Netflix reported strong first quarter earnings with a record-breaking addition of 9.3 million subscribers, surpassing expectations of 4.8 million. The company's operating margins also increased to 28.1% compared to 21% in the same period last year.
Netflix announced that it will no longer report quarterly membership numbers or average revenue per member starting next year, citing the evolving pricing and plans with different price points depending on the country.
The streaming giant's subscriber growth can be attributed to its crackdown on password sharing and the introduction of an ad-supported tier, as well as price hikes on certain subscription plans. Operating margins have also improved due to these initiatives.
Despite the impressive earnings report, Netflix disappointed investors with second quarter revenue guidance of $9.49 billion, missing consensus estimates of $9.51 billion.
Netflix's stock price has been on a tear in recent months and analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
The company also reported earnings per share (EPS) of $5.28, well above consensus estimates of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period.
Netflix is expanding its offerings with deals like the Screen Actors Guild Awards and a 10-year deal to air 'WWE Raw'. It has also partnered with Rockstar Games to further push into the video game space. New generations are rediscovering iconic shows from the past on Netflix.
The decision to stop reporting subscriber numbers is a signal that Netflix's second wave of subscriber growth may be ending. The company wants investors to judge it by revenue, operating margin, and free cash flow instead.
