Profits Blow Past Estimates as Netflix's Subscriptions and Revenue Soar

Netflix Inc. believes that amid global economic uncertainty, offering entertainment remains a strong and resilient business. On Thursday, the streaming giant reported better-than-expected first-quarter results and said it hasn't seen much disruption from the current economic instability, particularly the trade tensions linked to the Trump administration's tariff policies.

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According to Netflix co-CEO Greg Peters, “Entertainment has historically held up well during economic downturns,” a sentiment he shared during the company’s earnings call with analysts.

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For the first quarter, Netflix significantly beat its own and Wall Street’s profit projections, thanks to stronger-than-anticipated growth in both subscription and advertising revenue. The company posted a net income of $2.89 billion, a 13% increase from $2.33 billion a year ago. That performance also outpaced analysts’ expectations of $2.48 billion, according to FactSet.

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Additionally, Netflix noted that if currency exchange rates were excluded, its revenue would have increased by 16%.

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Earnings per share also surpassed forecasts, coming in at $6.61 compared to analysts’ expectations of $5.67. Quarterly revenue reached $10.5 billion, rising from $9.4 billion in the same period last year — a figure that matched market expectations. Revenue gains were partly driven by a subscription price hike that took effect in January.

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Netflix stock closed Thursday’s regular trading session up 1.2% and gained another 3.4% in after-hours trading. Its share price has generally outperformed the broader market during the recent tariff-driven slowdown, signaling that investors were anticipating strong financial results.

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During the earnings call, Peters and co-CEO Ted Sarandos both said that consumer behavior has shown little sign of softening. Peters emphasized that the company is closely monitoring consumer sentiment but hasn't seen anything alarming. Sarandos added that Netflix’s global content production — spanning more than 50 countries — provides a strong buffer against any slowdown specific to the U.S. economy.

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Netflix’s strength continues to rest largely on its content library, which features high-performing shows such as Adolescence, Black Mirror, and Squid Game. However, Peters highlighted that its ad-supported subscription tier is playing an increasingly important role. This lower-priced option helps attract and retain cost-conscious consumers and enhances the company’s ability to remain stable during economic downturns.

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Peters also pointed out that Netflix's advertising segment remains relatively small compared to competitors, making it less susceptible to sudden declines in advertising budgets. "We're not seeing any weakness from our advertising partners just yet," he said, adding that Netflix still aims to double its advertising revenue in 2025.

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Nancy Tengler, CEO and CIO of Laffer Tengler Investments, described Netflix as a type of "recession play" — a service people continue to pay for even when they’re cutting back on other expenses. She compared Netflix to Spotify, noting that such services are often among the last luxuries consumers are willing to give up.

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This quarter also marked a strategic shift for Netflix: it no longer reported subscriber numbers, a metric that had long been considered a key indicator of growth. Instead, the company is focusing more on traditional financial metrics. In its shareholder letter, Netflix only stated that subscription revenue was “slightly higher” than anticipated.

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In the previous quarter — the last one in which subscriber figures were disclosed — Netflix added 18.9 million subscribers globally, far surpassing expectations.

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According to a report earlier this week by The Wall Street Journal, Netflix has set ambitious internal goals. The company is aiming to double its revenue by 2030 and reach a $1 trillion market valuation, up from its current $411 billion. It also wants to grow its global subscriber base to 400 million, up from just over 300 million at the end of 2024. Netflix is also aiming to triple its annual operating income from the current $10.4 billion level.

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Sarandos acknowledged those goals but clarified during the earnings call that such internal discussions are not formal forecasts. “These are aspirations, not guarantees,” he said.

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Analysts at MoffettNathanson noted last month that Netflix’s ad-supported tier could become a major engine for growth. They said the business still has “plenty of room to expand.” The $7.99 per month ad-supported plan has helped bring in more price-sensitive customers, in contrast to the premium, ad-free tier that costs $24.99 per month.

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Netflix has also begun expanding into live sports programming, a move expected to significantly boost viewership and diversify its content strategy. Looking ahead, the company forecasted 15% revenue growth for the second quarter, driven by the recent price increase and continued gains in subscriptions and advertising.

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For the full year, Netflix reaffirmed its revenue forecast of between $43.5 billion and $44.5 billion, supported by “solid member growth, increased pricing, and near-doubled ad revenue.”

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