Netflix co founder Reed Hastings

Netflix (one of the major streaming platforms globally) dropped its Q4 2024 earnings last week. Here are the key points

FY 2024 numbers 

• Revenue rose up by 15.6% year on year. From $33.7 billion in 2023 to $39 billion in 2024

• Operating income grew by nearly 50% from $6.9 billion in 2023 to $10.4 billion in 2024. For every $100 made by Netflix in 2024, $27 was operating profit. 

• Profit after tax was up by nearly 100% year on year. From $5.4 billion in 2023 to $8.7 billion in 2024.

• Earnings per share grew by 65% from $12.03 in 2024 to $19.83%

Below is a table showing the revenue statement for the last 3 financial years, and the percentage change for each year. 

Paid membership grew by 19 million subscribers in 2024

In the shareholder letter, management outlined priorities for 2025

 Improve our core business with more series and films our members love, an enhanced product experience and growth of our ads business.

Further develop newer initiatives such as live programming and games;

 Sustain healthy growth – management now forecast 2025 revenue of $43.5-$44.5 billion . (Up$0.5B vs. prior forecast) and an operating margin of 29%, up one point from our prior forecast.

Key points from the earnings call

The company held an earnings call the same day. Here are key points from the call.

Where did subscriber growth come from? 

Gregory K. Peters Co-CEO, President & Director

We’ve seen broad strength across content categories, across all regions. We’ve seen it throughout the entire year. And as we’ve consistently seen across our history, no single title really drives the majority of our acquisition or engagement.

So even in an amazing quarter where we had three huge live events, we had an incredible fight, two NFL games. We had one of our biggest TV series ever in Squid Game season 2, all very successful events and titles that we are thrilled about. Our estimates for subscriber adds driven by those titles combined represent a small minority of our total member acquisition in the quarter. So it’s really the whole service that’s working that delivered the upside that we saw this quarter. The vast majority of our net adds were driven by our broad slate in our portfolio globally

Ad revenue is growing 

In response to a question on ads, Gregory K. Peters Co-CEO, President & Director said

We exceeded our ads revenue target in Q4, which was an exciting milestone to get. We’ve doubled our ads revenue year-over-year last year. We expect to double it again this year so that should give you a sense of the slope of monetization growth that we’re on. And broadly, we think of this as we’re making solid progress. There is considerable work ahead of us for sure, but we don’t see specific hurdles that you mentioned in the question other than just doing the work. So we think our path is relatively straightforward. And we’re confident we’ve got a significant runway to continue to grow that revenue.

Spencer Adam Neumann Chief Financial Officer  On content spending  

We’re a long way from equilibrium. As you say, we’re taking up our cash content spend this year estimated from $17 billion to $18 billion. That’s in the context of we’re small in terms of view share and penetration everywhere around the world or less than 50% penetrated into connected households. You heard from Greg that we’re only capturing about 6% of our estimated revenue market. So we have a long way to grow. 

It’s really about where do we put the next $1 billion and then beyond that to work in the most impactful way. Over the next year or so, you’ll see that in areas like continuing to build into big scripted TV series, as you heard from Ted. We’re continuing to build out live. We’re continuing to build out our original programming in each of our regions around the world and also seeing more and more kind of impactful licensing opportunities. And I think we kind of grew from there. So the opportunity, there’s a long runway to continue to grow. 

We do it in a disciplined way, right? So we kind of set our growth based on our top line growth and our margin targets and then we kind of allocate as we can across the business for highest impact.