Streaming giant Netflix reported its Q1 earnings, beating Wall Street estimates for revenue and earnings per share. However, the company’s forecast for Q2 fell short of expectations, highlighting the challenges it faces in its pursuit of growth.
The company also announced that it is delaying the wider launch of its plan to crack down on unsanctioned password sharing until Q2 to make improvements. While the move will delay some financial benefits, the company stated that it is pleased with the results so far.
As competition in the streaming industry intensifies, Netflix is looking for new ways to make money, such as the password crackdown and a new ad-supported service.
Shares of Netflix initially dropped as much as 11% in after-hours trade following the report but recovered to gain 1.4%.
Netflix serves as a bellwether for the streaming industry, and its growth has slowed as competition has intensified. From January through March, Netflix added 1.75 million streaming subscribers, missing analyst estimates of 2.06 million additions.
Paolo Pescatore, an analyst at PP Foresight, described the Q1 results as mixed. “Netflix is a mature business reinforcing less reliance on subscriber growth. However, this metric still moves the needle for key stakeholders,” he said.
Netflix also announced that it is moving into live streaming. The company angered fans of dating show “Love is Blind” on Sunday when a reunion special that was meant to be shown live was unavailable due to a “bug” that has now been fixed, according to Co-CEO Greg Peters.
A year ago, Netflix lost 200,000 subscribers – its first subscriber decline in more than a decade, sending its stock reeling and resetting Wall Street’s expectations for the sector.
Netflix added nearly 9 million subscribers in 2022, half as many as the 18 million gained in the prior year, with much of that growth coming from Asia, according to research firm MoffettNathanson. The gains it made in Asia and Latin America have impacted the average revenue per user, spurring Netflix to make changes to its business model, the firm said.
