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Netflix earnings, subscriber growth top estimates as investors eye potential price hikes
Netflix (NFLX) stock rose as much as 5% in after-hours trading Thursday as the streaming giant beat third quarter EPS and revenue estimates and projected sales for the current quarter that came in ahead of Wall Street’s expectations.
Revenue beat Bloomberg consensus estimates of $9.78 billion to hit $9.83 billion in Q3, an increase of 15% compared to the same period last year, as the streamer continued to lean on revenue initiatives like its crackdown on password sharing and ad-supported tier, in addition to last year’s price hikes on certain subscription plans.
Netflix guided to fourth quarter revenue of $10.13 billion, a beat compared to consensus estimates of $10.01 billion.
For full-year 2025, the company sees revenue hitting between $43 billion and $44 billion compared to consensus estimates of $43.4 billion. This would represent growth of 11% to 13% from the company’s expected 2024 revenue guidance of $38.9 billion.
It expects full-year operating margins to hit 27%, an increase from the previous 26%, after the metric hit nearly 30% in the third quarter.
Diluted earnings per share (EPS) also beat estimates in the quarter, with the company reporting EPS of $5.40, above consensus expectations of $5.16 and well ahead of the $3.73 EPS figure it reported in the year-ago period. Netflix guided to fourth quarter EPS of $4.23, ahead of consensus calls for $3.90.
Subscribers also came in strong with another 5 million-plus subscribers added on the heels of breakout programming like “The Perfect Couple” and “Nobody Wants This.”
Subscriber additions of 5.07 million beat expectations of 4.5 million and follows the 8.05 million net additions the streamer added in the second quarter. The company had added 8.8 million paying users in Q3 2023.
“We expect paid net additions to be higher in Q4 than in Q3’24 due to normal seasonality and a strong content slate,” the company said, citing upcoming releases like “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day.
Investors have praised the company’s foray into sports and live events. Meanwhile, its ad tier continues to gain traction, accounting for over 50% of sign-ups in the countries where it’s offered during the third quarter.
“We continue to build our advertising business and improve our offering for advertisers,” the company said in the earnings release. “Ads membership was up 35% quarter on quarter, and our ad tech platform is on track to launch in Canada in Q4 and more broadly in 2025.”
Last quarter, Netflix revealed it secured “a 150% plus increase in upfront ad sales commitments over 2023.” The company has previously said its goal is to make ads “a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond.”
On the earnings call, Netflix co-CEO Greg Peters said that while ads won’t be a primary driver of revenue next year as “we’re still scaling that audience and that inventory faster than our ability to monetize it,” the company sees an “opportunity to close that gap.”
Leading up to the results, Netflix’s stock had been on a tear, with shares up around 45% since the start of the year and trading near all-time highs.
Analysts expect another price hike by the end of the year, which will likely serve as yet another catalyst for shares. But the stock’s recent run-up has led to some apprehension on Wall Street.
Price hike to come?
The company recently revealed subscribers watched over 94 billion hours on the platform from January to June as part of its latest biannual viewership report, although year-over-year engagement levels came in roughly flat — a potential headwind when it comes to pricing power, which has become especially important for streaming companies as consumers become more picky.
On average, US consumers subscribe to four streaming services and spend about $61 per month, according to the latest Digital Media Trends report from Deloitte. Retaining loyal subscribers over time is a challenge due to consumers churning out of, or canceling, their subscription plans.
Netflix last raised the price of its Standard plan in January 2022, upping the monthly cost to $15.49 from $13.99. It also raised the price of its Premium tier by $2 to $19.99 a month at the same time; the company again raised the cost of that plan last October to $22.99.
The company has yet to raise the price of its ad-supported offering, introduced less than two years ago, which remains one of the cheapest ad plans among all of the major streaming players at $6.99 a month.
“Given Netflix’s low cost per viewed hour, we see scope for the firm to raise US prices by 12% in 2025,” Citi analyst Jason Bazinet said ahead of the report.
The company recently phased out its lowest-priced ad-free streaming plan, making the $15.49 Standard plan its cheapest offering for an ad-free experience.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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