Netflix announced a significant change in its reporting strategy, revealing that it will no longer provide quarterly updates on subscriber numbers starting from the first quarter of 2025.
This decision came on the heels of a strong performance in the first quarter, where the streaming giant attracted 9.3 million new subscribers, nearly double the consensus forecast.
Despite the subscriber surge, Netflix’s shares dropped 4.2% in after-hours trading to $585.41 due to a revenue forecast that fell short of analyst expectations.
The company, which reached a global subscriber count of 269.6 million, is shifting its focus towards revenue and operating margins as key performance indicators, according to statements from its executives.
Co-Chief Executive Greg Peters emphasized this strategic shift, stating, “This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business.”
Analysts have expressed concerns that discontinuing the routine disclosure of subscriber numbers could complicate financial modeling and obscure future business projections.
Magalie Grossheim, a senior equity research analyst at M Science, speculated on the challenges ahead, noting the uncertainty of what could drive subscriber growth following the company’s crackdown on password sharing.
Netflix’s decision mirrors actions taken by other tech giants like Meta and X (formerly Twitter), which have also stopped reporting certain user metrics as their growth rates slowed.
Paolo Pescatore, an analyst at PP Foresight, criticized the move, suggesting that it might not be well-received given the substantial subscriber growth Netflix has experienced over the past year.
In addition to changes in reporting, Netflix is actively expanding its content and advertising strategies.
It introduced ad-supported subscription plans in November 2022, which now account for 40% of new sign-ups in available markets.
This approach not only caters to budget-conscious viewers but also helps convert shared account users into paying subscribers.
The company continues to innovate its content offerings, as highlighted by Co-CEO Ted Sarandos during an upcoming presentation for advertisers. Sarandos expressed excitement about new seasons of popular series like “Bridgerton” and “Sweet Tooth,” along with new unscripted events.
Financially, Netflix reported a 14.8% increase in revenue to nearly $9.4 billion for the first quarter, with operating income soaring by 54% year-over-year to $2.6 billion.
However, the projected revenue for the current quarter is slightly below analyst expectations.
Looking forward, Netflix is planning to enhance its global reach and content variety, including a significant investment in sports broadcasting with a 10-year, $5 billion deal to stream WWE’s “Raw.”
Sarandos also addressed speculation about film production strategies, clarifying that while the focus is on improving film quality, there is no intention to reduce the number of films produced.