Netflix beats subscriber targets, but revenue falls short of forecast – National


Netflix NFLX.O blew past Wall Street expectations on new customers for the second straight quarter on Thursday but signaled the positive surprises could be over, forecasting revenue growth slightly below analyst targets.
Shares of the streaming video pioneer were down 4.2 per cent at US$585.41 in after-hours trading.The company said its ad-supported streaming plans helped bring in 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG. For the current quarter, it projected revenue of US$9.49 billion compared with analyst expectations of US$9.537 billion.Netflix executives have urged investors to focus on revenue and operating margins when assessing its progress. The company said it will stop reporting subscriber additions each quarter starting with the first quarter of 2025, and instead will announce them only when major milestones are reached. Story continues below advertisement

“This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business,” Co-Chief Executive Greg Peters said in a post-earnings video.The recent subscriber additions brought Netflix’s total subscribers to 269.6 million at the end of March.Analysts said the decision to stop quarterly reporting of those numbers would likely rankle investors. They also said it was unclear what would drive new sign-ups once Netflix has pulled in as many users as possible from its crackdown on password-sharing.

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“It might be a few more quarters of paid sharing benefits, but we don’t really know what the next catalyst will be after that for a member addition,” said Magalie Grossheim, senior equity research analyst at M Science. “I think that’s probably contributing also to why they’re deciding to stop reporting those numbers.” Story continues below advertisement

In a letter to shareholders, the company said it would work to improve the variety and quality of its entertainment and scale its advertising business to grow further.

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“We have built a hard to replicate combination of a strong slate, superior recommendations, broad reach and intense fandom, which drives healthy engagement on Netflix,” the company said.Earnings per share for January through March came in at US$5.28, beating analyst expectations of US$4.52.

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Netflix revenue rose 14.8 per cent to nearly US$9.4 billion during the period, when the service debuted titles such as sci-fi drama series “3 Body Problem” and crime thriller “Griselda.”Operating income totaled US$2.6 billion, a year-over-year increase of 54 per cent.

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Netflix began offering ad-supported plans, which cost less than half of the options without commercials, in November 2022. In 2023, it started a crackdown on sharing of passwords, Story continues below advertisement

trying to convert people who use the accounts of friends or family into paying subscribers.The company said the version of its service with ads now accounts for 40 per cent of all sign-ups in markets where it offers the plan.To satisfy its large global audience, Netflix has been broadening its programming. The streaming service is expanding its sports offering with a US$5 billion, 10-year deal to stream WWE’s wrestling show, “Raw,” starting in January 2025.–Reporting by Lisa Richwine and Dawn Chmielewski in Los Angeles; Additional reporting by Harshita Mary Varghese and Aditya Soni in Bengaluru; Editing by Kenneth Li, Peter Henderson and Matthew Lewis

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