A year ago Netflix shocked the video industry with an unexpected fall in subscribers and after taking measures such as introducing an AVOD offer, the streaming leader looks to be back on track, albeit slowly, as seen in its first quarter 2023 financials.
For the quarter ended 31 March, Netflix said that it had got off to a good start in 2023, posting revenues of $8.162 billion, up 3.7% on an annual basis but compared badly with Q1 2022’s annual growth of 9.8%. Operating income for the quarter was $1.714 billion, more than three times the amount recorded for Q4 2022, and in the ballpark of the Q1 2022 figure. Net income also made a welcome return to growth totalling $1.305 billion, compared with $1.597 billion in Q1 2022 but just $55 million in Q4 2022.
At the heart of the revenue generation was a 4.9% year-on-year growth in global streaming paid memberships leading to a total of 232.5 million, an increase of 1.75 million annually. Q4 2022 saw 7.66 million additions, and Q1 2022 a fall of 200,000. Q1 2022 annual growth was 6.7% while it was 4.0% for Q4 2022. Regional financial highlights included US and Canadian revenue growing 8% year-on-year driven by a 9% increase in average revenue per membership (ARM). EMEA revenue was down 2% year-on-year (+6% on an F/X neutral basis), due primarily to a decline of 6% in ARM offset partially by a 4% increase in average paid memberships.
LATAM revenue increased 7% year over year (+13% F/X neutral), with a 3% rise in ARM (+8% F/X neutral).Paid membership dipped by 400,000 year-on-year, which Netflix attributed to pull forward from Q4 when it had a big quarter with 1.8 million paid net adds and what it called “ongoing macroeconomic softness”.
APAC revenue grew 2% year over year (+10% F/X neutral). Average paid memberships increased 17% year over year. This offset a 13% decrease in ARM (-6% F/X neutral), which was due to plan mix and a higher mix of member growth in countries with lower pricing.
Noting highlights for the quarter revealed in the Q1 results, Netflix pointed to what it said was a strong content slate in Q1 featuring the likes of Outer Banks, You, Ginny & Georgia and a big sequel film Murder Mystery 2. It added that it had enjoyed hits across nearly every genre of TV like The Night Agent (now our 6th most popular English language TV show ever), The Glory (our 5th most popular non-English TV show ever), Full Swing, That 90s Show and films You People and Luther: The Fallen Sun.
Also among the highlights for the quarter, Netflix revealed that in order to cut down password abuse, and stem potential loss of revenues, it had launched paid sharing in four countries and that it was pleased with the results to date and was planning on a broad rollout in Q2, including in the US. In addition, given what it said was the current healthy performance and trajectory of its per-member advertising economics, particularly in the US, it was upgrading its ads experience with more streams and improved video quality to attract a broader range of consumers. Netflix also revealed that its ad-supported plan now has on average around 95% content parity globally (by viewing) with its ads-free plans, including all the latest TV shows and films.
Going forward, Netflix said its long-term financial objective of double digit revenue growth was unchanged and it was on track to meet full year 2023 financial objectives. For Q2’23, it forecast revenue of $8.2 billion, up 3% year-on-year, or 6% growth on an F/X neutral basis.
At the heart of the revenue generation was a 4.9% year-on-year growth in global streaming paid memberships leading to a total of 232.5 million, an increase of 1.75 million annually. Q4 2022 saw 7.66 million additions, and Q1 2022 a fall of 200,000. Q1 2022 annual growth was 6.7% while it was 4.0% for Q4 2022. Regional financial highlights included US and Canadian revenue growing 8% year-on-year driven by a 9% increase in average revenue per membership (ARM). EMEA revenue was down 2% year-on-year (+6% on an F/X neutral basis), due primarily to a decline of 6% in ARM offset partially by a 4% increase in average paid memberships.
LATAM revenue increased 7% year over year (+13% F/X neutral), with a 3% rise in ARM (+8% F/X neutral).Paid membership dipped by 400,000 year-on-year, which Netflix attributed to pull forward from Q4 when it had a big quarter with 1.8 million paid net adds and what it called “ongoing macroeconomic softness”.
APAC revenue grew 2% year over year (+10% F/X neutral). Average paid memberships increased 17% year over year. This offset a 13% decrease in ARM (-6% F/X neutral), which was due to plan mix and a higher mix of member growth in countries with lower pricing.
Noting highlights for the quarter revealed in the Q1 results, Netflix pointed to what it said was a strong content slate in Q1 featuring the likes of Outer Banks, You, Ginny & Georgia and a big sequel film Murder Mystery 2. It added that it had enjoyed hits across nearly every genre of TV like The Night Agent (now our 6th most popular English language TV show ever), The Glory (our 5th most popular non-English TV show ever), Full Swing, That 90s Show and films You People and Luther: The Fallen Sun.
Also among the highlights for the quarter, Netflix revealed that in order to cut down password abuse, and stem potential loss of revenues, it had launched paid sharing in four countries and that it was pleased with the results to date and was planning on a broad rollout in Q2, including in the US. In addition, given what it said was the current healthy performance and trajectory of its per-member advertising economics, particularly in the US, it was upgrading its ads experience with more streams and improved video quality to attract a broader range of consumers. Netflix also revealed that its ad-supported plan now has on average around 95% content parity globally (by viewing) with its ads-free plans, including all the latest TV shows and films.
Going forward, Netflix said its long-term financial objective of double digit revenue growth was unchanged and it was on track to meet full year 2023 financial objectives. For Q2’23, it forecast revenue of $8.2 billion, up 3% year-on-year, or 6% growth on an F/X neutral basis.
