Netflix 2Q24 Earnings, Netflix Growth, Wall Street Giving Netflix Green Light to Spend
Hello everyone.
There continues to be quite a bit of interest in what’s unfolding in video and music streaming. While Netflix (and Spotify) appear to be finding their strides, Apple's strategy is increasingly being drawn into question by the press and some users. There are various topics that we will discuss. For today, we will dissect Netflix's earnings.
Let's jump in.
Netflix 2Q24 Earnings
Like how we cover Apple earnings, there is value found in setting the stage before diving headfirst into Netflix’s numbers.
For the past few quarters, Netflix has seen very strong paid subscriber growth. Instead of growth being driven organically by Netflix expanding its installed base, the company has seen success in getting existing viewers to begin paying via a password sharing crackdown. The lack of installed base expansion is one reason why management has been trying to move Wall Street's focus away from subscriber growth and to engagement and revenue.
Another development to watch has been signs of consumers feeling fatigued from higher subscription prices. In countries that have the option of going the lower-priced ad-supported route, approximately 35% of new Netflix signups had been going in that direction (pre-2Q24). Netflix has been putting its thumb on the scale to drive that percentage higher.
For CY2Q24 (April to June results), Netflix grew paid subs by a healthy 8M (to 278M). As shown in the exhibit below,
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