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Netflix Earnings Preview: Strong Quarter Expected Amid Macro Uncertainty

As the streaming giant prepares to report its fiscal fourth quarter earnings, analysts are bracing for a strong performance, driven by a stellar content lineup and successful live sports programming.

A Stellar Content Slate

Netflix ended the year on a high note, with two back-to-back NFL games, a record-breaking “Jake Paul vs. Mike Tyson” boxing match, and the return of the hit series “Squid Game.” This solid content slate is expected to drive subscriber growth and retention, according to Geetha Ranganathan, senior analyst at Bloomberg Intelligence.

Wall Street Expectations

Analysts expect Netflix to deliver:

• Revenue: $10.11 billion, in line with the company’s guidance of $10.13 billion
• Earnings per share: $4.18, slightly below the company’s guidance of $4.23
• Net subscriber additions: 9.18 million, a significant increase from the previous quarter

The Rise of Live Sports

The Jake Paul and Mike Tyson match attracted over 108 million global viewers, making it the most-streamed sporting event of all time. The NFL games averaged around 30 million viewers, with the Christmas Day game becoming the most-watched in the US. The recent debut of WWE Raw is expected to drive further growth and retention.

A Shift in Focus

This quarter marks a significant shift for Netflix, as it stops reporting net subscriber figures. Instead, investors will focus on the company’s efforts to drive engagement and revenue growth through its advertising successes and price increases.

Advertising Successes

Netflix’s ad tier, now two years old, has reached 70 million global monthly active users. The company has also seen significant growth in its ad-supported offering, which remains one of the cheapest among major streaming players.

Price Increases Ahead?

With year-over-year engagement levels roughly flat, Netflix may need to raise prices to boost growth. The company has yet to raise the price of its ad-supported offering, and analysts expect a price increase in the US market soon.

Valuation Concerns

Analysts are expecting a downward revision to Netflix’s 2025 revenue outlook, due in part to the strengthening dollar. However, a big price increase could offset this slowdown in revenue growth.

Overall, Netflix is poised to deliver a strong quarter, driven by its solid content slate and successful live sports programming. However, the company faces challenges ahead, including valuation concerns and the need to drive engagement and revenue growth.