In its latest financial report, Netflix has demonstrated strong performance, exceeding market expectations across multiple key areas. The streaming giant reportedly added 9.3 million subscribers in the quarter ending March 31, bringing its total global subscriber base to an impressive 269.6 million.
Netflix revenue reached $9.37 billion and earnings per share at $5.28 outperforming Wall Street’s expectations. This number represents a 15% increase in revenue from the same quarter in 2023, and the earnings per share nearly doubled from the previous year’s $2.88 to $5.28. Additionally, Netflix reported a 28% increase in its operating income, reaching $2.6 billion.
In a surprising move, in its quarterly letter to shareholders, Netflix announced that it intends to stop reporting subscriber totals and average revenue per subscriber, beginning with its first-quarter results in 2025.
The earnings release reads, “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth. In addition, as we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact.”
Notably, Netflix’s quarterly report provided revenue guidance of $9.49 billion for the second quarter. This forecast showed a 4% drop in share prices during after-hours trading despite the company’s strong subscriber growth, which exceeded the expectations of many analysts.
Taking a broader perspective, the company has significantly recovered in its recent quarterly performances from what it was facing in its challenging period two years ago, with a declining subscriber base and increasing competition. The company’s stock has since rebounded impressively, recently surpassing $600 per share. Many Wall Street analysts are expecting the stock to reach $700 or even higher.
Advertising has immensely contributed to Netflix’s resurgence, along with the introduction of a more affordable ad-supported subscription tier in late 2022. This move came into effect after its former CEO Reed Hastings unexpectedly announced during an earnings call that the company would abandon its longstanding resistance to advertising. Although specific subscription numbers for this tier were not provided, Netflix has reported that its ad-supported subscription plan continues to gain momentum.
The company revealed a 65% year-over-year growth in its ad-supported subscriber base compared to the same period in 2023 for the January-to-March period of 2024. In comparison to the previous two quarters, this growth follows a nearly 70% sequential increase. Furthermore, of all new signups in markets where the ad-supported plan is available, 40% opt for this subscription option on Netflix. Co-CEO Greg Peters, responsible for overseeing the advertising launch, previously announced in January that the company had surpassed 23 million monthly active users on the ad-supported plan.