CALIFORNIA: Netflix surpassed Wall Street earnings estimates for the first quarter but offered a lighter-than-expected forecast on Tuesday, depicting the challenges faced by the streaming service as it seeks growth.
The company said it moved a wider launch of a plan to counter unsanctioned sharing of passwords into the second quarter to make improvements, delaying some financial benefits, but expressed satisfaction on the outcomes so far.
As Netflix faces signs of market saturation, it seeks new ways to earn money, such as the password crackdown strategy and a new ad-supported service.
Earnings and revenue for the first quarter coincided with the average analyst estimates from Refinitiv. Earnings per share stood at $2.88 with revenue of $8.162 billion.
“We are growing and we are profitable,” Co-Chief Executive of Netflix Ted Sarandos said in the firm’s post-earnings video interview. “We have a clear path to boost growth in both revenue and profit, and we are executing it.”
Following the report, Netflix’s shares fell as much as 11% in after-hours trade but recovered to gain 1.4%.
The mature streaming service serves as a bellwether for the industry, in which growth has halted as competition has intensified.
From January through March, the company added 1.75 million streaming subscribers, missing estimates by analysts of 2.06 million additions.
Analyst Paolo Pescatore of PP Foresight termed the first- quarter results as mixed.
He called Netflix “a mature business reinforcing less reliance on subscriber growth”.
However, he added, this metric still moves the needle for key stakeholders.
