Cautious forecast
Netflix exceeds expectations – and warns
April 19, 2024, 4:15 a.m
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Netflix’s crackdown on password sharing continues to pay off: the streaming pioneer’s subscription numbers exceed the wildest expectations. However, this is unlikely to last much longer.
Series like “Griselda” or “3 Body Problem” are once again attracting consumers to Netflix in droves. The streaming provider gained almost twice as many new customers at the start of the year as expected. “We have built a combination of strong programming, great recommendations, broad reach and an intense fan base that is difficult to copy,” the company said. However, the company signaled that this boom was coming to an end and its sales targets fell short of market expectations. Investors’ initial joy about the increase in customers quickly evaporated. After Netflix shares initially gained three percent in after-hours US trading, they were down three percent a few minutes later.
Netflix forecast revenues of $9.49 billion for the current quarter. Analysts had hoped for $9.537 billion. At the start of the year, sales rose by almost 15 percent to $9.4 billion. Profits nearly doubled to $5.28 per share. Both indicators were above market expectations. At the same time, the customer base grew by 9.3 million to a total of 269.6 million.
Netflix also owes this increase to the campaign against the sharing of passwords that has been running for months. In order to retain viewers who have previously used third-party access data, the company offers a discounted, advertising-financed subscription. According to the US group, 40 percent of new customers in those countries where the option is offered are now choosing this variant. Analysts expect Netflix to make almost a billion dollars from advertising this year. The experts at asset manager Wedbush predicted that this source of income could bubble up even more in the coming years. With a cheap advertising subscription, the risk of customers churn is lower than with more expensive, ad-free offers.