Netflix will announce its fourth quarter earnings report after the US stock market on January 23, EST. The market generally predicts that Netflix Q4 achieved revenue of 8.710 billion US dollars, an increase of 10.93% year on year; earnings per share were 2.22 US dollars, a sharp increase of 1751.92% year over year.
Regarding this financial report, the market is generally concerned about Netflix's performance in the increasingly competitive streaming market. In particular, investors expect Netflix to continue to show strong momentum in key indicators such as content investment, user growth, international expansion, and profitability.
Prior to the results, a number of investment banks raised their target price for Netflix. Among them, the target price reached as high as 600 US dollars, and there is still room for 25% increase from the current price.
Looking back at the third quarter, Netflix can be described as “doing a good job”:
An important indicator for streaming media companies — the number of paid members reached 2471.5 million; the net increase in the number of members was 8.76 million, the biggest month-on-month increase since adding 10.1 million subscribers in the second quarter of 2020.
Operating margin for the quarter was 22.4%, exceeding expectations of 22.1%; operating profit was US$1.92 billion, up 25% year over year, exceeding expectations of US$1.9 billion. Free cash flow was US$1.89 billion, or only US$472 million in the same period last year, exceeding market expectations of US$1.27 billion, making it the second-highest quarter since a record.
At the same time as the number of users increased, Netflix also announced price increases in the largest markets such as the US, UK, and France. Meanwhile, Netflix expects the number of new net paying users in the fourth quarter to be similar to the third quarter.
According to some analysts, Netflix is expected to add more than 20 million new users this year, a sharp jump from less than 9 million new users last year, mainly due to the crackdown on password sharing and the introduction of cheaper packages with ads.
As the world's largest media companies join the streaming media war, analysts generally believe that Netflix is shifting from focusing on subscriber growth metrics to maximizing revenue by increasing prices, introducing subscription packages with ads, and cracking down on shared accounts with multiple people.
Oppenheimer analysts then said,
It is believed that Netflix's measures such as password sharing rules, advertising, and optimized subscriber plan choices will drive subscriber growth and average revenue per member (ARM), thereby generating higher revenue. Netflix's growth initiatives should continue to drive the streaming company's revenue and user growth, raising its target price from $475 to $600.
Bloomberg analysts pointed out that
Netflix is expected to add 8.8 million new users in the fourth quarter, which is not much different from the third quarter, which means about 24 million subscribers for the whole year. These increases are likely to slow in 2024 as the company works to achieve a better balance between subscribers and price increases.
Furthermore, Netflix is expected to not only re-accelerate revenue growth in 2024, but also increase operating profit margins to 22% to 23%.
Click to make an appointment:Netflix 2023Q4 results live broadcast (simultaneous interpretation)
Editor/phoebe