Netflix has exceeded expectations for Q3 2024 and its results have helped to forecast an uptick in revenue next year. Variety reported on the Q3 2024 results that beat analyst forecasts, which saw the streaming giant add 5.1 million paid subscribers to a global number of 282.72 million in the third quarter of 2024. The increase marks a 14% year-over-year growth.
According to analyst consensus data provided by LSEG, Wall Street forecasted earnings per share of $5.12 USD on $9.77 billion USD in revenue for the July-September quarter. Netflix's revenue saw an increase of 15% from the same time last year and also reported a free cash flow of $2.2 billion USD. In a letter to its shareholders accompanying the earnings report released earlier this week, Netflix updated investors stating, "Our ads plan allows us to offer a lower price point for consumers, which is proving to be popular: in Q3, it accounted for over 50% of sign-ups in our ads countries and membership on our ads plan grew 35% quarter over quarter. We’re on track to reach what we believe to be critical ad subscriber scale for advertisers in all of our ads countries in 2025, creating a strong base from which we can further increase our ad membership in 2026 and beyond. We’re also pleased with the engagement on our ads plan with view hours per membership similar to engagement on our standard plan in our 12 ads countries."
Looking ahead, the company has also forecasted an 11 to 13% growth which equates to a $43 billion to $44 billion USD in revenue for next year. The quarterly shareholder letter read, "We expect revenue growth to be driven by a healthy increase in paid memberships and [average revenue per member].After delivering outsized margin improvement in 2024, we want to balance near-term margin growth with investing appropriately in our business. We still see plenty of room to increase our margins over the long term." Netflix said it would be targeting an operating margin of 28% in 2025 as opposed to the forecasted 27% in 2024. They also noted that as of Q1 of next year, they will no longer be reporting subscriber numbers on a regular basis as they believe other metrics will better reflect the company's overall health.
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