How Matrix Predicted Netflix Earnings

The biggest Netflix story this year isn’t Jake Paul beating Mike Tyson. It’s Netflix's Q3 2024 growth.

Even with stiff competition in the streaming wars, Netflix saw 15% revenue growth and a 6% margin improvement, buoyed by a 35% quarter-over-quarter growth in its ad plan membership base. 

Will we see this trend continue into the upcoming Q4 2024 earnings call? Could a simple Hebbia query have predicted this? With one prompt, we asked Matrix.

The signs were there in earlier quarters, when Netflix executives noted rapid scaling of their ads member base and growing revenue from ads.

“The groundwork laid in Q2, including a focus on scaling the ads business and improving advertiser adoption rates, contributed to the robust growth seen in Q3 2024. The emphasis on building an ads server and enhancing user experience indicated a clear strategic direction that supported future growth in the advertising tier.

1. Engagement and Content Quality: Netflix reported that ads plan members watch similar hours and titles as non-ads members, indicating healthy engagement. 
2. Advertiser Adoption and Partnerships: There was a 150% rise in ad sales commitments during the U.S. upfront. Partnerships with measurement firms like Nielsen were also established, enhancing advertiser adoption and effectiveness.
3. Improved User Experience: Netflix introduced features like improved video resolution and the ability to download content as part of its strategy to enhance user experience. 

Netflix’s approach to expanding their content library—through original and diverse programming, strategic partnerships, and leveraging successful franchises—has translated to retaining subscribers and attracting new ones to the ad-supported tier. "

Disney, take note.