Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Netflix Inc. (NASDAQ: NFLX) delivered a stellar third-quarter earnings report on Thursday, surpassing analyst expectations and demonstrating robust growth across key metrics. The streaming giant’s performance has bolstered investor confidence, as reflected in the stock’s pre-market surge today with the stock up over 6% at the time of writing (6:51 AM EDT).

Netflix’s Financial Performance and Ad-Tier Success in Q3 2024

Netflix reported earnings per share of $5.40, beating the LSEG consensus estimate of $5.12. Revenue for the quarter reached $9.83 billion, slightly above the $9.77 billion analyst expectation. The company’s Q3 revenue grew 15% year over year, while its operating margin expanded to 30%, up from 22% in the same period last year. Free cash flow also saw a significant boost, totaling $2.2 billion compared to $1.9 billion in Q3 2023.

The streaming service’s ad-supported tier showed remarkable progress, with membership growing 35% quarter over quarter. This tier now accounts for over 50% of sign-ups in countries where it’s available. Notably, engagement levels on the ad-supported plan are comparable to those of the standard plan in the 12 countries where ads are offered.

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Netflix Stock Gains in Premarket Trading

Looking ahead, Netflix projects Q4 revenue to rise 14.7%, with full-year 2024 revenue growth expected to hit 15%. The company’s 2025 revenue forecast ranges between $43 billion and $44 billion, representing an 11% to 13% growth. Netflix also anticipates reaching a critical ad subscriber scale in all its ad-supported countries by 2025.

These results and projections paint a promising picture for Netflix investors. Despite industry challenges, the company’s continued growth, successful monetization strategies, and healthy engagement levels suggest a strong market position. Improved free cash flow and profitability, coupled with the potential for long-term margin expansion, further enhance the investment case. The market’s initial reaction has been positive, with Netflix shares up 6.23% in pre-market trading, reaching $730.50 as of 6:51 AM EDT.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.