Netflix is reporting a healthy start to the fiscal year in its earnings today, bringing in nine million new subscribers in the last quarter for a grand total of 269.6 million. But soon, we won't be able to headline Netflix earnings stories with that information anymore.
In its first quarter earnings report, Netflix announced alongside its successful start to the year that it would cease sharing subscriber numbers beginning a year from now, with its Q1 2025 earnings. Per the letter, Netflix claims this is part of its ongoing push to focus on revenue and operating margin as its primary financial metrics, and engagement as its metric for customer satisfaction. As Netflix co-CEO Greg Peters explained on a call following the report's publication:
As we noted in the letter, we've evolved and we're going to continue to evolve our revenue model and adding things like advertising and our extra member feature. Things that aren't directly connected to a number of members. We've also evolved our pricing and plans with multiple tiers, different price points across different countries. I think those price points are going to become increasingly different. So, each incremental member has a different business impact and all of that means is that historial simple math that we all did - you know, number of members times the monthly price - is increasingly less accurate in capturing the state of the business. So this change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to the business. So we're gonna report on and guide on revenue, on OI, OI margin, net income, EPS, free cash flow.
We'll add a new annual guidance on a revenue range to give you a little bit more of a longterm view. We're not gonna be silent on members as well. We'll periodically update when we grow and we announce certain major milestones, it's just not going to be part of our regular reporting. And we want to do all of this thoughtfully and give everyone time to transition, so we're gonna report subscribers until Q1 of next year, which links into our new annual revenue guidance for 2025.
As former IGN streaming editor and current Parrot VP of strategy Julia Alexander points out on X/Twitter, this change will have the unfortunate side effect of making it impossible to calculate subscriber churn once it goes into effect:
Netflix doesn't report churn, but sub history allowed for calculation. Antenna does a great job with churn reporting (where Netflix is exceptionally low, as seen through engagement), but we don't have insight into global churn as core markets may start moving toward saturation.
— julia alexander (@loudmouthjulia) April 18, 2024
Also in its earnings, Netflix reported revenue was up 15% year over year to $9.37 million. First quarter growth was largely driven by shows such as Griselda, Avatar: The Last Airbender, and American Nightmare in the US, as well as Fool Me Once and The Gentlemen in the UK, among others. In film, Damsel, Lift, and The Greatest Night in Pop performed well.
The company forecasts 16% year-over-year revenue growth for the upcoming Q2, and forecasts 13% to 15% year-over-year growth for the full year. In its last earnings report, Netflix stated it expects to continue to grow its ads business in the coming quarters, and expects "record membership growth" for the year.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.
