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Netflix Crushes Subscriber Targets but Misses on Revenue Forecast

In a remarkable performance, Netflix (NFLX) exceeded Wall Street's expectations for new customer acquisition for the second consecutive quarter. 

However, the company signaled a potentially dampened outlook, forecasting revenue growth slightly below analyst targets.

Neftlix streaming company, learn a trade

Initially rising about 3% in after-hours trading following the earnings report, Netflix's stock later fell by 3% to $589.98. The company credited its ad-supported streaming plans for attracting 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG.

For the current quarter, Netflix projected revenue of $9.49 billion, slightly lower than analyst expectations of $9.537 billion. Earnings per share for January through March stood at $5.28, a significant increase from $2.88 a year earlier.Netflix's revenue surged by 14.8% to nearly $9.4 billion during the period, coinciding with the debut of titles such as the sci-fi drama series "3 Body Problem" and the crime thriller "Griselda." Operating income saw a robust year-over-year increase of 54%, totaling $2.6 billion.

Analysts, based on LSEG data, had anticipated Netflix to gain approximately 5 million subscribers globally in the quarter, following record gains at the end of 2023. These additions propelled Netflix's total subscribers to 269.6 million by the end of March.

In a letter to shareholders, Netflix highlighted its unique combination of a strong content slate, superior recommendations, broad reach, and intense fandom as key drivers of healthy engagement on the platform. As competitors like Walt Disney (DIS) struggle with losses in their streaming efforts, Netflix continues to attract customers and generate profits.

The company outlined plans to enhance the variety and quality of its entertainment offerings and to scale its advertising business further. Notably, Netflix began offering ad-supported plans in November 2022, which cost less than half of the ad-free options, and initiated a crackdown on password sharing in 2023 to convert freeloaders into paying subscribers.

The ad-supported version of Netflix now accounts for 40% of all sign-ups in markets where it's offered. To cater to its diverse global audience, Netflix is expanding its sports offerings with a $5 billion, 10-year deal to stream WWE's wrestling show, "Raw," starting in January 2025.

Under new leadership from Dan Lin, Netflix's film division has undergone restructuring, aiming to produce fewer but higher-quality movies for streaming. Despite falling short on revenue forecasts, Netflix's continued innovation and strategic initiatives position it as a formidable force in the competitive streaming landscape.


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