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Netflix Adds 9.3M Subscribers In Another Strong Quarter

Netflix added 9.3 million subscribers in the quarter ended March 31, reaching 269.6 million worldwide, and outperformed expectations in other key areas in its latest strong financial report.

Revenue and earnings per share both handily exceeded Wall Street forecasts at $9.37 billion and $5.28, respectively. The top line was up 15% from the same quarter in 2023, while EPS came in at nearly double the year-ago period’s $2.88. Operating income jumped 28% from the prior year to reach $2.6 billion.

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In its quarterly letter to shareholders, Netflix made the surprising disclosure that it plans to stop reporting subscriber totals and average revenue per subscriber starting with its first quarter results in 2025.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” the letter said. “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.”

One dent in the quarterly report was Netflix’s revenue guidance for the second quarter. At $9.49 billion, the forecast was a shade lower than many analysts expected, prompting shares to sag 4% in after-hours trading despite the subscriber fireworks.

Taking the long view, the company’s recent quarterly performances have represented a remarkable bounce-back from a grim period. Two years ago, the company was on its knees, with a subscriber base in decline and competition closing in. Its stock has roared back, recently topping $600 a share, and many Wall Street analysts are looking for it to go to $700 or higher. Just a few quarters after its crossroads, Netflix has emerged the unquestioned leader in streaming, with rivals still reckoning with how to catch up to it.

Advertising has been an important part of the comeback story, with a cheaper ad-backed subscription tier launching in late-2022. The rollout came just a few months after co-founder and former CEO Reed Hastings blurted out on an earnings call that the company was reversing its longtime aversion to advertising.

Subscriptions to the ad tier have never been broken out, but the company said in the letter that the plan continues to show momentum. With year-to-year comparisons finally possible between January-to-March periods in 2024 and 2023, the company said its ad-supported subscriber base grew 65% over the prior-year quarter. It had risen almost 70% on a sequential basis in the previous two quarters. More than 40% of all signups in the markets where the ads plan is available come in through that door, the company noted.

Co-CEO Greg Peters, who has overseen the launch of advertising, said in January the company had exceeded 23 million monthly active users on the ad plan.

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