Netflix shares jumped as much as 4% in after-hours trading on Thursday after the company beat Wall Street expectations for its first quarter of 2025.
Revenue grew 12.5% to $10.5 billion, driven by higher pricing and higher-than-forecasted subscription and ad revenue, the latter of which the company said is still “very small.” The company remains on track to reach “sufficient scale” with its ad-supported offering in 2025.
Here are the top-line results:
Net income: $2.89 billion, compared to $2.33 billion a year ago.
Earnings per share: $6.61 per share, compared to $5.69 per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $10.54 billion, up 12.5% year over year, in line with analysts surveyed by Zacks Investment Research.
Operating income: $3.35 billion, up 31.7% year over year, compared to $2.63 billion a year ago.
The latest earnings disclosure marks Netflix’s first in which it no longer breaks out its total subscriber and average revenue-per-paid member figures on a quarterly basis as it shifts its focus to revenue, operating margins and engagement. It last reported a total of 301.63 million subscribers globally. However, the company previously said it would continue to provide a breakout of total revenue by region, as well as the impact of foreign exchange changes, and announce major subscriber milestones as it crosses them.
Revenue in the U.S. and Canada grew 9% year over year to $4.62 billion, due to a partial impact from pricing changes, plan mix and the absence of ad revenue from its Christmas Day NFL games. The company expects revenue growth in the region to accelerate in the second quarter. Meanwhile, revenue climbed 15% year over year $3.41 billion in Europe, the Middle East and Africa; 8% to 1.26 billion in Latin America; and 23% to $1.26 billion in the Asia-Pacific region.
The streamer also revealed that executive chairman Reed Hastings, who co-founded Netflix in 1997, would transition out of the role to become board chairman and a non-executive director. Additionally, its longest-standing independent board director Tim Haley informed the company that he would not stand for re-election.
Resilience in Tough Economic Times
Netflix executives also addressed the economic uncertainty and global recession fears sparked by President Donald Trump’s tariff policy. While tariffs don’t directly impact TV shows and films, it could have an indirect impact on Hollywood in areas such as advertising and consumer spending.
Co-CEO Greg Peters said the company is paying close attention to consumer sentiment and the broader economy, but that there’s “nothing really significant to note” in terms of impacts to the company. He said retention and engagement remains “stable and strong” and that there hasn’t been any significant changes in its plan mix.
“We take some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times,” he continued. “Netflix specifically also has been generally quite resilient, and we haven’t seen any major impacts during those tougher times, albeit, of course, over a much shorter history.”
Adding to that resilience, Peters added, is “having the low-cost ads plan in our largest markets.” With the $7.99 ad-supported rate, Peters said that the company does expect the demand to remain strong. “It’s an accessible price point,” Peters said. He noted that Netflix accounts for about 6% of consumer spend and ad revenue in the areas it serves.
“We really rely on our members to let us know when we’ve invested enough, grown the value in our offering, and then determine, based on that, when we adjust pricing to be able to reinvest back into our service,” Peters added. “So we’re going to continue to follow that philosophy and that path, rather than some predetermined plan.”
Co-CEO Ted Sarandos acknowledged that Netflix faces some international risk due to taxes and levies around the world, but that it’s not changing its forecast.
“We produce original content in 50 countries around the world, and we’re a net contributor to many of those economies and cultures,” Sarandos added. “We create and support employment, training. We work with local producers and local talent, we help export local stories and local cultures around the world. We even drive tourism. So we believe we’re additive to the local economies and the local cultures all around the world where we’re working, so perhaps a little bit less exposed.”
Upfront Impact
When asked about possible impacts to advertiser spend during the upfront, Peters said that they are seeing no signs of softness based on direct interactions with buyers.
“We’re currently relatively small in ads as a revenue contributor to Netflix, but probably more importantly, the amount of ad spend that we’re seeking to win relative to the big ads pie. That smallness probably provides us some insulation to market shifts right now,” he said.
Netflix recently expanded its in-house adtech platform to the U.S. on April 1 following a launch in Canada and is on track to roll it out in the remaining 10 countries where its ad-supported offering is available in the coming months.
“That offers a bunch of new capabilities that advertisers have told us they want. So we’re just starting to sell into those new capabilities that opens up new opportunities for us, opens up new demand for us as well,” Peters added. “So I would say, based on everything that we’re seeing right now, we continue to expect that we will roughly double our advertising revenue in 2025 through a combination of both upfront programmatic expansion and scatter.”
YouTube Competition and Driving Engagement
During the quarter, Netflix touted the release of series “Adolescence” and films “Back in Action,” “Ad Vitam” and “Counterattack.” It also continued to build out its live programming offering with the launch of WWE Raw, which has been on its global Top 10 list every week.
Netflix plans to stream the Taylor vs Serrano women’s boxing rematch on July 11 and opted into a second NFL game for Christmas Day 2025. It also touted upcoming films including “Nonnas” starring Vince Vaughn, Tyler Perry’s “Straw” starring Taraji P. Henson, “Bullet Train Explosion” and “Havoc,” an action thriller starring Tom Hardy and Forest Whitaker. Upcoming series will “Forever,” a modern-day take on the classic Judy Blume novel, “The Royals,” “The Four Seasons” starring Tina Fey, Steve Carell and Colman Domingo, new seasons of “America’s Sweethearts: The Dallas Cowboys Cheerleaders,” “Black Mirror” and “Ginny & Georgia, and the final season of Squid Game on June 27.
“We are working hard to improve and expand our entertainment offering with the goal to build the most valued entertainment company for members, creators and shareholders,” the company wrote in its quarterly shareholder letter.
When asked about competition with YouTube, Sarandos said Netfilx offers “the best monetization model on the planet for premium storytelling.”
“I think we can help those creators reach an audience. Our model can also support more ambitious efforts for them, can help de risk them unlike the kind of typical [user-generated content] models,” he continued. “[Ms. Rachel has] been in the top 10 every week since she launched on Netflix, Kill Tony right now is killing it with our standup fans. We’re working with Sidemen, we just launched Pop the Balloon. So we think it’s really exciting when you put this all together. We believe it’s the best place for premium content, as defined by fans, and the best home for storytellers, wherever they’re working on honing their skills today.”
Peters also said that Netflix has more room to improve discovery and recommendations on the platform to drive engagement. It plans to roll out its new homepage design later this year as well as a new interactive search feature based on generative technologies. While its add an extra member feature has also resulted in good retention and engagement, Netflix executives said it isn’t a major driver for the business and is expected to remain “relatively small in the foreseeable future.”
Netflix Growth Outlook Remains Steady
Looking ahead, Netflix has maintained its revenue guidance of $43.5 billion to $44.5 billion in 2025 and an operating margin of 29%. It expects content expenses will grow in the third and fourth quarters on a year over year basis.
In the second quarter of 2025, it expects revenue to grow 15.4% to $11.04 billion as it sees a full quarter benefit from pricing changes and continued subscriber and ad revenue growth. It also anticipates net income of $3.06 billion, earnings per share of $7.03, operating income growth of 33.3% to $3.68 billion and an operating margin of 33%.
Longer-term, The Wall Street Journal recently reported that the company is eyeing a $1 trillion market capitalization by 2030. Per the Journal, it’s aiming to double its revenue from $39 billion last year and generate roughly $9 billion in global ad sales by 2030, triple operating income from $10 billion last year and grow its subscriber base to around 410 million in that time.
Sarandos dodged the report. “We often have internal meetings and we talk about long-term aspirations, but it’s important to note that this is not the same as forecast. Our operating plans is the same as our external forecasting guidance,” Sarandos said addressing the leak. “We don’t have a five-year forecast or five-year guidance, but you can assume that we are long-range thinking and that we’re working hard every day to build the most loved and valued entertainment company for all of our stakeholders. We do have big, long-term aspirations, and those aspirations are really grounded in the potential for growth that we see in the business.”
