Netflix reported its first-quarter earnings Thursday, adding 9.3 million subscribers and expanding its lead as subscription streaming TV’s dominant platform.
The company now has 269.6 million global subscribers. The company said in its quarterly letter that it will stop reporting subscriber numbers and average revenue per member beginning in the first quarter of 2025.
Netflix reported revenue of $9.4 billion and operating income of $2.6 billion, both up substantially from a year earlier.
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For Q2, the company expects revenue growth to be at 16 percent, with lower paid net additions due to seasonality. For the year, the company expects annual revenue growth of 13-15 percent.
Netflix has been on a tear in recent months, adding millions of subscribers each quarter thanks to its consistent slate of programming, and its recent efforts to crack down on password and account sharing, as well as its push into advertising via its nascent and less expensive ad tier. In Q4, which is typically the company’s strongest quarter, it reported 13 million new subscribers.
In its shareholder letter, the company says it plans to further build out its advertising business (the company says its subscriber base grew by 65 percent in the quarter), and to tweak its entertainment slate with “more, great TV shows and movies, a stronger slate of games and must-watch live programming.”
Or, as co-CEO Ted Sarandos said on the earnings call, Netflix is focused on creating “this consistent and dependable and expected drumbeat of hits shows films and games. That’s the business that we’re in. And that’s what we have to do every day. We have to do it all over the world.”
Sarandos also weighed in on the company’s sports and live events strategy, telling analysts that they are “in the very early days of developing our live or live programming,” and that is is an expansion in strategy similar to how they added unscripted, films, and games to the service.
Netflix is “not anti-sports, but pro profitable growth,” Sarandos continued. “Our North Star is to grow engagement, revenue and profit. And if we find opportunities to drive all three of those, we will do that across an increasingly wide variety of quality entertainment. So when and if those opportunities arrive, that we can come in and do that — which we feel like we did in our deal with WWE — if we can repeat those dynamics in other things including sports, we’ll look at it for sure.”
On the advertising front, co-CEO Greg Peters elaborated on how the company will grow that business, telling analysts “I would say we’re generally taking our entire playbook, everything that we’ve learned about how to grow our members, and we’re applying it to our ads tier now. So clearly that means partner channels, it means device integrations, bundles, integrated payments.”
“So we’re making good progress there, but look, you know, we’ve got much, much more to do in terms of scaling,” he continued. “We’ve got more to do in terms of effective go-to-market, more technical features, more ads products. There’s plenty of work ahead for us on ads.”
And the company also used the opportunity to strut, leaning into its status as the streaming leader. The company touted its more than 1 billion followers on social media, as well as its marketing prowess, while also tooting its own horn.
“Our most direct promotional tool is Netflix itself, which has become the go to place for so many people looking for entertainment,” the letter said, noting the hundreds of millions of trailer views on its platform. “This hard-to-replicate combination of our reach, recommendations and fandom enables Netflix to push
stories into culture in ways that very few can match.”
Netflix also made some tweaks to its capital structure, upsizing its revolving credit facility to $3 billion, and clearing up its cash strategy, writing that “we’ll continue to prioritize profitable growth by reinvesting in our business, maintain a healthy balance sheet and ample liquidity, and return excess cash (beyond several billion dollars of minimum cash and any used for selective M&A) to shareholders through share repurchases.”
