Netflix Surges on Record-Breaking Quarter, Boosted by Subscriber Growth and Revenue Beat
Shares of Netflix ($NFLX) soared over 14% in pre-market trading on Wednesday after the streaming giant reported a remarkable fourth-quarter performance.
Strong Subscriber Surge
Netflix added a whopping 18.9 million subscribers in Q4, marking its largest quarterly subscriber gain in history. This significantly exceeded Wall Street's expectations of 9.18 million new users.
Revenue and Earnings Beat
Revenue reached $10.25 billion in Q4, surpassing analysts' estimates of $10.11 billion and representing a 16% year-over-year increase. Diluted earnings per share (EPS) came in at $4.27, beating consensus expectations of $4.18.
Increased Revenue Outlook
Netflix raised its full-year revenue guidance for 2025, now projecting a range of $43.5 billion to $44.5 billion, up from its previous range of $43 billion to $44 billion.
Price Hikes Announced
To keep pace with growing expenses, Netflix announced price increases for its ad-supported and ad-free plans in the US, Canada, Portugal, and Argentina.
Impact of Live Events
Netflix believes that live events, such as the NFL games and Jake Paul vs. Mike Tyson boxing match, contributed to the impressive subscriber growth but did not solely drive it.
EPS Guidance Miss
Despite the strong overall performance, Netflix guided to fourth-quarter EPS of $5.58, slightly below consensus estimates of $6.01.
Operating Margins Surpass Expectations
Operating margins for the fourth quarter came in at 22.2%, while full-year 2024 margins reached 27%. Netflix expects operating margins to expand to 28.2% in Q1.
Focus on Special Events
Netflix emphasized its strategic focus on delivering special event programming in the live events space, rather than acquiring rights to large regular season sports packages.