Netflix expects its revenue to continue to grow at a double-digit rate in 2025.
In reporting third-quarter 2024 results that beat analyst expectations, the company provided revenue forecasts for next year: It expects 2025 revenue to be between $43 billion and $44 billion, which is expected to increase in 2024. The forecast represents an 11% to 13% growth compared to revenue of $38.9 billion. (Estimated earnings for next year are based on foreign exchange rates as of September 30, 2024.)
“We expect revenue growth to be driven by healthy growth in paid membership. [average revenue per member]” the company said in its quarterly letter to shareholders.
Additionally, Netflix said it is targeting an operating profit margin of 28% in 2025, compared to its expected operating profit margin of 27% in 2024. “After achieving significant margin improvement in 2024, we want to balance short-term margin increases with appropriate investments in our business. There is no room for long-term margin growth. The company said there is still plenty.
Netflix’s free cash flow totaled $2.2 billion in the third quarter, up from $1.9 billion in the year-ago period. The company expects free cash flow for the full year 2024 to be between $6 billion and $6.5 billion (assuming no material fluctuations in exchange rates). This is up from approximately $6 billion due to higher operating profit estimates.
During the third quarter, Netflix repurchased 2.6 million shares for $1.7 billion, with $3.1 billion remaining under existing authorizations. The company also said it raised $1.8 billion in its “first-ever investment-grade debt transaction” during the third quarter, which will be used to repay debt that matures over the next 12 months.
As a result, Netflix’s total debt increased to $16 billion from about $14 billion in the previous quarter. However, net debt (total debt less cash and cash equivalents and short-term investments) fell from $7.4 billion in the second quarter to $6.8 billion at the end of the third quarter.
