Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Netflix Inc (NASDAQ:NFLX) reported a strong financial performance with a 15% revenue growth and a 6-percentage-point improvement in operating margin for 2024.

• The company has maintained healthy engagement levels, with about two hours of viewing per member per day, indicating strong member retention.

• Netflix Inc (NASDAQ:NFLX) is expanding its content slate with new seasons of popular shows like 'Wednesday,' 'Squid Games,' and 'Stranger Things,' as well as new projects from renowned creators.

• The company is investing in new initiatives such as games and live events, which are expected to be incremental growth drivers in the coming years.

• Netflix Inc (NASDAQ:NFLX) is seeing significant growth in its advertising business, with ads revenue expected to roughly double year-over-year in 2025.

Negative Points

• The company experienced a slight net loss in membership in the Latin America region during Q3, primarily due to recent price changes.

• The Hollywood strikes impacted Netflix Inc (NASDAQ:NFLX)'s 2024 content slate, causing delays in the release of some high-profile shows and films.

• Despite the growth in the advertising business, it is not yet a primary driver of revenue and is still scaling its audience and inventory.

• Netflix Inc (NASDAQ:NFLX) faces competition from platforms like YouTube, which also competes for viewers' time on TV screens.

• The company's engagement in the US market has been stable but flat, with limited growth in total viewing hours.

Q & A Highlights

Q: Can you please frame your key investment priorities for 2025 and beyond? And how have they evolved in the past 12 to 18 months? A: Gregory Peters, Co-CEO, highlighted that Netflix plans to build on its success by focusing on original programming and expanding its global reach. The company aims to deliver 15% revenue growth and a 6-percentage-point improvement in operating margin. Netflix is excited about its 2025 slate, which includes new seasons of popular shows and new projects from renowned creators.

Q: At a high level, when we think about the Netflix revenue growth algorithm, can you please provide some color on the pieces moving forward between organic membership growth, ARM increases, and advertising? A: Spencer Neumann, CFO, explained that Netflix expects to deliver $43 billion to $44 billion in revenue in 2025, driven by membership growth and ARM increases. The majority of growth will be membership-driven, with ARM growth coming from plan evolution, pricing, and growing ads revenue.