Achi news desk-
Shares of Netflix ( NFLX ) fell 9.6% on Friday after the company gave a second-quarter revenue forecast that missed estimates and said it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix reported second-quarter revenue of $9.49 billion, missing consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from single tiers to multiple tiers with different price points depending on the country, each tiered fee company has a very different business impact,” the company said.
Netflix reported first-quarter earnings that beat across the board on Thursday, with another 9 million new subscribers in the quarter.
Subscriber additions of 9.3 million beat expectations of 4.8 million and trailed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in the first quarter of 2023.
Revenue beat the Bloomberg consensus estimate of $9.27 billion to reach $9.37 billion in the quarter, up 14.8% compared to the same period last year, as the streamer relied on revenue initiatives such as password-sharing hacking and an ad-supported tier. for the latest price increases in certain subscription plans.
Netflix stock has been on a tear in recent months, with shares now trading near the high end of its 52-week range. Analysts on Wall Street warned that high expectations for the printing could pose an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting earnings per share of $5.28, well above consensus expectations of $4.52 and nearly double the figure of $2.88 per share it reported in the same period last year. Netflix reported second-quarter earnings per share of $4.68, ahead of consensus calls for $4.54.
Profitability indicators also came in strong, with operating profit rates in the first quarter of 28.1% compared to 21% in the corresponding period last year.
The company previously projected operating margins of 24% for the full year of 2024 after the index grew to 21% from 18% in 2023. Netflix expects earnings to drop slightly in the second quarter to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM was up 1% year over year – in line with Q4 results. Wall Street analysts expect ARM to strengthen later this year as both the impact on the ad layer and the effects of rising prices take shape.
On the ad front, ad subscriptions increased 65% quarter-over-quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ad program now accounts for more than 40% of all Netflix subscriptions in markets where it is offered.
Alexandra Canal He is a senior reporter at Yahoo Finance. Follow her in X @allie_canal, LinkedIn, And email her at [email protected].
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