On July 18, 2024, Netflix Inc (NFLX, Financial) released its 8-K filing for the second quarter of 2024, showcasing robust financial performance and significant growth in key metrics.
Company Overview
Netflix Inc (NFLX, Financial) operates a global streaming service with nearly 250 million subscribers, offering on-demand access to television series, movies, and documentaries. The company has recently ventured into ad-supported subscription plans, expanding its revenue streams beyond traditional subscription fees.
Q2 2024 Financial Performance
Netflix Inc (NFLX, Financial) reported a 17% year-over-year increase in revenue for Q2 2024, reaching $9.559 billion, surpassing the analyst estimate of $9.527 billion. The operating margin improved to 27.2%, up from 22.3% in the same quarter last year. Net income for the quarter was $2.147 billion, translating to diluted earnings per share (EPS) of $4.88, exceeding the analyst estimate of $4.75.
Key Financial Metrics
| Metric | Q2 2023 | Q2 2024 | Y/Y Growth |
|---|---|---|---|
| Revenue | $8.187 billion | $9.559 billion | 16.8% |
| Operating Income | $1.827 billion | $2.603 billion | 42.5% |
| Operating Margin | 22.3% | 27.2% | 4.9 pp |
| Net Income | $1.488 billion | $2.147 billion | 44.3% |
| Diluted EPS | $3.29 | $4.88 | 48.3% |
Subscriber Growth and Engagement
Global streaming paid memberships grew by 16.5% year-over-year, reaching 277.65 million. The company added 8.05 million net new subscribers in Q2 2024, compared to 5.89 million in Q2 2023. This growth was driven by a diverse range of popular content, including hit series like "Bridgerton S3" and "Baby Reindeer," as well as successful films such as "Under Paris" and "Atlas."
Ad-Supported Subscription Plans
Netflix Inc (NFLX, Financial) continues to make progress in scaling its ad-supported business. The ad-supported tier saw a 34% quarter-on-quarter growth in membership. The company is also developing an in-house ad tech platform, which will be tested in Canada in 2024 and launched more broadly in 2025.
Cash Flow and Capital Structure
Net cash provided by operating activities in Q2 2024 was $1.291 billion, while free cash flow totaled $1.213 billion. The company repurchased 2.6 million shares for $1.6 billion during the quarter and has $5 billion remaining under its existing authorization. At the end of Q2, Netflix Inc (NFLX, Financial) had $14 billion in gross debt and $6.7 billion in cash, cash equivalents, and short-term investments.
Future Outlook
For Q3 2024, Netflix Inc (NFLX, Financial) forecasts revenue of $9.727 billion, representing a 13.9% year-over-year growth. The company expects to maintain an operating margin of 28.1%. For the full year 2024, Netflix Inc (NFLX) has raised its revenue growth forecast to 14%-15% and expects an operating margin of 26%, up from the previous estimate of 25%.
"We’re working to improve every aspect of Netflix so we can better serve existing and future members," the company stated in its earnings release.
Netflix Inc (NFLX, Financial) continues to focus on enhancing its entertainment offerings, scaling its ad-supported business, and maintaining strong financial discipline to drive sustainable growth and profitability.
Explore the complete 8-K earnings release (here) from Netflix Inc for further details.
