Netflix Q1 Earnings: What should you know?

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Netflix Q1 results

Netflix Q1 results: Key insights

  1. Netflix reported Q1 revenue of $8.16 billion, roughly in line with estimates.
  2. However, Netflix added 1.75 million subscribers during the quarter, missing analyst expectations of 2.06 million subscribers.  
  3. Netflix to begin clampdown on password sharing in the April to June 2023 quarter to boost earnings.
  4. Netflix ended its DVD by email business after 25 years. 

Netflix share price and Netflix results:

Netflix shares dropped 9% in after-market trading on April 19 2023 on the back of weak quarterly results, but quickly pared most of its losses to trade 1% lower. Netflix shares have gained about 14% so far this year and lost 3% during the January to March period. 

The company has been in the news recently on account of its clampdown on password sharing and plans to focus on streaming focused content which will be telecasted live to drive more user engagement.

Netflix share historical performance:

1 Day1 Month1 Year5 Years

(Data as on April 18th 2023)

Netflix Q1 Revenue

  • Revenue rose 4% to $8.1 billion from a year ago, but raised some doubts about the pace of revenue and earnings growth for the upcoming quarter. 
  • Netflix revenues have been subdued over the past couple of quarters as the streaming sector continues to suffer from intense competition. Fewer players are competing for the attention of multiple users. 
  • From January through March, Netflix added 1.75 million streaming subscribers, missing analyst estimates of 2.06 million additions.
Q1FY23Q1FY22YoY % change
$8.1 billion$7.9 billion4%

Netflix Q1 Net Profit:

Net income attributable to ordinary shareholders slipped 18.3% to $1.3 billion from $1.6 billion a year earlier. 

Netflix is currently encountering significant obstacles such as the likelihood of a writers' strike, rising competition in the streaming market, and a growing competitor base that makes it more difficult to maintain subscriber growth. 
The live business struggled recently due to technical issues that caused a delay in the highly anticipated "Love Is Blind" reunion show on Netflix.

Q1FY23Q1FY22YoY % change
$1.3 billion$1.6 billion-18.3%

Netflix Q1 Subscribers:

Netflix reported an overall subscriber base of 233 million at the end of the March quarter, which was 5% higher than the corresponding quarter in the previous year. Netflix’s crackdown on password sharing and its paid sharing initiative launched in Canada, New Zealand, Spain and Portugal has somewhat helped maintain its subscriber growth. 

However, the 5% growth in subscribers fell short of analyst expectations. 

Q1FY23Q1FY22YoY % change
233 million222 million%5

Netflix dividend

Netflix board did not release any dividend for the quarter.

Netflix Q1: Analyst View

  • Jefferies has a "buy" rating on the firm with a price target of $405. The brokerage believes high double-digit revenue growth in Canada could be due to Netflix cracking down on password-sharing. 
  • J.P.Morgan has an "overweight" rating on the stock with a price target of $380. The brokerage explained that along with higher free-cash-flow (FCF), the two most positive takeaways are that Canada subscriptions are now above pre-paid sharing levels and Netflix is earning more from users in the U.S. on ad-supported plan than the standard plan.
  • Wells Fargo has an "overweight" rating on the stock and has a share price target of  $400.  The brokerage said the company continues to evolve by driving revenue higher through new channels and this will provide a bigger base to eventually restart content growth. 

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.