Netflix Q4 2023 Earnings: The Stock Surges to a Two-Year High as Subscribers during Q4.

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Netflix Q4 2023 Earnings: The Stock Surges to a Two-Year High as Subscribers during Q4.

Q4 2023 Highlight:

Revenue: $8.83 billion vs $7.852 billion YoY

EPS: $2.11 vs $0.12 YoY

Global Streaming Paid Memberships: 260.28 million vs 230.75 million subscribers YoY.

Netflix for the fourth quarter of 2023 reported revenue of $8.83 billion up by 12.5% on a year-on-year basis. Revenue came in higher than the company's previous forecast. The surge in top-line growth is attributed to favorable foreign exchange rates, the benefits of paid sharing, and, the company's recent price changes on certain subscription plans. (Source: Netflix)

In the fourth quarter, Netflix posted a net income of $937.8 million, equivalent to $2.11 per share. This represents a significant increase from the previous year's corresponding period, where the net income was $55.3 million, or 12 cents per share. (Source: Netflix)

The company's full FY23 operating margin to 21% from 18% in 2022 ahead of the company's expectation of 20% for the year. (Source: Netflix)

In Q4, operating income amounted to $1.5 billion, up from $0.5 billion in the year-ago period, while operating margin improved to 17% vs. 7% in the year-ago quarter. (Source: Netflix)

Netflix exceeded its own projection for the quarter by adding 13.12 million subscribers, surpassing the anticipated 9 million. The total net additions for the year 2023 amounted to approximately 260.8 million. In the fourth quarter of 2022, the company gained 7.67 million paying users. (Source: Netflix)

For the full year of 2024, the video-streaming giant said that it will focus on enhancing profitability. Netflix has revised its full-year 2024 operating margin forecast, raising it to 24%. This marks an increase from the previously estimated range of 22% to 23%. The company attributes this adjustment to the weakening of the U.S. dollar and a better-than-anticipated performance in the fourth quarter. (Source: Netflix)

Additionally, Looking ahead, the company has outlined three key opportunities for 2024. Firstly, there is a focus on enhancing the core aspects of their content, such as series and films, while also diversifying their offerings into new areas like games, live content, and sports-adjacent programming. This implies a strategic examination of content expenditure. Secondly, there is an emphasis on scaling and expanding their advertising business. Lastly, there is a plan to strengthen their connection with audiences through marketing initiatives, consumer products, and the introduction of innovative new live experiences. (Source: Netflix)

Despite the emphasis on in-house content development, Netflix remains open to partnerships with content creators traditionally associated with linear programming. In a notable move, Netflix revealed on 23rd January its plan to stream the widely popular WWE Raw starting in the coming year. This marks the streaming platform's most significant venture into live entertainment to date, showcasing its willingness to collaborate with established players in the linear space to enhance its subscriber base. (Source: Netflix)

Netflix is in the midst of a strategic shift, moving from a focus on subscriber growth to a more profit-oriented approach. The company is implementing tactics such as price increases, password enforcement, and the introduction of ad-supported tiers to boost revenue. (Source: Netflix)

Recent insights into the growth of Netflix's advertising-based plan revealed that the platform now boasts over 23 million global monthly active users, a significant increase from the 15 million reported just a few months earlier in November. (Source: Netflix)

While advertising is not expected to be the primary revenue driver in 2024, Netflix is actively working to scale this aspect of its business. Greg Peters, co-CEO of Netflix, emphasized during the earnings call that the company is concentrating on making the ad plan more appealing. This includes enhancements such as additional streams, higher resolution, and downloads, as well as engaging with partner channels. The streaming giant also plans to enhance its ad tier for advertisers by strengthening sales teams and ad operations to better align with brands' needs. (Source: CNBC)

Furthermore, as compared to its competitors Netflix increased significantly, rising by 36% compared to one year ago. In contrast, Disney's stock has experienced a decline of 10% during the same period, and Warner Bros. Discovery's stock is down by 22%. (Source: Fortune)

On January 23, 2024, Netflix stock surged by 8% in after-hours trading on the subscriber addition. (Source: Fortune)

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