19 APR 2024

Netflix added 9.3M subscribers in Q1, growing its lead in streaming

The streamer presented its Q1 financial results, with a revenue growth of 14.8% to $9.3 billion during its first quarter of 2024, and net income surging by 77% to $2.3 billion.

19 APR 2024

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Netflix reported its first-quarter earnings, adding 9.3 million subscribers and expanding its lead as subscription streaming TV’s dominant platform, adding to a total of 269.6 million global subscribers. Moreover, the company reported revenue of $9.4 billion and operating income of $2.6 billion, both up substantially from a year earlier. For the next quarter, the company expects revenue growth to be at 16%, with lower paid net additions due to seasonality. For the year, it expects annual revenue growth of 13-15%.

Netflix has been on a tear in recent months, adding millions of subscribers each quarter thanks to its consistent slate of programming, and its recent efforts to crack down on password and account sharing, as well as its push into advertising via its nascent and less expensive ad tier. In Q4, which is typically the company’s strongest quarter, it reported 13 million new subscribers. The company mentioned in its quarterly letter that it will stop reporting subscriber numbers and average revenue per member beginning in the first quarter of 2025.

Morover, according to data from Parrot Analyticsdominating in demand for originals while also re-establishing itself as the go-to home for recent theatrical films, comfort sitcoms and laundry folding procedurals has cemented Netflix as the largest TV network in the world (without any major mergers and acquisitions). As Netflix strengthens its hold on the global streaming market, it will still need new types of content to fill in the gaps of its most popular series, which are getting longer and longer. This will come in the form of live events. The upcoming Mike Tyson-Jake Paul in July fight will be a good case study in Netflix’s ability to build an audience for an original live event. The biggest question when it comes to live sports is whether Netflix will make a serious bid for part of the upcoming NBA rights package, most likely the NBA Cup, and how WWE performs on the service and with advertisers beginning in 2025.

The company stated it plans to further build out its advertising business and to tweak its entertainment slate with “more, great TV shows and movies, a stronger slate of games and must-watch live programming.” Co-CEO Ted Sarandos said Netflix is focused on creating "this consistent and dependable and expected drumbeat of hits shows, films and games. That’s the business that we’re in. And that’s what we have to do every day. We have to do it all over the world.” He also weighed in on the company’s sports and live events strategy, telling analysts that they are “in the very early days of developing our live or live programming,” and that it is an expansion in strategy similar to how they added unscripted, films, and games to the service.

Sarandos added: “Netflix is not anti-sports, but pro profitable growth. Our North Star is to grow engagement, revenue and profit. And if we find opportunities to drive all three of those, we will do that across an increasingly wide variety of quality entertainment. So when and if those opportunities arrive, that we can come in and do that — which we feel like we did in our deal with WWE — if we can repeat those dynamics in other things including sports, we’ll look at it for sure.”

Co-CEO Greg Peters elaborated on how the company will grow that business, explaining that “I would say we’re generally taking our entire playbook, everything that we’ve learned about how to grow our members, and we’re applying it to our ads tier now. So clearly that means partner channels, it means device integrations, bundles, integrated payments.”

“So we’re making good progress there, but look, you know, we’ve got much, much more to do in terms of scaling,” Peters continued. “We’ve got more to do in terms of effective go-to-market, more technical features, more ads products. There’s plenty of work ahead for us on ads.”

Despite the good results of its advertising plans, Statista reported that Netflix’s share price was down 6 percent on Friday morning. That’s partly due to a slightly lower-than-expected guidance for second quarter revenue and partly due to the company’s surprise announcement that it would stop reporting quarterly membership figures next year. "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," the company explained.

Netflix also made some tweaks to its capital structure, upsizing its revolving credit facility to $3 billion, and clearing up its cash strategy, writing that “we’ll continue to prioritize profitable growth by reinvesting in our business, maintain a healthy balance sheet and ample liquidity, and return excess cash (beyond several billion dollars of minimum cash and any used for selective M&A) to shareholders through share repurchases.”