If it’s fun to share good news, Netflix had a lot of fun yesterday.
After a year that was disrupted by striking actors and writers – strikes which were largely targeted at Netflix and its competitors – the plucky streamer shared its Q4 earnings in a call with shareholders on Tuesday (which was also livestreamed on YouTube), and they were impressive.
“Revenue in Q4 grew 12% year over year, or 13% on a foreign exchange (F/X) neutral basis. Our healthy topline growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate,” Netflix announced in a letter to shareholders. “Revenue was $0.1B (2%) above our October forecast due to favorable F/X movement and stronger than anticipated membership growth.”
In terms of new sign-ups, it was Netflix’s largest Q4 ever, totaling 13.1 million in Q4 ’23 vs. 7.7 milion in Q4 ’22. Not since the early days of the pandemic have they seen such growth.
The strong quarter also demonstrated the potential of Netflix’s ad business, something it is keen on growing. “We expect strong growth in 2024 but off a small base so it’s not yet a primary driver of our overall revenue growth. Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond,” the letter stated.
“Our top ads priority… is scale. We saw a 70% quarter-on-quarter growth last quarter. That’s after 70% quarter-over-quarter for the quarter before and then 100% the quarter before that. So that’s a good trajectory to be on,” said Gregory Peters, co-CEO and director. In order to keep that trajectory, Peters admitted that Netflix has to make ad plans more enticing.
A good part of that will be on the technical side, making ads more effective “and growing our go-to-market capabilities,” Peters added. “And these are features like targeting, improved ad relevance – that’s good for members, it’s good for brands. We’ve got tons to do on improved measurement. We want to launch more ad products. We’ve got binge ad sponsorships now. And we have to build… the capability to be better partners with advertisers and serve their needs.”
In news that will likely inspire a lot of headlines with wrestling-based puns, the streamer also announced yesterday that it signed a multi-year deal with WWE to bring its flagship program, Monday Night Raw, exclusively to Netflix. It will be the first time the wrestling program won’t be on linear TV since its debut more than 30 years ago.
“For decades, the WWE has grown this multigenerational fan base that we believe we could serve and we can grow. We believe that WWE has been historically under distributed outside of North America. And this is a global deal. So we can help them and they can help us build that fandom around the world,” said Theodore Sarandos, co-CEO and director. “This should also add some fuel to our new and growing ad business.”
Photo via Unsplash
