Netflix soars in Q1 2024: Revenue up 15 percent, operating income surges by 54 percent

Netflix reported a strong start to 2024, boasting a 15 percent increase in revenue compared to Q12023. They also clocked a a significant jump in operating income, which surged by 54 percent year-over-year. The streaming giant's operating margin touched 28percent in Q1 2024.

Ads membership grew 65 percent quarter on quarter (after rising nearly 70 percent sequentially in each of Q3 2023 and Q4 2023) with over 40 percent of all signups in ads markets coming from ads plan.

“Our two priorities in ads are to scale our member base and to build out our capabilities for advertisers. We made progress on both fronts in Q1. For advertisers, we continue to focus on measurement solutions, including new partnerships with Kantar and Lucid for brand awareness and recall, and Nielsen Catalina Solutions for sales lift and we’re working to build out our sales capabilities,” they said in a statement.

The growth in numbers for the quarter, according to the Netflix was primarily driven by membership growth as well as pricing. ARM (average revenue per membership) rose 1 percent year over year, while subscriber count increased by 9.3 million. Same quarter last fiscal, new subscriber count stood at 1.8 million.

However, this is the last year Netflix is going public with subscriber details in their financial results.

“Starting next year with our Q1 2025 earnings, we will stop reporting quarterly membership numbers and ARM,” they said.

Explaining they move they said, “We’re focused on revenue and operating margin as our primary financial metrics — and engagement as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth.”

The projected revenue growth for Q2 2024 is expected to be 16 percent.

“For the full year 2024, we expect healthy revenue growth of 13 percent to 15 percent, based on F/X rates at the end of Q1 2024. We now expect FY24 operating margin of 25 percent, based on F/X rates as of January 1, 2024, up from our prior forecast of 24 percent,” they said in their financial results.

In a brief outline of plans, the streaming giant said they would continue to improve the variety and quality entertainment, innovate in product and marketing and tap into additional revenue and profit pools, in particular scaling ads to become a more meaningful contributor to the business in 2025 and beyond.