Price increase, membership growth! Netflix's first-quarter profit hits a record high, and second-quarter guidance exceeds expectations

The American streaming platform Netflix announced its first-quarter financial report after the market closed on Thursday, showing that due to strong growth in subscription and advertising revenue, the company's revenue and second-quarter performance guidance both exceeded analysts' expectations, with quarterly profits hitting a record high, driving the stock price up over 4.3% in after-hours trading.

Here are the key points from Netflix's first-quarter financial report:

Key Financial Data:

Revenue: Netflix's first-quarter revenue was $10.54 billion, higher than analysts' expectations of $10.5 billion, a year-on-year increase of 12.5%

Operating Margin: Netflix's first-quarter operating margin was 31.7%, above the expected 28.2% and last year's 28.1%

Net Profit: Netflix's first-quarter net profit was $2.9 billion, 24% higher than the expected $2.44 billion

Earnings Per Share: Netflix's first-quarter earnings per share were $6.61, exceeding the market expectation of $5.68

Free Cash Flow: Netflix's first-quarter free cash flow was $2.7 billion, a quarter-on-quarter increase of 25%

Performance Guidance:

Revenue: Netflix expects second-quarter revenue to be $11.04 billion, higher than analysts' expectations of $10.88 billion

Full-Year 2025 Revenue: Netflix maintains its previous forecast, expecting full-year revenue to be between $43.5 billion and $44.5 billion, with an operating margin of 29%.

Over the past 12 months, Netflix's stock price has risen over 58%, further solidifying its position as a leader in the streaming industry. The company continues to expand its content types, including YouTube influencer shows, live events, and gaming content. The company stated that the growth prospects for revenue and profits remain robust, and it has maintained its previous forecasts for revenue and profit margins.

Netflix is one of the "tech giants" performing best in an environment of economic uncertainty, with its stock price rising about 9% this year, standing out among large tech companies. After the financial report was released, Netflix's stock rose over 4.3% in after-hours trading, closing at $1,015.60.

This quarter marks the first time Netflix no longer discloses quarterly subscription user numbers and average revenue per user (ARPU), stating that this is to shift Wall Street's focus more towards its revenue and profit performance. Netflix pointed out that part of the revenue growth this quarter came from an increase in membership numbers.

At the end of the fourth quarter last year, Netflix had 301.6 million global subscription users. Media reports indicate that Netflix has ambitious growth targets, including doubling revenue by 2030, increasing global advertising sales to about $9 billion, and achieving a market value of $1 trillion. Currently, the company's market value is slightly above $400 billion

Growth or Slowdown? Offsetting with Price Increases and Advertising

However, most analysts previously predicted that Netflix's growth would slow down by 2025, especially after price increases in its largest market, the United States. As user growth slows, Netflix is trying to achieve more revenue from existing customers, including through advertising and price hikes.

In January of this year, Netflix raised prices for all its plans in the United States. Currently, its ad-supported plan costs $7.99 per month, while the premium plan is $24.99. Netflix stated that in countries where this plan has been launched, it accounts for 55% of new user registrations. Additionally, the company announced on Thursday that it would increase subscription prices in France starting today.

Netflix expects stronger revenue growth in the second quarter, benefiting from recent price increases, ongoing membership growth, and new advertising revenue. Although many companies are preparing for the impacts of global tariff escalations, analysts believe that Netflix will be relatively less affected. This is because when households cut back on major expenses like entertainment, they often retain home video subscription services like Netflix.

Jessica Reif Ehrlich, a media analyst at Bank of America, pointed out that with its strong market position and popular content, Netflix is unlikely to face a "mass cancellation wave," although some cost-sensitive users may choose cheaper subscription tiers.

Netflix also announced that its co-founder Reed Hastings has stepped down as executive chairman and will serve as the non-executive chairman of the company's board. Netflix stated that this is "a natural evolution of the leadership structure and succession plan."