Netflix Adds 9.3M Subscribers in Strongest Q1 Since 2020

Thanks to a strong slate of original programming and its continued crackdown on password sharing, Netflix enjoyed the strongest start to a year since 2020, as the video streaming giant added 9.3 million subscribers in the first three months of the year, blowing past analyst expectations.

Revenue grew 15 percent year-over-year, driven primarily by membership growth and pricing. Looking ahead, Netflix expects continued double-digit revenue growth, as it plans to grow beyond mere subscriber additions. “The overall business growth now has extra levers and extra drivers like plan optimization, including things like extra members, ads revenue, pricing into more value,” Co-CEO Gregory Peters said in a call with investors, while CFO Spencer Adam Neumann emphasized how much room for growth the company has left: “We're less than 10% of TV share in every country in which we operate. There's still hundreds of millions of homes that are not Netflix members. And we're just getting started on advertising,” Neumann said.

Speaking of advertising, Netflix’s ad-supported tier, introduced in select markets in late 2022, is proving very popular with customers. In the first three months of 2023, ads memberships grew 65 percent compared to the previous quarter, as 4 in 10 new signups in eligible markets chose the ad-supported tier.

Despite the good results, Netflix’s share price was down 6 percent on Friday morning. That’s partly due to a slightly lower-than-expected guidance for second quarter revenue and partly due to the company’s surprise announcement that it would stop reporting quarterly membership figures next year. "As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact," the company explained, knowing that these kinds of decisions rarely go down well with investors, who like to get as detailed picture of how things are going as possible.