Netflix Q4 2023 Earning Results and Trends

Netflix's shares rose by 13% after surpassing revenue expectations in 4Q23. The company's paid sharing rollout contributed to its success, and Sensor Tower data shows that it continues to lead in mobile engagement and user churn. Netflix's US ad business also showed positive growth, with nearly a third of ad spend coming from new advertisers in 4Q23. Additionally, Sensor Tower's Audience Insights shows that the recent WWE deal is expected to benefit Netflix due to high levels of time spent on entertainment apps by smartphone users who frequently see WWE ads.

Key Takeaways:

Netflix posted its largest ever gain in 4Q net subscriber adds (+13mn), driven by the continued rollout of its paid sharing initiative; NFLX also exceeded 4Q23 street estimates for revenue, but fell short on EPS. Although Netflix lags its newer streaming peers in user growth, ST data shows that the platform continues to boast the highest levels of user engagement and lowest levels of user churn on mobile
- In 4Q23, 21% of Netflix mobile MAUs engaged with the app on a daily basis, vs <15% each for Disney+, Prime Video, Hulu, Max, Peacock, and Paramount+, per ST data. Additionally, Netflix monthly user churn was much lower at ~23% throughout 4Q23 vs Paramount+ (46%), Peacock (42%), Hulu (34%), Disney+ (32%), and Prime Video (29%)
Netflix's ad business is beginning to take off with advertisers across a plethora of industries jumping on board. For the third consecutive quarter, Pathmatics by ST data indicates that Netflix saw QoQ increases in US ad spend for 7/10 of the top categories on its ad network
- Perhaps more impressive, nearly a third (~30%) of total US spend on Netflix’s ad network in 4Q23 came from new advertisers (those who hadn’t advertised at all on Netflix from 1Q23-3Q23), suggesting that the company is succeeding at pulling in ad dollars in the ever-competitive and lucrative advertising space
Netflix’s rapidly expanding games portfolio presents an additional lever to drive both subscriber and revenue growth. Most recently, Netflix launched licensed titles from Take-Two’s hit GTA series, and saw explosive growth in its mobile gaming portfolio. Per ST data, Netflix’s portfolio-level game downloads increased a staggering 180% YoY in 2023 with nearly 53% of those downloading arriving in 4Q23, which coincides with the release of its licensed GTA titles
Just this week, Netflix struck a $5bn deal with the WWE to stream WWE Raw and select WWE events both domestically and internationally. This deal could help Netflix gain more brand awareness and subscribers among those interested in the WWE. Per ST’s proprietary Audience Insights data, US smartphone users who are typically exposed to ads from the WWE spend 126% more time on entertainment apps than the average smartphone user and boast a 62% higher share of users on Netflix vs the general population

For more information, request the full report from reports@sensortower.com.

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Written by: Abraham Yousef, Senior Insights Analyst

Date: January 2024

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