Netflix Full-Year Report 2023
Revenue in Q4 grew 12% year over year, or 13% on a foreign exchange (F/X) neutral basis. Our healthy top line growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate. Revenue was $0.1B (2%) above our October forecast due to favorable F/X movement and stronger than anticipated membership growth. Paid net additions totaled 13.1M in Q4’23 vs. 7.7M in Q4’22 — our largest Q4 ever. ARM was up 1% year over year on both a reported and F/X neutral basis. This was in-line with our expectations of “roughly flat year-over-year” ARM due to limited price increases over the last 18 months, as well as price reductions in some countries early in 2023, which were partially offset by price rises in the US, UK and France in Q4’23.
In Q4’23, operating income amounted to $1.5B, up from $0.5B in the year ago period, while operating
margin improved to 17% vs. 7% in the year ago quarter. We under-forecasted both operating income and
operating margin (forecast of $1.2B and 13%, respectively) due to the revenue upside in the quarter and
lower-than-planned spending. For 2023, we generated $7B of operating income, up 23% year over year.
Operating margin for 2023 was 21% (both reported and using F/X rates at the beginning of 2023) —
ahead of our 18%-20% beginning-of-year forecast.
EPS for the fourth quarter was $2.11 compared with $0.12 last year and our forecast of $2.15. EPS
includes a $239 million non-cash unrealized loss from F/X remeasurement on our Euro denominated
debt (due to the intra-quarter depreciation of the US dollar against most currencies).
As a reminder, the quarterly guidance we provide is our actual internal forecast at the time we report.
Our primary financial metrics are revenue for growth and operating margin for profitability. Our goals are to sustain healthy revenue growth, expand operating margin and deliver growing free cash flow.
We seek to provide a range of prices and plans to meet a wide range of needs, including highly competitive starting prices. As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.
