Netflix reports record earnings for the year’s first quarter, mainly due to a crackdown on password sharing and a noteworthy rise in users.
The streaming company revealed that 9.3 million new users joined during the first quarter, bringing its total number of subscribers to around 270 million. Over $2.3 billion in profits were made within the same period, exhibiting a solid financial performance. However, Netflix revealed a deliberate change in reporting methods, saying it will stop releasing important subscriber data starting next year.
“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” the company wrote to shareholders. Netflix emphasized that its growth trajectory now includes more than just member numbers, and it asked investors to pay attention to its rapidly increasing profitability and revenue, which increased by about 15% year over year to $9.37 billion in the first quarter.
The firm credited its performance to well-received releases, such as the murder drama “Griselda,” which consistently increased audience engagement. However, a few investors voiced their concerns over Netflix’s decision to stop disclosing subscriber numbers, seeing it as a possible indication that Netflix’s consumer growth trajectory has reached a standstill.
Former Netflix executive and current principal at SPG Global, an entertainment investment business, Simon Gallagher, emphasized the effect of the crackdown on password sharing and acknowledged that it had been a major factor in the company’s recent rise. However, he issued a warning that this momentum could drop soon.
Despite the company’s favorable financial projections, analysts disagree with Netflix’s choice to withhold subscriber figures. In line with industry experts, Jamie Lumley of research company Third Bridge questioned the implications for Netflix’s subscriber base growth trajectory.
Netflix’s stock prices, which had risen more than thirty percent since the beginning of the year, somewhat decreased after the announcement. Analysts emphasized that Netflix’s emphasis on original content and strategic moves—like entering the sports and video game industries—are essential to maintaining its competitive advantage and increasing profitability in the face of a constantly changing streaming market.