From January to March, Netflix added 1.75 million streaming subscribers.
Netflix Inc beat Wall Street’s earnings estimates for the first quarter but presented a lighter-than-expected forecast on Tuesday, demonstrating the challenges the mature streaming service faces in its pursuit of growth.
Netflix Inc beat Wall Street earnings estimates for the first quarter but presented a lighter-than-expected forecast on Tuesday, demonstrating the challenges it faces in its quest to grow the mature streaming service.
Netflix said it moved a broader launch of a plan to crack down on unapproved password sharing to the second quarter in a bid to make improvements, delaying some financial gains, but said it is pleased with the results so far. .
As the streaming video pioneer faces signs of market saturation, it is looking for new ways to make money, such as password crackdowns and a new ad-supported service.
Revenue and earnings for the first quarter were broadly in line with Refinitiv’s average analyst estimates. Earnings per share reached $2.88 on revenue of $8.162 billion.
shares of Netflix The report fell as much as 11% in after-hours trading, but gained 1.4%.
From January to March, Netflix added 1.75 million streaming subscribers, missing analyst estimates of 2.06 million additions.
PP Foresight analyst Paolo Pescatore described first-quarter results as mixed.
“Netflix is a mature business that reinforces its low reliance on subscriber growth. However, this metric still moves the needle for key stakeholders,” he added.
The company launched its solution for password-sharing in 12 countries in February — offering a “paid sharing” option — but expansion has been delayed.
“We are confident this will result in better outcomes for our members and our business,” the company said. Netflix also said it was “on track to meet our full year 2023 financial objectives.”
Netflix said the moratorium on password sharing would begin in the United States during the current quarter.
For April to June, the company anticipates $8.242 billion in revenue and $2.86 in diluted EPS. Wall Street was projecting $8.476 billion for revenue and $3.05 for diluted EPS.
Netflix serves as a bellwether for the streaming industry, which has seen growth slow as competition intensifies.
A year ago, Netflix lost 200,000 subscribers — its first subscriber decline in more than a decade, which dealt a blow to its stock and reset Wall Street’s expectations for the sector.
Netflix will add about 9 million subscribers in 2022, more than half the 18 million it gained in the prior year, with much of that growth coming from Asia, notes research firm MoffettNathanson. The firm said the gains made in Asia and Latin America have affected average revenue per user, prompting Netflix to make changes to its business model.
The company introduced a low-cost version of its service with ads in 12 countries in the fourth quarter.
UBS media analyst John Hodulik wrote that the password-sharing crackdown could well boost Netflix’s nascent advertising business, as it drives these “sharers” to a lower-priced version of the service.
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