The Netflix logo is displayed above its corporate offices on January 24, 2024 in Los Angeles, California.
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Netflix Wall Street will be closely watching any details or developments the streamer will provide about its ad-supported business model when second-quarter earnings are reported after the close on Thursday.
The streaming giant launched its ad-supported tier in late 2022 and has slowly released detailed information and metrics on business performance.
Here are Wall Street’s expectations for Netflix’s second-quarter results:
- Earnings per share: LSE expected $4.74
- income: LSEG estimates $9.53 billion
- Total members: 274.4 million paid members, according to StreetAccount
Advertising has become an increasingly important business model for media companies to improve (or in some cases enable) streaming profitability. Netflix has seen its stock rise in recent quarters as the company battles to gain subscribers on its cheaper, ad-supported tier, in addition to cracking down on password sharing.
The company has also begun adding live sports events, such as NFL games during the Christmas period, over the next three years, a move that could attract more advertising revenue to the streamer.
As of the end of the first quarter, Netflix had approximately 270 million subscribers worldwide, a 16% increase from the same period last year, exceeding expectations.
When Netflix pitched advertisers during its Upfront demo in May, the company said its ad-supported tier had amassed 40 million global monthly active users, nearly double the number from just a few months earlier.
Last quarter, Netflix warned investors that starting next year it would stop providing quarterly membership numbers or average revenue per user, noting that the company “considers revenue and operating margin as our primary financial metrics and engagement (i.e. time spent) serves as our best metric” for customer satisfaction. “
The decision demonstrates Netflix’s “shift from a high-growth, low-margin business to a slow-growth, high-margin business,” according to an analyst note from Wedbush last week. However, the report stresses that while Netflix is ahead of its competitors in streaming, the transformation is “far from complete.”
Netflix shares have been boosted by a crackdown on password sharing and the addition of a cheaper ad-supported tier.
“As Netflix asks investors and journalists to focus less on subscription growth, it will put more emphasis on the time users spend, while YouTube’s only real competitor in terms of scale is YouTube,” said eMarketer senior analyst Ross Benes. More live event announcements will be made as the company looks to increase ad-supported hours amid an industry-wide decline in scripted content production. “
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