Company shares plans for the future, including introducing live programming
Netflix Inc. reported a rise in subscribers and revenue for the third quarter of 2024, adding more than five million customers and exceeding Wall Street’s expectations across all major financial metrics. According to Bloomberg, the company attributed its growth to a successful crackdown on password sharing and the introduction of a lower-priced, ad-supported subscription plan.
In a shareholder letter released Thursday, Netflix announced that its sales for the quarter rose 15% to $9.83 billion. Earnings per share climbed to $5.40, surpassing analyst predictions that estimated an addition of 4.52 million subscribers. Following the announcement, shares of Netflix surged as much as 5.4% to $724.89 in after-hours trading. The stock has experienced a remarkable recovery, more than quadrupling in value since May 2022, when a slowdown in growth caused widespread investor concern.
Since implementing measures to curb password sharing, Netflix has gained over 60 million new subscribers, ending the quarter with a total of 282.7 million.
“We’re feeling really good about the business,” said co-CEO Ted Sarandos during an analyst call. “We had a plan to re-accelerate growth and we delivered on that plan.”
Despite the positive results, many analysts remain cautious, suggesting that the growth driven by the password-sharing crackdown may be temporary. Concerns have been raised regarding Netflix’s ability to sustain growth without new strategies, as the company has yet to see significant financial returns from its advertising initiatives or investments in video games.
Analyst Dave Heger from Edward Jones told Bloomberg that subscriber growth “does seem like it’s slowing back down.”
Strong content lineup ahead
In its shareholder letter, Netflix projected sales for 2025 would rise between 11% and 13%, potentially reaching as high as $44 billion, driven by both new subscribers and planned price increases. The company announced that it would raise prices in Spain and Italy and phase out a less expensive plan in Brazil.
Notably, nearly all new subscribers during the quarter came from the Europe, the Middle East, and Africa, and the Asia-Pacific regions. However, Netflix experienced its first loss of customers in Latin America since early 2023.
Netflix’s advertising business is still developing, but management expressed ambitious plans for the coming years. The company is building its own advertising technology and has formed partnerships to sell its ad-supported service alongside other streaming platforms. Co-CEO Greg Peters indicated that advertising sales are expected to double next year.
To diversify content offerings and attract advertisers, Netflix is venturing into live programming. The company plans to broadcast a live boxing match next month, followed by two NFL games on Christmas Day, and will introduce weekly live wrestling starting next year.
Despite setbacks from two Hollywood labour strikes last year that delayed programming, Netflix achieved success with series such as The Perfect Couple, new seasons of Emily in Paris, and a highly anticipated series about the Menendez brothers produced by Ryan Murphy. The company also plans a strong fourth quarter lineup, highlighted by the return of Squid Game.
While Netflix’s operating margin is projected to rise by just one percentage point to 28% next year, the company emphasized a commitment to balancing short-term profitability with long-term investment in its business.
“We still see plenty of room to increase our margins over the long term,” the company stated.
