Netflix, the streaming giant, has reported its Q1 earnings for 2023, with the period running from January 1 to March 31, and revealed that it gained 1.75 million net new subscribers, which is lower than the 7.66 million subscribers it gained in the final quarter of 2022, the period when the lower-cost, ad-supported tier was launched.
This marks the first full quarter with Netflix’s ad-filled option available to subscribers, and the streamer ended the period with a total global subscriber count of 232.5 million. While the 1.75 million growth in new customers is far from the expected 2.3 million, it still represents a 4.9% year-over-year growth in subscribers for Netflix.
The paid memberships rose by 100,000 in the U.S. and Canada, 640,000 throughout Europe, the Middle East and Africa, and 1.5 million in the Asia-Pacific region. However, subs fell by 450,000 in Latin America.
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Netflix stopped providing subscriber guidance for the next quarter with its Q4 earnings in January, citing a shift in focus away from subscriber growth and toward revenue. As such, no self-set goals were revealed by the streamer for Wall Street to compare these Q1 results to. However, a general consensus saw investors banking on approximately 2.3 million net additions.
Netflix highlighted several big returning series and films, including ‘Outer Banks’ S3, ‘You’ S4, ‘Ginny & Georgia’ S2, ‘Soy Georgina’ S2, ‘The Glory’s’ new installment, and a big sequel to its hit film ‘Murder Mystery.’ Building anticipation and buzz before and after titles premiere is a key goal for Netflix’s marketing team as it helps drive acquisition and retention.
In its letter to shareholders accompanying the Q1 financials, Netflix also revealed that beginning in Q2, it would finally expand its password-sharing crackdown to the U.S. The company plans to start blocking devices (after a certain period of time) that attempt to access a Netflix account without properly paying. “In Q1, we launched paid sharing in four countries and are pleased with the results,” Netflix said. “We are planning on a broad rollout, including in the U.S., in Q2.”
Netflix’s revenue from U.S. and Canada ops grew 8% compared to Q1 2022, while Europe, Middle East, and Africa revenue were down 2%. Latin America revenue was up 7%, and Asia-Pacific increased by 2%. The streamer reported diluted EPS of $2.88 (or $1.3 billion net income) on $8.2 billion in revenue, beating on earnings and meeting revenue expectations. Revenue was up 3.7% year over year. Free cash flow stood at $2.1 billion. Operating income was $1.7 billion with a 21% operating margin.
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Wall Street forecast earnings per share (EPS) of $2.86 on $8.2 billion in revenue, according to analyst consensus data provided by Refinitiv. The streamer’s stock closed Tuesday at $333.70 per share, and the regular U.S. stock markets will reopen at 9:30 a.m. ET.
Netflix revealed that it is on track to meet its full-year 2023 financial objectives, and for Q2’23, it forecasts revenue of $8.2B, up 3% year over year, or 6% growth on an F/X neutral basis.
In the note to investors, Netflix revealed that it would release a pre-recorded interview with new Ted Sarandos and new Co-CEO Greg Peters, following the shift of co-founder
