Focus
1. Netflix's first-quarter revenue reached US$8.2 billion, up nearly 4% year-on-year, net profit of US$1.3 billion, down 18% year-on-year, and earnings per share were also lower than the same period last year.
2. Netflix added 1.8 million new users in the first quarter, bringing the total number of users to 232.5 million, still lower than the growth rate before and during the epidemic.
3. Netflix has pledged to step up its crackdown on account sharing and will continue to push ad-supported subscription services around the world in moves aimed at boosting profit margins.
4. Netflix CEO Ted Sarandos announced that the company will shut down its "shrinking" DVD business.
5. Netflix expects revenue of $8.2 billion in the second quarter of fiscal 2023, up 3% from $7.970 billion in the same period last year, but this outlook has fallen short of analyst expectations.
Tencent Technology News News on April 19, local time in the United States on Tuesday, video streaming giant Netflix announced the company's financial results for the first quarter of fiscal 2023 as of March 31 after the US stock market closed. According to the report, Netflix's first-quarter revenue was $8.2 billion, a year-on-year increase of nearly 4%; Net income was US$1.3 billion, down 18% year-over-year; Diluted earnings per share were $2.88, compared to $3.53 in the year-ago quarter. The stock fell as much as 10% in after-hours trading as Netflix's outlook for both fiscal 2023 revenue and earnings per share fell short of expectations, but then rebounded sharply.
First, Netflix's main performance data for the first quarter
1. Revenue growth is less than analysts' expectations
Netflix's first-quarter revenue was $8.162 billion, up 3.7% from $7.868 billion in the year-ago quarter and below analysts' average estimate of $8.18 billion.
Netflix's first-quarter net profit was $1.305 billion, down 18% from $1.597 billion in the year-ago quarter.
Netflix diluted earnings per share in the first quarter were $2.88, compared to $3.53 a year ago and beating analysts' average expectations of $2.86.
Netflix's first-quarter operating profit was $1.714 billion, compared to $1.972 billion in the year-ago quarter; profit margin was 21%, down from 25.1% in the year-ago quarter.
2. Divided by region
Netflix's first-quarter streaming services revenue from the U.S. and Canada was $3,609 million, up 9% from $3.35 billion in the year-ago quarter.
Netflix's first-quarter streaming services revenue from EMEA was $2,518 million, down 6% from $2,562 million in the year-ago quarter.
- Netflix's first-quarter revenue from Latin America was $1.07 billion, up 3% from $999 million in the year-ago quarter.
Netflix's first-quarter revenue from Asia Pacific was $934 million, up 2% from $917 million in the year-ago quarter.
3. Cost and expenditure
Netflix's cost of revenue in the first quarter was $4.804 billion, compared to $4.285 billion in the year-ago quarter;
Marketing expenses of $555 million, compared to $556 million in the year-ago quarter;
Technology and development spending of $687 million, compared to $658 million in the year-ago quarter;
General and administrative expenses were $401 million, compared to $398 million in the year-ago quarter.
4. User data and revenue
Netflix's total number of paying subscribers to streaming services worldwide reached 232.5 million in the first quarter, up 4.9% from 221.64 million in the year-ago quarter. Paying subscribers increased by a net 1.8 million, compared to a decrease of 200,000 in the same period last year. thereinto
• The number of paying subscribers to streaming services in the U.S. and Canada was 74.4 million, compared to 74.58 million in the year-ago quarter. Average revenue per user was $16.18, compared to $14.91 in the year-ago quarter;
The number of paying streaming subscribers in EMEA was 77.37 million, compared to 73.73 million in the year-ago quarter. Average revenue per user was $10.89, compared to $11.56 in the year-ago quarter;
- The number of paying subscribers to streaming services in Latin America was 41.25 million, compared to 39.61 million in the same period last year. Average revenue per user was $8.6, compared to $8.37 in the year-ago quarter;
• The number of paying subscribers to streaming services in Asia Pacific was 39.48 million, compared to 33.72 million in the same period last year. Average revenue per user was $8.03, compared to $9.21 in the year-ago quarter.
5. Free cash flow
Netflix's net cash from operating activities was $2,179 million in the first quarter, compared to $923 million in the year-ago quarter. Netflix's free cash flow for the first quarter was $2,117 million, compared to $802 million in the year-ago quarter.
As of the end of the first quarter of fiscal 2023, Netflix had total cash, cash equivalents and restricted cash of approximately $6,738 million, compared to $6,035 million at the end of the first quarter of fiscal 2022.
Second, the analysis of financial reports
1. User stickiness
User stickiness is important to streaming success because it drives retention (increased user satisfaction) and user acquisition (increased word-of-mouth). The third-party data in the chart below shows that Netflix and YouTube are the clear leaders in streaming engagement, and the opportunity ahead is huge, as streaming still accounts for a minority number of viewers in every country.
Netflix believes that participation in streaming will continue to grow, with total viewership increasing several times in Brazil, Mexico and Poland, up from the current share of 2% to 4% in Brazil, Mexico and Poland, or 7% to 9% in the US and UK.
2. Increase efforts to crack down on account sharing
Netflix continued to advance its monetization strategy in the first quarter to help re-accelerate revenue growth and improve operating margins. During the quarter, Netflix cut prices in 116 countries, and the company believes increasing adoption in those markets will help maximize its long-term revenue. In addition, Netflix's new advertising program allows it to offer consumers lower subscription packages.
Cracking down on account sharing is another important move, as widespread account sharing weakens Netflix's ability to invest in and improve services for paid members. Paid sharing, which was launched in Canada, New Zealand, Spain and Portugal in the first quarter, worked very well. As it continues to improve and advance its plans, Netflix believes that user sticky pages will return to growth over time.
Netflix's crackdown on account sharing has always been a top concern for investors. Late last year, the company said it would begin rolling out measures to let those who borrow other people's accounts create their own. Netflix says more than 100 million households have their own accounts, about 43 percent of its global user base, and account sharing affects its ability to invest in new content. Ad-supported subscription services and cracking down on account sharing are all about boosting profits.
Netflix's crackdown on account sharing has been slower than many investors and analysts expected. The company said the benefits of the move could now be felt in the third quarter, rather than the second.
3. Competition
A year ago, Netflix reported its first user loss in a decade, causing its stock price to plummet, as did other media companies. That prompted Netflix and its streaming rivals to focus on boosting profits rather than subscriber numbers. Users are increasingly able or willing to switch between different services, and they now have more options than ever before.
Netflix is competing with TV, gaming, user-generated content, paid streaming content, and social media, among others, and the competition is becoming increasingly fierce. Sarandos recently said that the company may offer multiple ad-supported tiered subscription services in the future. Netflix power is focused on streaming and has already generated significant profits and free cash flow. Big tech companies continue to invest heavily in streaming, with a recent focus on live sports. Netflix says it doesn't focus too much on its competitors, but just wants to always do better and faster than its competitors.
4. Close the DVD mailing business
In the earnings report, Netflix announced that it will close its DVD mailing business, which aims to send movie and television discs to customers in red envelopes. CEO Ted Sarandos said in a blog post that the company will eventually shut down its "shrinking" DVD business.
Netflix's main business is built on DVD distribution, and over the years, the company's streaming platform has been more of a side hustle. But as Netflix moved into original programming and built a larger library of streamers, more subscribers were choosing to watch content online rather than ordering discs. House of Cards became Netflix's first original show after its release in 2013 and was not originally available on DVD.
Netflix says it has shipped more than 5.2 billion discs over the life of its business. The company's first red envelope in March 1998 contained Beatles Juice, and the most popular DVD rented by mail was the 2009 sports-themed TV series Blind Zone starring Sandra Bullock.
Sarandos said in a blog post that mail-in DVDs "paved the way for our transition to streaming." He added: "Our goal has always been to provide the best service to our members, but this will become increasingly difficult as business continues to shrink. ”
3. Performance outlook
Netflix's main financial metrics are revenue growth and operating margin. Netflix said its long-term financial goals have not changed and it hopes to continue double-digit revenue growth, expand operating margins and provide growing positive free cash flow. Netflix expects the company to meet its full-year 2023 financial targets.
Netflix expects revenue of $8.2 billion in the second quarter of fiscal 2023, up 3% from $7.970 billion in the same period last year, but this outlook missed analyst expectations; Operating income will be $1.6 billion, compared to $1,578 million in the year-ago quarter, and operating margin will be 19%, compared to 20% in the year-ago quarter. Net income will be $1,283 million, compared to $1,441 million in the year-ago quarter, and diluted earnings per share will be $2.84, down from $3.20 in the year-ago quarter.
4. Stock price reaction
Netflix shares rose $0.98, or 0.29%, to close at $333.70 in regular trading on the Nasdaq stock market on Tuesday. At press time, the stock was down $0.68, or 0.2%, at $333.02 in after-hours trading.
Over the past 52 weeks, Netflix shares have peaked at $379.43 and bottomed at $162.71. Based on Tuesday's closing price, Netflix has a market capitalization of about $148.6 billion. (Golden Deer)