Netflix blows past earnings estimates as subscribers jump 16%

🌈 Abstract

The article discusses Netflix's quarterly earnings and revenue results, as well as the company's decision to no longer report paid memberships starting next year.

🙋 Q&A

[01] Netflix's Quarterly Earnings and Revenue

1. What were Netflix's key financial results for the first quarter?

• Netflix beat quarterly earnings and revenue estimates.
• The company reported net income of $2.33 billion, or $5.28 per share, up from $1.30 billion, or $2.88 per share, in the prior-year period.
• Netflix posted revenue of $9.37 billion for the quarter, up from $8.16 billion in the year-ago quarter.

2. How did Netflix's subscriber growth perform in the quarter?

• Total memberships rose 16% in the first quarter, reaching 269.6 million, well above the 264.2 million Wall Street had expected.
• However, Netflix said it will no longer provide quarterly membership numbers or average revenue per user starting next year.

3. Why is Netflix shifting its focus from subscriber growth to profitability?

• Netflix stated that now that it is generating substantial profit and free cash flow, as well as developing new revenue streams like advertising and a password-sharing crackdown, its membership numbers are not the only factor in the company's growth.
• The company said the membership metric lost significance after it started to offer multiple price points for memberships.

4. What are some of Netflix's new initiatives and plans for the future?

• Netflix is exploring live programming, including a partnership with TKO Group Holdings to bring WWE to the platform.
• The company also teased that it would like to expand its live sports offerings in the future.

[02] Netflix's Outlook and Stock Performance

1. What is Netflix's outlook for the second quarter?

• Netflix expects paid net additions to be lower in the second quarter compared to the first quarter "due to typical seasonality."
• The company's second-quarter revenue forecast of $9.49 billion was just shy of Wall Street's estimate of $9.54 billion.

2. How has Netflix's stock performed?

• As of Thursday morning, the company's stock was up 27% year to date and around 85% over the last 12 months.
• However, shares of the company fell around 4% in extended trading after the earnings report.