Netflix will no longer share projected subscriber targets in upcoming earnings reports — a closely tracked metric among investors — as the company looks to shift the narrative to its financial performance.
Starting with Netflix’s fourth-quarter 2022 earnings report in January 2023, it will not provide guidance for the next quarter (Q1 of 2023). The company will continue to provide guidance for revenue, operating income, operating margin, net income, EPS and fully diluted shares outstanding for the following quarter, but not paid membership.
“As discussed in previous letters, we are increasingly focused on revenue as our primary top-line metric,” Netflix said in its Q3 shareholder letter. “This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth.”
Netflix said it will continue to report total streaming subscribers as well as break out regional sub figures each quarter as part of its earnings release. “In the grand scheme of things, you know, pretty minor change,” Spencer Wang, VP, investor relations and corporate development, said on the company’s recorded Q3 earnings interview.
The streaming giant announced the change in its guidance reporting with the release of its Q3 earnings, which handily topped Wall Street estimates. Netflix returned to subscriber growth, adding 2.4 million net new paid customers (beating its guidance of 1 million).
It also forecast a gain of 4.5 million for Q4 — its final such guidance to the Street. “Our paid net adds forecast assumes that we experience our usual seasonality as well as the impact of a strong content slate, counterbalanced by macroeconomic weakness which leads to less-than-normal visibility,” Netflix said in its shareholder letter.
Netflix is launching a cheaper, ad-supported plan next month in 12 countries, including in the U.S. on Nov. 3, where it will cost $6.99/month (30% less than the regular single-stream Netflix Basic plan at $9.99). “While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4’22 as we’re launching our Basic With Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time,” the company said. “Our aim is to give our prospective new members more choice — not switch members off their current plans.”
From Variety US
