Netflix co-CEO Greg Peters speaks at Mobile World Congress 2023’s keynote address on the future of entertainment.
Joan Cross | nuphoto | Getty Images
Netflix Executives sent a message Thursday that everything will go well with business in the face of economic turbulence. However, its year-round outlook tells a slightly nuanced story.
According to StreetAccount, Netflix recorded a large beat in its operating margin in the first quarter, reporting 31.7% compared to an average estimate of 28.5%. It also far surpassed the second quarter analyst estimates. It is 33.3% versus the average estimate of 30%.
Netflix is ”first” to its first quarter’s own guidance with its own phrasing, “tracking beyond the midpoint of its 2025 revenue guidance range.”
Still, Netflix refused to change any of its long-term forecasts. That suggests that Netflix is less confident in the second half.
“Since our last revenue report, there have been no significant changes to our overall business outlook,” Netflix wrote in a quarterly note to shareholders.
US consumer sentiment is at the second lowest level since 1952 since President Donald Trump’s new tariff policy came into the market.
Co-CEO Greg Peters said during the company’s revenue conference call that Netflix has been “generally very resilient” to slowing the economy in the past. Home Entertainment offers a cheaper form of leisure than most other activities. A monthly Netflix subscription with ADS is $7.99.
But the problem remains, or whatever the economy slows down, or how it can pinch Americans’ wallets and force higher cancellations between streaming subscriptions.
As Netflix has stopped reporting subscribers for this quarter, the company will not be in the details if it sees a slower customer later this year, besides reporting underlying revenue and profits.
Although revenues were $10.5 billion in the first quarter, it was pretty much in line with analysts’ expectations, the guidance for the second quarter was just above $11 billion.
“Retention, it’s steady and strong. I haven’t seen anything important in plan mixes or plan take rates,” Peters said. “In general, things seem stable.”
