Netflix Q1 revenue up 12.5% to $10.5bn, Hastings moving out of exec chairman role
UK drama Adolescence drove viewership in the quarter
Netflix posted revenue of US$10.5bn in the first quarter, up 12.5% from the prior year, as the streamer topped Wall Street expectations in its first earnings report without subscriber numbers, as well as revealing that co-founder Reed Hastings will transition from executive chairman to chairman of the board.
By region, the US and Canada saw revenue grow by 9% to US$4.62bn compared to the previous year, while Europe, Middle East and Africa was up 15% to US$3.41bn, Latin America rose 8% to US$1.26bn and Asia Pacific grew 23% to US$1.26bn.
Across the business, operating income grew by 27% to US$3.35bn. Netflix shares were up around 3% in after-hours trading, following the release of the earnings report. The stock was trading at US$973 per share when the market closed on Thursday.
In its letter to shareholders, the company highlighted the four-part UK drama Adolescence as well as movies Back in Action, Ad Vitam and Counterattack as some of the key titles driving viewership in the quarter.
The company also said that WWE’s Monday Night Raw, which started airing exclusively on Netflix in January in multiple global territories (with more still to come), had ranked in the global top 10 chart every week since it debuted.
Asked by analysts about Netflix’s interest in sports rights including the UFC, which is now free to negotiate with other platforms after its exclusive negotiating window with ESPN ended, co-CEO Ted Sarandos declined to comment.
Co-CEO Greg Peters also addressed broader concerns about the economy in the midst of market uncertainty stemming from US president Donald Trump’s fast-changing international tariff strategy.
Peters said Netflix was “paying close attention to the consumer sentiment and where the broader economy is moving,” but claimed there is “nothing really significant to note” thus far in terms of impact. He added that having the low-cost advertising plan in Netflix’s largest markets gives it “more resilience,” as consumers have the option to shift to the cheaper ad-supported plan.
One of the potential impacts of an uncertain economic backdrop is advertisers pulling back, a particularly pertinent question heading into next month’s advertising Upfronts in New York.
Peters said Netflix is not seeing any signs of “softness” in appetite from ad buyers and that it was positive about its prospects heading towards the Upfronts. He did note that the fact advertising makes up a relatively small percentage of Netflix’s overall revenue today “provides an insulation to market shifts right now.”
In terms of the growing competition between Netflix and YouTube, Peters downplayed the notion that the two platforms are competing over the same audience. “The biggest opportunity we’ve got is actually going after the roughly 80% share of TV time that neither Netflix nor YouTube have today. We think of that as a real, immediate opportunity,” he said.
He also reiterated the company’s belief that it is a better home for creators and premium storytellers, both in terms of creativity and compensation.
“We believe we are a more competitive, better service for a certain class of creators in certain types of storytelling,” he said. “And most importantly in that is that we lead monetisation for those kinds of titles, and that means we can provide a better opportunity than YouTube or other services for those creators and those stories.”
Elsewhere, the streamer described Hastings’ shift out of the executive chairman role as being “part of the natural evolution of our leadership structure and succession planning.” The move comes after Hastings shifted from co-CEO to executive chairman in 2023.
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