Netflix’s global membership grew by 1.75m to 232.5m, the streamer reported in mixed first quarter 2023 results on Tuesday, marking the first earnings call without Reed Hastings who has moved up to executive chairman after Greg Peters joined Ted Sarandos as co-CEO.
The new subscriber number fell below Wall Street’s expectations of 2.26m net paid adds and marked 4.9% year-on-year growth from the company’s notoriously poor earnings report a year ago. Netflix no longer offers subscriber forecasts for the upcoming quarter.
Turning to Netflix’s prime financial metrics, revenue grew 3.7% year-on-year to $8.16bn, just below Wall Street’s forecasts of $8.18bn.
Operating income came in at $1.71bn, while operating margin was 21% compared to 25% in the year-ago period, which the company attributed to the appreciation of the US dollar.
Net income was $1.3bn and diluted earnings per share were $2.88, ahead of analysts’ expectations of $2.86. Revenue forecasts for the second quarter are $8.24bn.
Netflix also said it will roll out its paid sharing initiative – a euphemism for charging members for allowing others to use their log-in details – in the US and Canada in the second quarter, having launched it in 12 countries until now.
In Latin America revenue grew 7.1% year-on-year to $1.07bn, although membership by region saw a 450,000 decline resulting in 41.25m. Netflix attributed this to a “pull forward” from Q4 in 2022, when the region added 1.8m paid memberships, and “ongoing macroeconomic softness”.
In the US and Canada there were 100,000 net adds for 74.4m as revenue grew 7.7% year-on-year to $3.61bn and average revenue per membership gained 9% from $14.91 in the last quarter to $16.18, suggesting new members joining or existing members switching to the less expensive advertising-support tier.
Europe, Middle East and Africa saw a 640,000 subscriber gain for 77.37m as revenue fell 1.7% year-on-year to $2.52bn. Australia Pacific added 1.46m for 39.48m as revenues gained 1.9% year-on-year to $934m.
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