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Mixed results for Netflix

More questions than answers from earnings report as streaming giant offers lighter forecast than expected

Netflix has released its first-quarter results which shows earnings in line with expectation for the first quarter, but with a softer than predicted onward forecast.

Revenue was reported at $8.16 billion with earnings per share (EPS) at $2.88, bot in-line with market forecasts. However, subscriber numbers of 1.75 million is some way below the expected 2.3 million while Netflix offered revenue ($8.24 billion) and EPS ($2.84) projections for Q2 which underwhelmed versus market expectation ($8.5 billion and $3.05 respectively).

“A mixed set of results for the company,” said Paolo Pescatore of PP Foresight. “The quarter raises more questions than answers as it pivot towards driving new revenue streams. During this transition there will be ongoing challenges and expect to see spikes in churn, net adds and ARPU with the rollout of new features and services.”

He continued, “Netflix is a mature business reinforcing less reliance on subscriber growth. However, this metric still moves the needle for key stakeholders. It is putting all the building blocks in place for future revenue growth. This is a far longer term play, so we should not expect to see immediate success.”

Anil Malhotra, subscriptions expert and CMO/Co-founder at eCommerce technology specialist Bango, added that having met market projections in Q1, “Netflix’s growth signals an end to the Covid ‘boom and bust’ phase for streaming services.

“Looking to the future, we should consider the subscription model that Netflix operates. When it comes to flexibility for subscribers, you can either change the cost or flex the billing period of the subscription. Netflix has already reduced costs through a cheaper, ad-supported tier. The next obvious step would be to increase flexibility, with bi-weekly or even weekly subscription periods, something many Super Bundlers are already trialling.”