Netflix increases profits, but won't disclose subscription figures in future.
Netflix is recording more sales, profits and subscribers. The company says subscription figures are less relevant and soon won't be included in business reports
(Image: Shutterstock.com/Daniel Avram)
Netflix has made a good start to 2024 – in financial terms. The streaming provider was able to increase all key figures in the first quarter of this year compared to the previous year: revenue, profits and subscribers. However, Netflix says the latter will become less important in the future. From 2025, Netflix will no longer report subscription figures regularly, but only when special milestones are reached. The entertainment company currently reports the number of members at least once a quarter.
More information is always better for the stock market and investors, but Netflix believes that subscription figures are now less relevant, at least for the financial result. This is due to new sources of revenue such as advertising in certain subscription plans, which have been offered since the end of 2022. Due to the different tariffs and various prices, including regional differences, subscription figures are no longer as meaningful as before. From the beginning of 2025, Netflix will therefore no longer disclose subscription figures in its quarterly results.
Subscription figures have recently grown significantly
The development of subscribers has been quite positive recently. According to Netflix, it now has 269.6 million paying members, 16 percent more than in the same period last year and, with 9.3 million new subscribers, 3.5 percent more than at the end of 2023. Market observers had assumed an average of 5.5 million new customers in this period. According to Marketwatch, even the most positive forecasts had only predicted 7 to 9 million new subscriptions.
Netflix's revenue has grown by 14.8 percent year-on-year to 9.37 billion US dollars. At the same time, operating profit rose by 28.1 percent to 2.63 billion dollars and net profit by as much as 79 percent to 2.33 billion dollars. This result also exceeds the Group's own expectations. At the beginning of this year, when Netflix grew faster following the account sharing ban and subscriptions with advertising, the streaming provider was still expecting a net profit of 1.98 billion dollars.
Advertising rates popular, new series as driving forces
Netflix attributes this success** to the popularity of its subscription plans with advertising. More than 40 percent of new customers in markets where this is offered have booked such a package, as it is cheaper than standard tariffs. As a result, Netflix was able to increase the number of memberships with advertising plans by 65 percent compared to the previous quarter. Subscription plans with advertising were even more popular in the previous quarters and even grew by 70 percent in the third and fourth quarters of 2023.
However, the films and series on Netflix are likely to be decisive for new members. Here, the streaming provider points to the new series "Griselda" with 66.4 million views and "Avatar – The Lord of the Elements" with 63.8 million views. The series "3 Body Problem", which was only launched at the end of March, already has 39.7 million views. British series were also successful, such as "In Eternal Debt" with 98.2 million views and "The Gentlemen" with 61 million views.
Outlook for further growth, but share price still falls
Netflix expects further growth in the current quarter. Revenue is set to increase by 16 percent. However, the entertainment company is forecasting slightly lower growth rates for the year as a whole. As things stand, Netflix's revenue is expected to grow by 13 to 15 percent in 2024. Nevertheless, the share price fell slightly in after-hours trading. The value of Netflix shares fell by almost five percent after the close of trading.
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The fact that Netflix will no longer regularly report subscription figures in future is often seen as an expected slowdown in growth. However, the entertainment company itself still sees potential. Almost 270 million households in over 190 countries have already subscribed to Netflix and, with an average of just over two people per household, the company has an audience of over half a billion people. Nevertheless, Netflix only accounts for 10 percent of TV viewing, so growth is possible, especially for live events such as sport and music.
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