Netflix (NFLX) earnings Q1 2024

A couple sits in front of a television with the Netflix logo on it.

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LOS ANGELES — Netflix will no longer provide quarterly membership numbers or average revenue per user starting next year, the company said Thursday as it reported earnings that beat on the top and bottom lines.

Total memberships rose 16% in the first quarter, reaching 269.6 million, well above the 264.2 million Wall Street had expected. However, the quarter marks one of the last glimpses investors will get of the company’s subscriber base going forward.

“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction,” the company said in its quarterly letter to shareholders. “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential.”

Netflix said now that it is generating substantial profit and free cash flow — as well as developing new revenue streams like advertising and a password-sharing crackdown — its membership numbers are not the only factor in the company’s growth. It said the metric lost significance after it started to offer multiple price points for memberships.

The company said it would still announce “major subscriber milestones as we cross them.”

Netflix also noted that it expects paid net additions to be lower in the second quarter compared to the first quarter “due to typical seasonality.” Its second-quarter revenue forecast of $9.49 billion was just shy of Wall Street’s estimate of $9.54 billion

Shares of the company fell around 4% in extended trading.

Here are Netflix’s first-quarter results:

  • Earnings per share: $5.28 vs. $4.52 expected by LSEG
  • Revenue: $9.37 billion vs. $9.28 billion expected by LSEG
  • Total memberships: 269.6 million vs. 264.2 million expected, according to Street Account

Netflix reported first-quarter net income of $2.33 billion, or $5.28 per share, versus $1.30 billion, or $2.88 per share, in the prior-year period.

The company posted revenue of $9.37 billion for the quarter, up from $8.16 billion in the year-ago quarter.

The streaming company is navigating its transformation from targeting subscriber growth to focusing on profit, as it uses price hikes, a crackdown on password sharing and an ad-supported tier to boost revenue. Investors are looking for signs that these efforts are still boosting Netflix and seeking more details about the company’s foray into video games.

Netflix could also provide more insight into its partnership with TKO Group Holdings to bring WWE to the platform. The company has teased that it would like to expand its live sports offerings.

“We’re in the very early days of developing our live programming and I would look at this as an expansion of the types of content we offer, the way we expanded to film and unscripted and animation and most recently games,” said co-CEO Ted Sarandos during Thursday’s earnings call. “We believe that these kind of event cultural moments like the Jake Paul and Mike Tyson fight are just that kind of television, and we want to be part of winning over those moments with our members as well, so that for me is the excitement part of this.”

As of Thursday morning, the company’s stock was up 27% year to date and around 85% over the last 12 months.

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