (Q4’24)	Trend
Ads business & ad tech	Q2: ads tier +34% q/q; in‑house ad tech to test in Canada 2024; broaden in 2025 . Q3: >50% of sign‑ups; critical scale in 2025; partnerships (The Trade Desk, DV360); ad revenue not primary driver in 2025 yet .	Q4: >55% of sign‑ups; ads members +~30% q/q; exceeded Q4 ad revenue target; expect to double ads revenue in 2025; first‑party ad server live in Canada; U.S. rollout in April .	Accelerating scale; beginning monetization step‑up
Pricing/Monetization	Q3: ongoing price actions in EMEA/APAC; value‑led pricing framework .	Price adjustments in US/Canada/Portugal/Argentina (embedded in 2025 guide); Extra Member with Ads introduced in 10/12 ads countries .	Continued disciplined pricing; new plan constructs
Live programming & sports	Q3: eventized live strategy (Tyson‑Paul, Christmas Day NFL, weekly WWE) .	NFL Xmas games most‑streamed ever; WWE off to strong start; cautious on full‑season major sports economics; acquired US rights to FIFA Women’s World Cup 2027/2031 .	Live momentum; selective rights aligned with event strategy
FX management	Q3: guide to F/X‑neutral margins; hedging program smooths volatility .	~60% revenue non‑USD; hedge ~50% of that on rolling 12‑mo basis; USD strength reduced 2025 revenue outlook by ~$1B vs Q3 (net of hedging) .	FX a headwind; hedging mitigates near‑term volatility
Games	Q2: GTA success; cadence of IP‑linked titles . Q3: scaling games; synergy between content and games .	Squid Game: Unleashed on pace to be most downloaded; early positive impacts on acquisition/retention; focusing on narrative/IP, party/cloud TV, kids, mainstream titles .	Strategy focus, early engagement signals
Regional trends	Q3: APAC fastest growth; LATAM pricing impact but improving .	UCAN/EMEA solid q/q growth; LATAM reported ARM pressured by FX; strong F/X‑neutral growth in LATAM; APAC continued scale .	Healthy breadth; FX masks local strength

Management Commentary

Prepared tone and priorities: “In 2024, we executed on our plan to reaccelerate growth… revenue grew 16% and operating margin expanded six points to 27%... In Q4, revenue increased 16% y/y… operating income rose 52% y/y” .
Guidance update rationale: “We now project 2025 revenue of $43.5–$44.5B… $0.5B higher than prior… reflects improved business fundamentals and carryover benefit of stronger‑than‑forecasted Q4’24 performance, net of headwinds from the strengthening of the US dollar… USD appreciation negatively impacted our 2025 revenue forecast by ~$1B, net of hedging” .
Ads strategy: “We exceeded our ads revenue target in Q4… doubled our ads revenue year‑over‑year last year. We expect to double it again this year… standing up our own ad stack… Canada live; roll out to the U.S. in April” .
Live programming strategy: “We’re not focusing on acquiring rights to large regular season sports packages; rather… can’t‑miss, special event programming” .

Q&A Highlights

Net adds and live events: Management emphasized broad‑based strength; “no single title really drives the majority of acquisition… estimates for subscriber adds driven by [live] titles combined represent a small minority” .
Ads monetization roadmap: Ads exceeded Q4 targets; expect 2025 revenue to double again; first‑party ad tech enables programmatic, targeting, measurement; Canada live, U.S. in April .
Sports rights stance: Record NFL streaming audiences; WWE off to strong start, but “full‑season Big League sports [economics]… extremely challenging”; opportunistic on event‑based rights (e.g., FIFA WWC) .
Pricing discipline: Pricing remains value‑led; recent increases executed smoothly; entry‑level ad tier positioned as “incredible value” .
FX/hedging details: ~60% revenue non‑USD; hedge ~50% of that on rolling 12 months to smooth volatility .
Production disruptions: California wildfires had “no meaningful delays” and “no meaningful impact to the cash in ’25” .

Estimates Context

Street consensus (S&P Global Capital IQ): Unavailable at time of request due to provider limit; therefore, we cannot present vs‑consensus comparisons for Q4 2024. Values would ordinarily be retrieved from S&P Global.
Alternative benchmark: Company’s Q4 guidance from the Q3 letter implied revenue $10.13B, operating income $2.19B, EPS $4.23; actuals were modestly above on all three (rev $10.25B; OI $2.27B; EPS $4.27) .

Key Takeaways for Investors

Broad‑based execution: Record net adds and a diversified slate—including live—drove an above‑plan quarter and a raise to 2025 revenue and margin targets despite FX headwinds .
Ads inflection: Scale achieved; 2025 is the “walk” year with first‑party ad tech rollout and targeted features, underpinning another ads revenue doubling—key medium‑term ARM lever .
Live events as catalysts: Eventized live (NFL, WWE, special events) is working for engagement and acquisition without burdening P&L with full‑season sports economics; more selective rights like FIFA WWC add visibility .
Margin trajectory intact: After outsized 2024 OM expansion to 27%, 2025 OM raised to 29% alongside reinvestment in ads/live/games and sustained top‑line growth .
FX is the main swing factor: ~60% non‑USD revenue and partial hedging imply continued translation risk; F/X‑neutral growth remains stronger than reported .
Cash and returns: 2025 FCF guided to ~ $8B with ~$18B content cash spend; expanded buyback authorization to $17.1B provides capital return flexibility .
Near‑term setup: Q1’25 growth guided to 11% (14% F/X‑neutral) with pricing/ads seasonality; focus shifts to execution on ad tech roll‑out, slate cadence, and monetization improvements .

NETFLIX INC (NFLX)·Q4 2024 Earnings Summary