Netflix profit jumps as price hikes and subscription growth beat expectations
Netflix reported the first-quarter earnings that surpassed analysts' expectations, with shares rising 2.5% in the extended trading hours. The video streaming giant attributed the success to 'membership growth and higher pricing.' Additionally, 'the timing of expenses' also helped boost its profitability.
The company raised prices across most of its plans this year in the US, Canada, Portugal, and Argentina. This included its standard plan without commercials, its cheaper ad-supported tier, and its premium plan. These increases contributed to higher profitability during the first quarter, with the operating margin climbing to 31.7%—nearly four percentage points higher than in the same quarter last year. Netflix also noted that revenue from advertising remains relatively small compared to its core subscription income.
Netflix's stock has shown notable resilience amid the tariff-induced market turmoil of 2025, rising 9% year-to-date—a sharp contrast to double-digit percentage declines seen across other major tech stocks. 'Based on what we are seeing by actually operating the business right now, there's nothing really significant to note,' commented co-CEO Greg Peters. 'We also take some comfort that entertainment historically has been pretty resilient in tougher economic times. Netflix, specifically, also, has been generally quite resilient. We haven't seen any major impacts during those tougher times, albeit over a much shorter history.'
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This quarter also marks a shift in Netflix's reporting approach, as the company has stopped disclosing subscriber numbers. Instead, it will focus on more traditional business metrics, such as revenue growth and profit margins. While Netflix added 18.9 million subscribers in the fourth quarter of 2024, analysts expect user growth to slow in 2025.
Netflix's earnings hit a trough in 2022 as subscriber growth stalled, prompting the company to overhaul its growth strategy. It launched a cheaper ad-supported plan at the end of 2022 and began cracking down on password sharing. The company has since expanded into live sports and events programming, including the Jake Paul vs. Mike Tyson fight, NFL games, the Beyoncé Bowl, and other live-streamed entertainment.
The company indicated that its new content helped drive revenue and profit growth in the first quarter. Popular titles included the series Adolescence, and films such as Back in Action, Ad Vitam, Counterattack, as well as the live programme WWE RAW. Netflix also highlighted that Adolescence became the first streaming show to top the UK's weekly TV ratings.
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For the first quarter, Netflix reported earnings per share of $6.61 (€5.81) on revenue of $10.54 (€9.27) billion—up 25% and 12.5% year-on-year, respectively. Both figures beat Wall Street estimates. Operating income rose 27% to $3.35 billion (€2.95), resulting in an operating margin of 31.7%—the highest in recent years.
The company maintained its guidance for 2025, forecasting revenue of between $43.5 billion (€38.3 billion) and $44.5 billion (€39.1 billion), with a targeted operating margin of 29%. 'There's been no material change to our overall business outlook since our last earnings report,' the company stated. 'We're currently tracking above the mid-point of our 2025 revenue guidance range.'
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