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Consumer Subscription Stocks Q1 Teardown: Netflix (NASDAQ:NFLX) Vs The Rest


Max Juang /
2024/07/08 3:48 am EDT

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Netflix (NASDAQ:NFLX) and the rest of the consumer subscription stocks fared in Q1.

Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.

The 8 consumer subscription stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 0.9%. while next quarter's revenue guidance was 2.8% below consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and consumer subscription stocks have had a rough stretch, with share prices down 17.3% on average since the previous earnings results.

Netflix (NASDAQ:NFLX)

Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.

Netflix reported revenues of $9.37 billion, up 14.8% year on year, in line with analysts' expectations. It was a strong quarter for the company: Netflix beat analysts' estimates for nearly every metric we track: paid subscribers, revenue, operating income, EPS, and free cash flow. In addition, it raised its operating profitability expectations as this quarter's margin expanded seven percentage points year on year, reaching 28%.

Netflix Total Revenue

The stock is up 12.8% since the results and currently trades at $689.07.

Read our full report on Netflix here, it's free.

Best Q1: Roku (NASDAQ:ROKU)

Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.

Roku reported revenues of $881.5 million, up 19% year on year, outperforming analysts' expectations by 3.7%. It was a decent quarter for the company: Roku beat analysts' revenue expectations and crushed adjusted EBITDA expectations. In addition, it expanded its number of users. Guidance was similar to the results themselves, with Q2 revenue guidance roughly in line while adjusted EBITDA guidance was well ahead.

Roku Total Revenue

Roku scored the biggest analyst estimates beat among its peers. The company reported 81.6 million monthly active users, up 14% year on year. The stock is down 0.9% since the results and currently trades at $62.25.

Is now the time to buy Roku? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Chegg (NYSE:CHGG)

Started as a physical textbook rental service, Chegg (NYSE:CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.

Chegg reported revenues of $174.4 million, down 7.1% year on year, in line with analysts' expectations. It was a weak quarter for the company, with a decline in its users and slow revenue growth.

Chegg had the slowest revenue growth in the group. The company reported 4.7 million users, down 7.8% year on year. The stock is down 61.3% since the results and currently trades at $2.78.

Read our full analysis of Chegg's results here.

Duolingo (NASDAQ:DUOL)

Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.

Duolingo reported revenues of $167.6 million, up 44.9% year on year, surpassing analysts' expectations by 1.1%. It was an ok quarter for the company, with exceptional revenue growth. On the other hand, its revenue guidance for next quarter was underwhelming, though it upgraded its full-year revenue and EBITDA outlook, topping projections.

Duolingo pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The stock is down 21.1% since the results and currently trades at $193.01.

Read our full, actionable report on Duolingo here, it's free.

Coursera (NYSE:COUR)

Founded by two Stanford University computer science professors, Coursera (NYSE:COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.

Coursera reported revenues of $169.1 million, up 14.5% year on year, falling short of analysts' expectations by 0.8%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.

Coursera had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The company reported 148 million users, up 19.4% year on year. The stock is down 38.9% since the results and currently trades at $7.26.

Read our full, actionable report on Coursera here, it's free.

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