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Buying Netflix (NFLX): A Bet on Operating Margins and Revenue Growth

There are some fears of the lack of transparency for the next quarters till analysts and investors get used to not seeing subscriber numbers, but operating margins are improving further, revenues are guided to 14% mid-point growth and earnings should increase 25% per year in the next 3. The stock is down 13% from its all-time high.

Netflix Q1-2024

Beats all around, and has better guidance as well.

GAAP EPS of $5.28 beats by $0.76.

Revenue of $9.37B (+14.8% Y/Y) beats by $90M.

Global streaming paid memberships: +9.33M to 269.6M. UP 165 YoY, Q1 is seasonally low, and in Q1-23, the YoY growth was inly 4.9% so this is quite impressive.

Q2 Guidance: Revenue of $9.49B vs. $9.28B consensus, 16% growth, 21% F/X neutral growth.

EPS of $4.68 vs. $4.54 consensus.

For the full year 2024, we expect healthy revenue growth of 13% to 15%, based on F/X rates at the end of Q1’24. 

We now expect an FY24 operating margin of 25%, based on F/X rates as of January 1, 2024, up from our prior forecast of 24%. 

It’s dropped 3% after hours, (of course,)