Netflix’s stock experienced an increase of more than 4% in after-market trading on Thursday following the release of its first-quarter earnings report, which exceeded Wall Street expectations. The company also restated its positive business forecasts despite historically low consumer confidence in the U.S.
In the earnings announcement on Thursday, Netflix expressed confidence in its future revenue and profit growth, indicating no changes to its 2025 revenue forecast.
This optimistic outlook may appeal to some investors who have been cautious, especially considering the challenges in the retail and apparel sectors amid economic uncertainties spurred by the Trump administration’s intensifying trade conflict with China.
During an earnings call, Netflix’s Co-CEO Greg Peters stated that the company has remained largely unaffected by the economic turmoil. Peters noted that while Netflix’s leadership is monitoring the economic situation closely, customer retention and audience engagement with Netflix content have not shown significant negative impacts.
Company executives explained that Netflix benefits from the generally resilient nature of entertainment spending during economic downturns. They emphasized the flexibility offered by Netflix’s varied subscription plans, including a $8 monthly plan that includes advertisements, as a way for customers to manage costs. Although advertising is a new business area for Netflix and could face challenges as marketers reduce expenditures, it’s currently a small portion of the company’s total revenue. Furthermore, new advertising tools are increasing the appeal of advertising on Netflix to advertisers, balancing out any potential downturns.
For the quarter, Netflix outperformed analyst projections for both revenue and profit. Revenue reached $10.54 billion, surpassing the expected $10.51 billion, while earnings per share were $6.61, significantly exceeding the forecasted $5.71.
This earnings release marked the first instance in which Netflix did not report quarterly subscriber numbers. The decision, announced last year, reflects a shift in focus as subscriber numbers no longer provide the most comprehensive view of the business, which now includes various subscriber tiers and a developing advertising segment.
As reported by the Wall Street Journal, Netflix remains confident in its five-year plan to increase its market capitalization to $1 trillion. The company aims to double its revenue and triple its operating income by 2030, with the objective of expanding its ad sales business to $9 billion annually within the same timeline.
The first quarter saw successful content releases, highlighted by the miniseries “Adolescence,” which Netflix claims is its third most-watched English language series to date.
During its last quarter of reporting subscriber growth in Q4, Netflix announced the addition of over 18.9 million members worldwide and raised the price of its standard plan to $17.99 per month.
Netflix’s growth momentum, akin to the Amazon flywheel, continues despite potential looming economic challenges, showing resilience in the face of adverse conditions.
