Netflix (NFLX) reported mixed first quarter results on Tuesday, missing subscriber growth forecasts while beating analyst expectations on earnings per share.
The stock, which initially fell as much as 12% after the release, saw shares pare losses as investors digested the report — the first since co-CEO and co-founder Reed Hastings stepped down from his leading role at the company.
Here are Netflix's first-quarter results compared to Wall Street's consensus estimates, as compiled by Bloomberg:
Revenue: $8.16 billion versus $8.18 billion expected
Earnings per share (EPS): $2.88 versus $2.86 expected
Subscribers: 1.75 million versus 2.3 million net additions expected
Earnings and revenue projections disappointed after Netflix revealed it anticipates $8.24 billion in revenue and $2.84 in diluted EPS for the second quarter — below Wall Street forecasts of $8.5 billion in revenue and $3.05 in diluted EPS.
The results come as investors eagerly await updates regarding the company's recently launched ad-supported tier, in addition to its controversial crackdown on password-sharing.
Netflix, which broadened its crackdown to include countries like Canada, New Zealand, Portugal, and Spain, in addition to the test countries of Chile, Costa Rica, and Peru, revealed it's planning "a broad rollout" of the crackdown this current quarter that will include the U.S.
"While we could have launched [paid account sharing] broadly in Q1, we found opportunities to improve the experience for members. We learn more with each rollout and we’ve incorporated the latest learnings, which we think will lead to even better results," the company wrote in the release, adding it's "pleased with the results" so far despite near-term churn seen in Latin America markets.
Netflix CEO Ted Sarandos poses at the premiere of the Netflix series "Beef," Thursday, March 30, 2023, at the Tudum Theatre in Los Angeles. (AP Photo/Chris Pizzello)Netflix also revealed more insights into its ad-supported tier, telling shareholders in the release: "While it’s still very early days, we continue to be pleased with our progress across all key dimensions: member experience, value to advertisers and incremental contribution to our business. Engagement on our ads tier is above our initial expectations and, as expected, we’ve seen very little switching from our standard and premium plans
The ad plan, dubbed "Basic with Ads," comes at a cost of $6.99 a month in the U.S. and serves as a complement to Netflix's existing ad-free tiers — the Standard plan ($15.49 a month) and the Basic plan ($9.99 a month.)
The company added, "Given current healthy performance and trajectory of our per-member advertising economics, particularly in the U.S., we’re upgrading our ads experience with more streams and improved video quality to attract a broader range of consumers."
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at here for the latest stock market news and in-depth analysis, including events that move stocks
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