$Netflix (NFLX.US)$The results for the first quarter of 2024 will be announced on April 18. The market expects Netflix's revenue for the first quarter to be around US$9.3 billion, which is expected to increase by about 14% year over year, slightly higher than the company's guiding target of US$9.24 billion. Earnings per share are expected to remain at $4.50, compared to $2.88 for the same period last year.

Combating password sharing has paid off

Netflix recently experienced a series of benefits in terms of user growth and revenue, as the company has been cracking down on password sharing while also building its ad-supported streaming service. In the fourth quarter of 2023, Netflix added 13 million new users, exceeding Wall Street's expectations, bringing its total user base to a record 260.8 million paying users.

Last spring, Netflix began offering paid sharing options in the US, allowing users to pay an additional $8 per month to share their accounts with people outside of their household. The move also increased Netflix's revenue, as users outside of the main household were required to pay new subscription fees or additional fees to share accounts.

Ad-supported users

The ad-support layer also gained traction, enabling the company to attract more price-sensitive customers. In January of this year, Netflix said that the total number of global users of the program was 23 million, up from about 15 million in November 2023. The plan appears to offer customers a solid price/performance ratio, is priced at $7 per month in the US, and offers full HD video quality, the same as Netflix's ad-free standard plan.

Additionally, the ad-supported plan will generate more revenue per user than the company's standard plan, as the increased ad revenue far more than offset the discounts offered by Netflix at the ad level. In other words, given the typical seasonal factors after the holidays, Netflix's new paid users are likely to drop month-on-month compared to the fourth quarter.

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