Netflix rang up solid subscriber gains in the second quarter of 2024 — considerably better than Wall Street expected — and posted financial results that beat forecasts.
The industry’s No. 1 premium streamer added 8.05 million net paid customers in Q2, bringing its global base to 277.65 million. The company reported revenue of $9.56 billion (up 17%) and net income of $2.15 billion (versus $1.49 billion a year ago), translating to earnings per share of $4.88.
Netflix had forecast Q2 revenue of $9.49 billion and earnings of $4.68 per share. On average, Wall Street expected revenue of $9.53 billion and EPS of $4.74, according to LSEG Data & Analytics.
Analyst consensus estimates pegged Netflix adding 4.8 million subscribers in Q2, according to FactSet StreetAccount, compared with 5.89 million in the year-ago period. The streamer had not provided guidance for quarterly subscriber adds (it stopped doing that at the start of 2023) other than to say it expected the number to be lower than the 9.3 million pickup in Q1. Starting in 2025, Netflix will no longer regularly report subscriber figures anymore, arguing that user-engagement metrics and financial results better reflect the health of its business.
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“Viewing is key to Netflix’s success. It’s the best proxy we have for member happiness, and when people
watch more, they stick around longer (retention), talk about Netflix more often (which drives acquisition)
and place a higher value on our service,” the company said in its Q2 letter to shareholders issued Thursday.
The company touted its haul of 107 Emmy nominations this year — leading all platforms and networks — across 35 series, TV movies and specials. In Q2, Netflix premiered “a wide variety of hit series” including “Bridgerton” Season 3, “Baby Reindeer,” “Queen of Tears” and “The Great Indian Kapil Show,” along with films like “Under Paris,” “Atlas” and “Hit Man.” The company said “The Roast of Tom Brady” attracted its largest live audience yet, with 22.6 million views from May 5 premiere through July 14.
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To boost engagement and capture more share of viewing time, Netflix has expanded its slate of live programming. That includes two NFL games on Christmas Day 2024, the rescheduled Nov. 15 fight between Jake Paul and Mike Tyson, and WWE’s “Raw” starting in 2025.
Also in the Q2 letter, Netflix noted that it began testing a “new, simpler and more intuitive” TV homepage in June, which “we believe will significantly improve the discovery experience on Netflix.”
Netflix has told investors that one of its priorities is scaling up the advertising business to become a “more meaningful contributor to our business in ’25 and beyond.” To date, it hasn’t disclosed how much ad revenue the initiative has generated. The company first introduced ad-supported plans in the fall of 2022. It’s still priced at $6.99/month in the U.S., and Netflix is making the ad-supported tier the entry-level package in the countries where it has rolled them out.
Members on ad-supported plans grew 34% in Q2 on a sequential basis, and they now account for over 45% of all signups in Netflix’s ads markets, according to the company. Netflix said it’s building an in-house ad tech platform that it plans to start testing in Canada in 2024 and launch more broadly in 2025. The streamer’s original go-to-market advertising tech and sales partner has been Microsoft’s Xandr.
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Building a business “from scratch takes time,” Netflix said. “The near-term challenge (and medium-term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory.”
Separately, Netflix announced that Peter Naylor, who joined as VP of global ad sales in 2022, will be leaving the company.
Pictured above: Luke Newton as Colin Bridgerton and Nicola Coughlan as Penelope Featherington in “Bridgerton” Season 3
