Netflix Stock Gains On Upbeat Q4, Bullish Guidance

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(RTTNews) - Netflix Inc.'s shares gained around 14 percent in the after-hours trading on Tuesday and are currently up 14 percent in the pre-market activity, as the streaming video giant issued positive outlook for its first quarter and lifted fiscal 2025 view. The fourth-quarter earnings beat market estimates with significant growth. The results and outlook mainly reflected 19 million net additions, which reflected the biggest quarter of net adds in its history.

In its earnings call, Gregory Peters, Co-CEO, President & Director, said, "... we feel really good about our long-term monetization opportunity. We earn, right now, only 6 percent of the revenue opportunity in the countries and segments that we currently serve. And as long as we continue to deliver on improving the variety, the quality of our TV and film slate, we gradually expand the offering with newer content types, we believe we'll be able to increase that share progressively every year."

Looking ahead, for the first quarter, the company projects net income of $2.24 billion or $5.58 per share, operating income of $2.94 billion and operating margin of 28.2 percent, all higher than the prior year.

Revenue is projected to be $10.416 billion, a growth of 11.2 percent from the prior year, which is modestly below fiscal 2025 guidance due to the timing of price changes and the seasonality of ads business. At constant currency rates, revenue would be up 14 percent.

The Wall Street analysts on average expect the company to report earnings of $5.64 per share on sales of $10.48 billion. Analysts' estimates typically exclude special items.

For fiscal 2025, Netflix now targets revenue of $43.5 billion to $44.5 billion, a growth of $0.5 billion from the prior forecast range. The Street is looking for revenues of $43.52 billion for the year.

The revenue forecast equates to 12 percent to 14 percent year-over-year growth, or 14 percent to 17 percent constant currency growth.

Operating margin is now expected to be 29 percent, up from previous forecast of 28 percent.

According to the firm, the updated guidance reflects improved business fundamentals and the expected carryover benefit of its stronger-than-forecasted fourth-quarter performance, among others.

For fiscal 2025, Netflix's priorities are to improve core business with more series and films, an enhanced product experience and growth of ads business; and to further develop newer initiatives such as live programming and games.

For its fourth quarter, Netflix's earnings came in at $1.87 billion or $4.27 per share, significantly higher than $0.94 billion or $2.11 per share last year. Analysts had expected the company to earn $4.2 per share.

Operating income rose 52 percent year-over-year to $2.27 billion, and operating margin climbed to 22.2 percent from 16.9 percent last year.

The company's revenue for the period rose 16 percent to $10.247 billion from $8.833 billion last year. The growth was 19 percent on a foreign exchange neutral basis.

Average paid memberships rose 15 percent from last year, while ARM was up 1 percent year over year.

Global Streaming Paid Net Additions were 18.91 milion, higher than 13.12 million last year.

Global Streaming Paid Memberships at the end of fiscal 2024 was 301.63 million, 15.9 percent higher than the prior year.

On the Nasdaq, Netflix shares closed Tuesday's regular trading at $869.68, up 1.35 percent. In the extended trading, the shares gained 14.4 percent.

In pre-market activity, the shares were at $994.64, up 14.37 percent.

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