Netflix on Thursday beat Wall Street expectations for the second consecutive quarter in new customer numbers, but predicted revenue growth that was slightly below analysts’ targets, suggesting its positive surprises may be over.
Shares of the streaming video pioneer fell 4.2% in after-hours trading to $585.41.
The company said its ad-supported streaming plans helped it add 9.3 million new customers, nearly double the consensus forecast of analysts surveyed by LSEG. The company’s revenue for the current quarter was expected to be $9.49 billion, compared to analysts’ expectations of $9.537 billion.
Netflix executives are urging investors to focus on revenue and operating margins when assessing the company’s progress. The company announced that it will no longer report quarterly subscriber growth starting in the first quarter of 2025, and will instead only make announcements when major milestones are reached.
“This change is driven by our desire to focus on the key metrics that we believe are most important to our business,” co-chief executive officer Greg Peters said in a post-earnings video. Ta.
With recent subscriber growth, Netflix had 269.6 million total subscribers at the end of March.
Analysts said the decision to stop reporting these numbers quarterly is likely to spook investors. He also said it’s unclear what will prompt new signups after Netflix pulls in as many users as possible from its crackdown on password sharing.
“There may be a few more quarters of paid sharing benefits, but after that I’m not sure what the next trigger for additional members will be,” said Magalie Grossheim, senior equity research analyst at MScience. . “I think that probably also contributes to why they decided to stop reporting these numbers.”
In a letter to shareholders, the company said it will work to improve the diversity and quality of entertainment and further grow its advertising business.
“We’re building a foundation that’s hard to replicate, a combination of strong foundations, great recommendations, broad reach, and passionate fandom that drives healthy engagement on Netflix.” the company said.
Earnings per share for the January-March period were $5.28, beating analysts’ expectations of $4.52.
Netflix’s revenue rose 14.8% to nearly $9.4 billion during a period in which the service debuted titles such as the sci-fi drama series “Three Body Problem” and the crime thriller “Griselda.”
Operating income totaled $2.6 billion, an increase of 54% year over year.
In November 2022, Netflix began offering ad-supported plans that are less than half the price of commercial-free options. In 2023, we will start cracking down on password sharing.
You’re trying to convert people using friends and family accounts into paying members.
The ad-supported version of the service currently accounts for 40% of all signups in markets where it is offered, the company said.
To satisfy its large audience around the world, Netflix is expanding its programming. The streaming service is expanding its sports offering with a $5 billion, 10-year deal to stream WWE’s wrestling show Raw starting in January 2025.
