Netflix Q1 earnings top estimates, but weaker revenue outlook bites

By Yasin Ebrahim

Investing.com -- Netflix reported Tuesday reported first-quarter earnings that topped analyst estimates, but guidance fell short of Wall Street expectations just as many were expecting the streaming giant to benefit from the launch of its ad-supported tier.

Netflix Inc (NASDAQ:NFLX) fell more than 1% in after-hours trading, though had been down more than 9% following the report.

Netflix announced earnings per share of $2.88 on revenue of $8.16 billion. Analysts polled by Investing.com anticipated EPS of $2.86 on revenue of $8.47 billion.

Netflix added 1.75 million users, compared with a loss of 200,000 in the same period last year, but that missed analyst estimates of about 2.41M net adds.

Looking ahead to Q2, the streaming giant said its revenue of $8.2B is up 3% year over year, but short of analysts' expectations for $8.48B.

The subdued outlook on second-quarter revenue comes as the streaming giant was expected to have benefited from the launch of an ad-supported tier and a crackdown on password sharing. But the company forecast that second-quarter paid net adds were expected to be “roughly similar to Q1’23.”

The streaming giant also delayed a broader expansion of its paid sharing option last year, requiring users to pay a fee to share their subscription with friends and family who don’t live with them. A broader expansion of the paid sharing option, which was rolled out out in four countries including Canada, New Zealand, Portugal and Spain, was pushed back to Q2 rather than late Q1 as initially expected, Netflix said.

"While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome from both our members and our business," it added.

Looking further ahead, the company said it was on track to meet 2023 guidance, forecasting revenue of $8.2B, up 3% year over year.