Netflix‘s earnings report for the first quarter of 2024 included some encouraging numbers, but a warner about the future caused the streamer’s stock price to decline. Netflix shares fell by as much as 8% after the company revealed that it would discontinue its practice of sharing quarterly subscriber gains.
Let’s start with the good news: Q1 2024 turned out pretty well for Netflix. Thanks to its global slate of originals, which included Q1 releases like Love Is Blind season six (pictured above), the streamer hit $9.33 billion in sales, while net income grew to $2.33 billion. Both of those numbers exceeded analyst projections.
Netflix’s subscriber numbers are also looking healthy. 9.33 million customers signed up for accounts during the first quarter; in comparison, analyst estimates for Netflix’s Q1 subscriber gain averaged out to 4.84 million customers, so the actual number was nearly twice as big as projections.
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Some of the new subscribers purchased their own accounts as a result of Netflix’s crackdown on password sharing. That effort has boosted Netflix’s numbers for several quarters in a row.
Netflix’s subscriber gains have been significant, but the streamer is also reevaluating the usefulness of that particular statistic. Its Q1 2024 earnings report noted that the expanding diversity of its subscription options — which range from the classic ad-free option to the newer “with ads” tier — is leading to less internal emphasis on raw subscriber counts. In upcoming earnings reports, Netflix will no longer share those particular pieces of data, though it will still inform shareholders when it crosses significant subscriber benchmarks.
“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,” reads the report. “It’s why we stopped providing quarterly paid membership guidance in 2023 and, starting next year with our Q1’25 earnings, we will stop reporting quarterly membership numbers.”
Netflix also noted that analysts should expect a subscriber downturn during the second quarter due to “seasonality.” That word of caution, when combined with the deemphasis on subscriber numbers, led to a significant selloff on Wall Street. In the wake of the Q1 2024 earnings report, Netflix stock had its biggest dip in nine months. As of this post, it is holding steady at around $554 per share.
