Netflix earnings top forecasts despite economic turmoil

Since Netflix came to New Zealand in March 2015, streaming has become the default way many people watch television. Photo / Unsplash

Netflix on Thursday reported quarterly earnings slightly better than analysts expected, saying it is staying focused on what it can control as the overall economy is roiled by United States President Donald Trump’s trade war.

The streaming television service declared itself “off to a good start in 2025” with a profit of $2.9 billion on revenue of $10.5 billion in the first quarter of the year.

Revenue grew thanks to higher subscription and ad earnings, along with the timing of some expenses, according to Netflix.

Shares in the Silicon Valley-based company were up nearly 3% in after-market trades.

“The will-they-or-won’t-they tariff situation is destruction to many industries and will make entertainment more expensive to produce,” said Emarketer senior analyst Ross Benes.

“But Netflix is poised to withstand the strain better than most of its competitors, at least initially, due to its low reliance on ad revenues and its favourable cancellation rates compared to its peers.”

Netflix is paying close attention to consumer sentiment and the direction of the broader economy, co-chief executive Greg Peters told financial analysts on an earnings call.

“We remain focused on the things that we can control, and improving the value of Netflix is the big one,” co-chief executive Ted Sarandos added.

“Historically, in tougher economies, home entertainment value is really important to consumer households.”

Netflix does most of its spending on content in the US, but produces original shows or films in some 50 countries, according to Sarandos.

Live programming and games

Netflix early this year increased prices in Argentina, Canada, Portugal and the United States.

In a bid to boost sputtering growth, the company launched an ad-subsidised offering in late 2023, around the same time as a crackdown on sharing passwords.

Netflix has been steadily improving its ad platform as viewers continue to turn away from traditional television to streaming shows on demand.

“We’re executing on our 2025 priorities: improving our series and film offering and growing our ads business; further developing newer initiatives like live programming and games; and sustaining healthy revenue and profit growth,” Netflix said in a letter to shareholders.

Netflix forecast revenue growth of 15% in the current quarter, crediting its line-up of shows and films along with improvements to its ad platform.

“We remain optimistic about our 2025 slate with a line-up that includes returning favourites, series finales, new discoveries and unexpected surprises designed to thrill our members,” Netflix told shareholders.

Netflix touted hits including its Adolescence series, which has logged some 124 million views, and the Spanish-language film Counterattack from Mexico.

Netflix said in February that it would spend $1 billion over four years producing content in Mexico, in a boost to that Government’s efforts to attract investment in the face of US tariff threats.

Investors view Netflix as a rare haven in a stock market vexed by Trump’s stop-start tariff plans targeting dozens of trade partners.

This quarter marks a shift by Netflix to stop reporting subscriber numbers along with its earnings figures.

The company, considered by analysts as the leading video streaming service, finished last year with more than 300 million subscribers.

“Netflix is part of a broader industry shift away from focusing on how many new viewers are obtained to focusing on how much money viewers are bringing in,” analyst Benes said.

- Agence France-Presse