3 Things to Take Note on Netflix's Earnings Release Later

Apr 18

NFLX is gearing up to unveil its first-quarter financial results on Thursday, April 18, 2024, after the market closes. Get ready for a glimpse into the numbers, expert opinions, and key highlights to keep an eye on.

Earnings Estimates
Analysts have their sights set on Netflix reporting first-quarter revenue of $9.275 billion. In the same quarter last year, the streaming giant raked in $8.162 billion. Netflix has surpassed expectations in two out of the last four quarters, including the most recent fourth quarter. During its fourth-quarter earnings report, Netflix hinted at first-quarter revenue of $9.24 billion, representing a solid 13.2% year-over-year increase.

Analysts anticipate the company to post first-quarter earnings per share of $4.52, up from $2.88 in the corresponding period of the previous year. Netflix has exceeded analysts' earnings per share estimates in three of the past four quarters. The company's own guidance points toward first-quarter earnings per share of $4.49.

In the fourth quarter, Netflix scored a whopping 13.12 million net subscriber additions, bringing its total to a staggering 260.28 million subscribers. Although Netflix's guidance suggests a sequential decline in net subscriber adds, it is expected to outperform the 1.8 million net adds reported in the first quarter of 2023.

Password Sharing
Netflix's crackdown on password sharing and the introduction of an ad-supported plan could lead to even more positive outcomes. Netflix's actions have the potential to drive additional growth. Initially, around 100 million users were sharing their passwords, indicating ample room for subscriber additions in 2024. Besides, monetization through the ad tier and potential price increases might drive further revenue growth.

Another aspect to watch closely is Netflix's average revenue per member. The introduction of the ad tier and the potential for price hikes among subscribers could lead to increased monetization. With its ad-free mid-tier price in the U.S. currently lagging behind Hulu and Max, Netflix's growing base of ad tier users presents more potential for volume and pricing power in the thriving advertising market. Notably, Netflix has not raised prices on its Standard plan since January 2022, making a price increase seem imminent.

Subscribers’ Growth
Netflix subscriber growth in the first quarter might be overly optimistic. While sentiment around Netflix improved significantly after the impressive net add numbers in the fourth quarter, the question remains: how much upside to the estimated 4.5 million net adds for Q1 can be achieved.

Summary
The net subscriber count will undoubtedly steal the spotlight, followed closely by the potential announcement of a subscriber price increase, which could make waves in the headlines. Additionally, keep an eye on Netflix's foray into the world of sports. Rather than aggressively bidding for full seasons of live sports, the company has opted for captivating one-off events and sports docuseries. Netflix recently showcased a live tennis event in March and is eagerly awaiting a highly anticipated live boxing match between Mike Tyson and Jake Paul on July 20, which could go down as one of the company's most significant sports events to date. Moreover, Netflix's dominance in the sector and its perspective on market share and competition are topics that could provide valuable insights into its strategy.

Get ready for Netflix's first-quarter results—a thrilling glimpse into the streaming giant's performance, projections, and strategic moves.