What to expect when Netflix (NFLX) reports Q1 2024 earnings results

Shares of Netflix, Inc. (NASDAQ: NFLX) were down over 1% on Tuesday. The stock has gained 27% year-to-date. The streaming giant is scheduled to report its first quarter 2024 earnings results on Thursday, April 18, after markets close. Here’s a look at what to expect from the earnings report:

Revenue

Netflix has guided for revenues of $9.2 billion for the first quarter of 2024, representing a 13% growth year-over-year. In the fourth quarter of 2023, revenues increased 12.5% YoY to $8.8 billion.

Earnings

Netflix has guided for net income of $1.97 billion and EPS of $4.49 for Q1 2024. This compares to net income of $1.30 billion and EPS of $2.88 reported in Q1 2023. In Q4 2023, net income was $938 million and EPS was $2.11.

Points to note

In its last quarterly report, Netflix said it expects revenue to increase 16% on an FX-neutral basis in Q1 2024. The company is expected to benefit from continued membership growth as well as its investments in its ads business.

The streaming giant is also expected to benefit from its strong content slate, pricing strategy, as well as its paid sharing initiative. Paid sharing has helped address the issue of account sharing while also boosting top line growth in Q4.

Paid net additions in Q1 are expected to be down sequentially, mainly due to seasonality as well as some pull-forward from the strong growth seen in Q4, when it added 13 million new subscribers. Paid net adds are expected to be higher on a year-over-year basis. The company expects to see YoY growth on an FX-neutral basis in global average revenue per membership (ARM) in Q1. ARM was up 1% YoY in Q4.

Netflix expects operating income to be $2.42 billion in Q1 2024 compared to $1.71 billion in Q1 2023. Operating margin is expected to be 26.2% in Q1 2024 versus 21% in the year-ago period. In Q4 2023, operating income was $1.5 billion and operating margin was 16.9%.