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Dec 31, 2022
Netflix Q4 2022 Earnings Report
Netflix's Q4 2022 results exceeded expectations with strong membership growth and a successful content slate, while also navigating leadership changes and preparing for paid sharing rollout.
Key Takeaways
Netflix exceeded its Q4 2022 forecast for revenue, operating profit, and membership growth, driven by a strong content slate and the successful launch of its ad-supported plan. The company reported $7.852 billion in revenue, $550 million in operating income, and 230.75 million paid memberships. Looking ahead, Netflix is focused on reaccelerating revenue growth through paid sharing and advertising initiatives.
Q4 revenue, operating profit, and membership growth exceeded forecast, driven by strong streaming engagement, revenue, and profit leadership.
The Q4 content slate, including 'Wednesday,' 'Harry & Meghan,' 'Troll,' and 'Glass Onion: A Knives Out Mystery,' outperformed high expectations.
The new, lower-priced ad-supported plan launched successfully in November, showing promising early results.
Ted Sarandos and Greg Peters are now co-CEOs, with Reed Hastings as Executive Chairman, completing the company's succession process.
Netflix
Netflix
Netflix Revenue by Segment
Revenue by Segment
UCAN Revenue
CapyFin.comEMEA Revenue
CapyFin.comLATAM Revenue
CapyFin.comAPAC Revenue
CapyFin.com Forward Guidance
For Q1 2023, Netflix projects revenue growth of 4% (8% on an F/X neutral basis) driven by growth in average paid memberships and ARM. The company anticipates a different quarterly paid net adds pattern in 2023 due to the rollout of paid sharing, with Q2 2023 likely to have greater paid net adds than Q1 2023. For the full year 2023, Netflix expects constant currency revenue growth to accelerate and operating profit growth and margin expansion, targeting an operating margin of 18%-20% based on F/X rates as of January 1, 2023.
Positive Outlook
- Revenue growth of 4% (8% on a F/X neutral basis) is expected in Q1 2023.
- Growth in average paid memberships and ARM will drive F/X neutral revenue growth.
- Paid net adds are expected to be modestly positive in Q1 2023.
- Constant currency revenue growth is expected to accelerate over the course of 2023.
- Year-over-year operating profit growth and operating margin expansion are anticipated for the full year 2023.
Challenges Ahead
- Fewer paid net adds are expected in Q1 2023 compared to Q4 2022 due to seasonality and strong member growth in Q4 2022.
- The rollout of paid sharing may result in some cancel reactions and impact near-term member growth.
- Near-term engagement, as measured by third parties, could be negatively impacted as some borrowers stop watching.
- Operating margin is expected to be down year-over-year in Q1 2023 (20% vs. 25%) due to the timing of content spend.
- Uncertain macroeconomic environment leads to less-than-normal visibility.
Revenue & Expenses
Visualization of income flow from segment revenue to net income