Netflix reported in its earnings today that it started its fiscal year on a strong note, adding 9 million new subscribers in the last quarter for a total of 269.6 million. But soon, you won’t be able to put that information in the headline of a Netflix earnings story.
In its first quarter earnings report, Netflix announced that while it was off to a strong start to the year, it would no longer release subscriber numbers starting with its first quarter earnings of 2025, a year from now. According to the letter, Netflix claims this is part of its continued efforts to focus on revenue and operating margin as key financial metrics and engagement as a measure of customer satisfaction. Greg Peters, co-CEO of Netflix, explained this in a phone call after the report was released:
As mentioned in the letter, we are evolving and will continue to evolve our revenue model and add things like advertising and additional member features. Things that are not directly related to the majority of members. We have also evolved our pricing and plans with multiple tiers with different price points for each country. I think these price ranges will become increasingly different. This means that each incremental member has a different impact on your business. This means that the simple calculation we’ve all used to do (number of members multiplied by monthly fee) is becoming less and less accurate in understanding the health of your business. Therefore, there is a real motivation for this change to focus on the key metrics that are considered most important to the business. So we’re going to report and guide you on revenue, OI, OI margin, net income, EPS, and free cash flow.
We’re adding new annual guidance on revenue ranges to provide a bit more long-term perspective. Don’t be silent about your members either. We will update regularly as we grow and announce certain major milestones, but it is not part of our regular reports. And because we want to do all of this carefully and give everyone time to transition, we plan to report subscriber numbers through the first quarter of next year and link them to our new annual revenue guidance for 2025.
As Julia Alexander, former IGN streaming editor and current VP of strategy at Parrot, points out on X/Twitter, this change has the unfortunate side effect of making it impossible to calculate subscriber churn once it goes into effect. Masu.
Netflix does not report churn, but subhistory can be calculated. While Antenna has done a good job with its churn reporting (as seen through engagement, Netflix is exceptionally low), we need some insight into global churn as our core market may start to move towards saturation. there is no.
— Julia Alexander (@loudmouthjulia) April 18, 2024
Netflix also reported a 15% year-over-year increase in revenue to $9.37 million. First-quarter growth was primarily driven by shows such as Griselda, Avatar: The Last Airbender and American Nightmare in the U.S., and Fool Me Once and The Gentlemen in the U.K. . Among movies, “Damsel,” “The Rift,” and “The Greatest Night in Pop” performed well.
The company expects sales to increase 16% year-over-year in the upcoming second quarter, and 13% to 15% year-over-year growth for the full year. In its last earnings report, Netflix said it expected continued growth in its advertising business in coming quarters and expected “record membership growth” this year.
Rebekah Valentine is a senior reporter at IGN. Do you have any story tips? Send it to rvalentine@ign.com.
