美国流媒体平台 $Netflix (NFLX.US)$ The Earnings Reports for the first quarter of 2025 (ending March 2025) were released after the market on Thursday, with the following key points:
Revenue: Netflix's Q1 revenue was $10.54 billion, exceeding the Analyst's expectation of $10.5 billion, representing a year-on-year growth of 12.5%; Q2 revenue is expected to be $11.04 billion, also above the market expectation of $10.88 billion; the forecast range for total revenue in 2025 remains at $43.5 billion to $44.5 billion.
Operating margin: Netflix's Q1 operating margin was 31.7%, higher than the expected 28.2% and the 28.1% from the same period last year; Q2 operating margin is expected to be 33.3%, exceeding the market expectation of 30%; the full-year operating margin guidance remains at 29%.
Net income: Netflix's Q1 net income was $2.89 billion, up 23.9% year-on-year, significantly exceeding the market expectation of $2.44 billion.
EPS: Netflix's Q1 EPS was $6.61, surpassing the market expectation of $5.68; for Q2, EPS is expected to be $7.03, higher than the market expectation of $6.24.
Free cash flow: Netflix's Q1 free cash flow was $2.7 billion, a quarter-on-quarter increase of 25%; full-year free cash flow is expected to be approximately $8 billion, while market expectations are $8.51 billion.
Performance by region:
Revenue from the USA and Canada: 4.617 billion USD, a year-on-year increase of 9%, lower than the market expectation of 4.681 billion USD;
Revenue from EMEA (Europe, Middle East, and Africa): 3.405 billion USD, a year-on-year increase of 15%, higher than the market expectation of 3.312 billion USD;
Revenue from Latin America: 1.262 billion USD, a year-on-year increase of 8%, with market expectations being 1.26 billion USD;
Revenue from the Asia-Pacific region: 1.259 billion USD, a year-on-year increase of 23%, exceeding the market expectation of 1.24 billion USD.
Overall, Netflix's earnings reports showed bright performance, with data exceeding Wall Street expectations comprehensively. Netflix stated that part of the revenue growth this quarter comes from the increase in memberships; the company expects that revenue growth in the second quarter will be even stronger, benefiting from recent price increases, continued membership growth, and additional advertising revenue. The company mentioned that the outlook for revenue and profit growth remains robust, maintaining previous predictions for revenue and profit margins, as well as expecting that advertising performance will double by 2025.
Although many companies are preparing for the impact of escalating global tariffs, analysts believe that Netflix is relatively less affected. This is because when households cut back on major expenditures like outdoor entertainment, they often retain subscription services like Netflix for household video.
It is noteworthy that this is the first time Netflix has not disclosed quarterly subscriber counts and average revenue per user (ARPU) in their earnings reports, a key reference that investors have closely monitored. The company stated that this was to shift Wall Street's focus more towards their revenue and profit performance.
In the fourth quarter of last year, Netflix added 18.9 million paying users, setting a new record and significantly exceeding market expectations. Media reports indicate that Netflix has ambitious growth targets, including doubling revenue by 2030, increasing global advertising sales to around 9 billion USD, and achieving a market cap of 1 trillion USD. Currently, the company's market cap is slightly above 400 billion USD.
After the earnings report was released, Netflix shares rose over 3% in after-hours trading on Thursday, with the increase at one point exceeding 5%, bringing the stock price back above the 1000 USD mark. So far this year, Netflix has accumulated a gain of over 9%, standing out particularly in a list of major US technology stocks that are struggling; on February 14, it hit a historic high price of 1064.5 USD during trading.
Before Netflix's earnings announcement, Wall Street analysts generally believed that the company was likely to demonstrate strong performance resilience amid macroeconomic uncertainties, and ultimately, Netflix's earnings report did not disappoint. Reports indicate that Netflix recently disclosed its internal plans, aiming to double revenue and quadruple operating profit by 2030, with the intention of hitting a market cap of 1 trillion USD. Based on the current market cap of 416.22 billion USD, that means the company needs to achieve over a 140% increase to reach its goal.
Furthermore, more importantly, Netflix's strong earnings report indicates that the earnings season for American tech giants has kicked off successfully. If the performance of the upcoming giants is generally strong, it is expected to drive a rebound from the sluggish performance. $Nasdaq Composite Index (.IXIC.US)$ the competition with $S&P 500 Index (.SPX.US)$
The operating profit margin has increased significantly.
In January of this year, Netflix raised the prices of its subscription plans: the ad-supported subscription increased from $6.99 to $7.99 per month, the standard ad-free version rose from $15.49 to $17.99, and the premium version went up from $22.99 to $24.99. Netflix stated that in the countries where this package has been launched, this version accounts for 55% of new user registrations.
The price increase at Netflix led to a significant boost in operating profit margins, with the company's Q1 operating profit margin soaring from 22.2% in the previous quarter to 31.7%, and it is expected that the Q2 operating profit margin will further expand to 33.3%. The improvement in operating profit margin is also the main reason for the company's profits significantly exceeding expectations.
Netflix indicated that the comprehensive price increase at the end of January this year did not scare off users. The performance in the USA, United Kingdom, and Argentina markets following this price increase met the company's expectations, prompting the company to decide to also raise prices in France and to include this change in revenue in its guidance considerations.
UBS Group analysts pointed out in a report released on Monday that Netflix's record subscriber growth in the fourth quarter, coupled with the price hikes, has laid a solid foundation for growth this year. They specifically mentioned that the return of popular series such as "Stranger Things," "Squid Game," and "Wednesday" will further help the platform maintain user engagement.
Stopping the disclosure of subscriber numbers.
Netflix has stopped disclosing specific subscriber numbers, which some analysts interpreted as a signal of slowing user growth. Netflix explained that the user count has 'become increasingly difficult to accurately reflect business conditions', and in the future, the focus will shift to metrics of user engagement like viewing time, believing this can better predict user retention and new user acquisition.
Recently, Netflix revealed that it aims to reach a global subscriber count of approximately 0.41 billion by the end of 2030; as of the end of 2024, Netflix users are expected to be 0.3016 billion. This goal represents an increase of approximately 0.1 billion compared to the end of 2024, which means roughly 18 million new users need to be added each year. Analysts stated that considering the recent momentum in user growth from combating password sharing and launching ad-supported services, as well as the strong performance of adding 19 million users in the fourth quarter of 2024, this target seems achievable.
However, due to the saturation of the American market, attracting new users has become more difficult, prompting the platform to accelerate its expansion into international markets. Netflix's senior management has indicated to employees that they plan to focus on increasing overseas subscribers, particularly in markets with high broadband penetration such as India and Brazil.
Media analysts at Bank of America noted that Netflix, with its strong market position and popular content, is unlikely to face a 'mass cancellation trend,' although some cost-sensitive users may opt for cheaper subscription tiers.
Advertising Business: An Important Pillar of New Growth
The advertising business is also an important pillar of Netflix's new growth. Netflix expects its advertising performance to double by 2025, and by 2030, advertising revenue is expected to increase to approximately $9 billion.
Netflix co-CEO Greg Peters stated that the company launched its advertising technology platform on April 1 and plans to expand into another 10 countries that have opened advertising operations in the coming months. The company expects advertising revenue to double this year. He also revealed that while the company is closely monitoring consumer sentiment and overall economic trends, there has been no reduction in advertising spending by clients, and business operations have not been significantly impacted.
Analyst firm Wedbush mentioned in a recent report that "with the introduction of more live content, improvements in advertising solutions and delivery efficiency, as well as the expansion of content strategy, Netflix is expected to continue expanding the revenue contribution of its advertising tier in the coming years." It was suggested that growth in 2024 will be driven by subscribers, in 2025 by pricing, and in 2026 it will be driven by the advertising business.
Research firm Moffett Nathanson also believes that Netflix still has significant growth potential in the future, especially regarding the monetization capabilities of its newly launched advertising subscription model and the improvement of profit margins. Compared to the premium ad-free plan priced at $24.99 per month, Netflix's $7.99 low stock price advertising plan has attracted many users who were previously deterred by high prices.
A safe haven amidst tariff turmoil?
As the US stock market continues to be hit by the "tariff pressure" from the Trump administration, Netflix is one of the few Stocks in the US Technology giants that has achieved positive growth in recent years, with a cumulative increase of over 9% this year.
JPMorgan Analyst stated that given the high user engagement (around 2 hours per day per membership household), low historical churn rate, high cost-performance ratio, and the relatively short time since the launch of ad tiers (at $7.99 per month in the USA), Netflix is likely to be more defensive when facing macro unfavorable factors, and its service accessibility is also broader. Even so, Anmuth indicated that in a severe economic situation, consumers might still carefully check their credit card bills for areas to save costs.
Hamilton Capital's Chief Investment Officer analyzed that Netflix is not directly impacted by tariffs, and its profitability and advertising revenue trends are strong. The low-cost subscription package is cost-effective enough that consumers are unlikely to cancel it even during an economic downturn. Oppenheimer analysts also noted that during the European debt crisis in 2012 and the pandemic in 2020, Netflix's user growth increased, proving that Entertainment is indispensable in turbulent economic times, and Netflix offers a strong cost-performance ratio.
However, there are also Analysts who believe that although Netflix may be immune to the direct impacts of tariffs and economic threats, Wall Street might overlook a point. If US-EU trade negotiations collapse, the EU may take strong measures against US Technology giants, including Netflix. European Commission President Ursula von der Leyen recently stated that if negotiations with President Trump fail, the EU plans to use the strongest trade countermeasures, including imposing tariffs on US digital companies.
Analysts state that the EU digital services tax and digital advertising tax may impact Netflix's income, while localized regulations and content quotas may hinder Netflix's market share in Europe. Although the likelihood is low at this stage, Netflix's Global layout can mitigate some impacts, but it cannot be ignored.
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