What to look for when Netflix (NFLX) reports its Q3 2024 earnings results

Shares of Netflix, Inc. (NASDAQ: NFLX) stayed green on Wednesday. The stock has gained 48% year-to-date. The streaming giant is scheduled to report its earnings results for the third quarter of 2024 on Thursday, October 17, after markets close. Here are a few points to look for in the earnings report:

Revenue

Netflix has guided for revenue to grow around 14% year-over-year to $9.72 billion in the third quarter of 2024. Analysts are projecting revenue of $9.76 billion. Revenues in Q3 2023 were $8.54 billion. In the second quarter of 2024, revenues grew nearly 17% YoY to $9.55 billion.

Earnings

Netflix has forecasted net income of $2.23 billion, or $5.10 per share, for Q3 2024. Analysts are predicting EPS of $5.11 for the quarter. This compares to net income of $1.67 billion, or $3.73 per share, reported in the same period last year. In Q2 2024, net income amounted to $2.14 billion, or $4.88 per share.

Points to note

Netflix expects revenues to grow 19% in Q3 2024 on an FX-neutral basis. It expects paid net additions to be lower than the year-ago quarter, which had the first full quarter impact from paid sharing. The company forecasts global ARM, or average revenue per membership, on a reported basis to be roughly flat YoY in Q3 2024 due to FX headwinds, and plan and country mix.

In Q2, Netflix added 8.05 million subscribers and its global paid memberships grew 16.5% YoY to 277.65 million. ARM grew 1% YoY. The company’s continued investments in creating a strong content slate are expected to keep yielding benefits.

Netflix is focused on scaling its ads business and it continues to work on increasing ads relevancy, targeting personalization, and better measurement. The company is also making progress on its gaming initiative as it sees gaming engagement continue to rise in 2024. NFLX sees significant growth opportunity in these two areas.

Netflix expects operating income for Q3 2024 to be $2.73 billion and operating margin to be 28.1%. This compares to operating income of $1.91 billion and operating margin of 22.4% reported in Q3 2023. Operating income was $2.60 billion and operating margin was 27.2% in Q2 2024.