Key facts
- Netflix is expected to post 11.8% revenue growth to $12.87 billion.
- US user churn rose 16.6% year-over-year in Q3.
- US and Canada downloads fell 20% in Q3.
- Average monthly viewing time per member fell to 49 hours in H1 2024.
- Jefferies forecasts ad revenue to reach $7.5 billion in 2029.
Netflix investors are anticipating third-quarter results on Tuesday, with a focus on the company's strategies to maintain growth amidst increasing competition and signs of user fatigue. Co-CEO Ted Sarandos has acknowledged slower growth and sees live programming as a potential avenue for acceleration. The company is navigating a shift in the entertainment landscape, with lower-cost, creator-led videos challenging premium scripted content, and YouTube reportedly surpassing Netflix in viewing time and market share in the US.
Analysts project Netflix's third-quarter revenue growth to be the slowest in three years, with sales forecast to rise 11.8% to $12.87 billion. The company recently reduced its workforce by approximately 6%, a move attributed by analysts to the streaming industry's pivot towards profitability. Content leadership has also seen a change with Bela Bajaria's departure and Peter Rice's appointment.
Market research firm Apptopia reported a 16.6% year-over-year increase in Netflix's US user churn during the third quarter, a rate roughly double that of the preceding three quarters, alongside a 20% decline in US and Canada downloads. Jefferies estimates that average monthly viewing time per Netflix member decreased to 49 hours in the first half of 2024 from 66 hours in the same period of 2023. Analysts cited the 2026 FIFA World Cup and a less robust content slate compared to the previous year as factors impacting engagement. Netflix has also acquired broadcast rights for the 2030 FIFA World Cup in Spain and Andorra, and is investing in advertising as a revenue diversification strategy, with Jefferies forecasting ad revenue to reach $7.5 billion by 2029.