Media analysts expected Netflix would add somewhere in the range of 2 million-3 million subscribers, give or take, in the first quarter of 2023. The streaming king fell a little short, adding 1.75 million. Its new worldwide paid-subscriber tally is 232.5 million. It’s also world-leading, unless you count every Disney-controlled streaming subscription individually.
This was the first quarter for which Netflix did not provide internal estimates for net subscriber adds (or losses) to the press and investment community. Given the results, it was probably a good time to walk away from that, but with the addition of Netflix’s “Basic with Ads” tier means revenue — not subscriber growth — is the company’s primary driver. Regardless of your preference, both were disappointments this quarter.
Netflix’s Q1 revenue was also a bit below expectations at $8.162 billion vs. a consensus-estimate $8.18 billion. Wall Street believed the streamer would post earnings of $2.86 per share; Netflix beat that by two cents. Netflix’s net income, which was just $55 million in the fourth quarter of 2022 (the lowest for any quarter since 2016), jumped to $1.305 billion this past quarter. That brought free cash flow from $332 million to more than $2.1 billion.
Most streamers would kill for any profit, let alone that profit, but Netflix is not most streamers. The company’s senior executive team will do their usual post-earnings video interview via YouTube at 6 p.m. ET/3 p.m. PT. The conversation, like the platform’s “Love Is Blind” Season 4 reunion ended up being, is prerecorded.
While earnings and cash were hard to come by in Q4 2022, subscribers were not. Netflix added 7.66 million subs from October to December; “Basic with Ads” launched in the U.S. in November.
Also on Tuesday, Netflix shuttered its famed DVDs-by-mail division. R.I.P. red envelopes, you had a good run.
With a nod to some “Wednesday” holdover, the big (English-language) TV originals in Q1 were “The Night Agent” Season 1, “Ginny & Georgia” Season 2, “You” Season 4, and “Outer Banks” Season 3. (“The Night Agent” actually booted “Ginny & Georgia” from Netflix’s all-time Top 10 list; presently, it is the No. 6 English TV series.) “The Glory” Season 1 was the big breakout hit on the non-English TV charts, with a nod to “Physical 100” Season 1 and “La Reina del Sur” Season 3.
“You People,” the “Luther” movie, and Adam Sandler’s “Murder Mystery 2” dominated the streamer’s English-language film charts; there were no breakout crossover hits from non-English-language movies.
Hope you watched all of those already on your, let’s say, borrowed Netflix subscription — the streaming king is all about monetizing password sharers these days. The U.S. rollout for “paid sharing” starts, well, right about now. That will prove to be not a quarter too soon for Netflix, as there are billions of dollars in untapped revenue in play here.