Netflix beats subscriber targets, but revenue falls short of forecast

Netflix said it will stop reporting subscriber additions each quarter starting with the first quarter of 2025 and instead will announce them only when major milestones are reached.

Netflix NFLX.O blew past Wall Street expectations on new customers for the second straight quarter on Thursday but signaled the positive surprises could be over, forecasting revenue growth slightly below analyst targets.

Shares of the streaming video pioneer were down 4.2 per cent at US$585.41 in after-hours trading.

The company said its ad-supported streaming plans helped bring in 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG. For the current quarter, it projected revenue of US$9.49 billion compared with analyst expectations of US$9.537 billion.

Netflix executives have urged investors to focus on revenue and operating margins when assessing its progress. The company said it will stop reporting subscriber additions each quarter starting with the first quarter of 2025, and instead will announce them only when major milestones are reached.

“This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business,” Co-Chief Executive Greg Peters said in a post-earnings video.

The recent subscriber additions brought Netflix’s total subscribers to 269.6 million at the end of March.

Analysts said the decision to stop quarterly reporting of those numbers would likely rankle investors. They also said it was unclear what would drive new sign-ups once Netflix has pulled in as many users as possible from its crackdown on password-sharing.

“It might be a few more quarters of paid sharing benefits, but we don’t really know what the next catalyst will be after that for a member addition,” said Magalie Grossheim, senior equity research analyst at M Science. “I think that’s probably contributing also to why they’re deciding to stop reporting those numbers.”