Netflix Drops on Mixed First Quarter Results

Netflix shares (NASDAQ: NFLX) are down about 3% on Wednesday after the company reported mixed financial results for its first quarter and delayed the wider launch of its password-sharing solution.

Netflix posted earnings per share (EPS) of $2.88 in the first quarter, slightly above Wall Street estimates of $2.86 per share. Total net income for the quarter came in at $1.31 billion, down from $1.6 billion, or $3.53 per share, in the same quarter last year.

Revenue stood at $8.16 billion at the end of the quarter, up 3.7% year-over-year and below the consensus estimates of $8.18 billion.

The company reported an operating margin of 21% in the three-month period, down from 25.1% in the year-ago quarter, while analysts were looking for 20.2%. Operating income was reported at $1.71 billion, down 13 YoY, though above the estimated $1.64 billion. 

“We are growing, and we are profitable,” Co-Chief Executive Ted Sarandos said in the company's post-earnings video interview. “We have a clear path to accelerate growth in both revenue and profit, and we're executing it.”

The streaming platform added 1.75 million new streaming subscribers in the quarter, missing the analyst estimates of 2.06 million. 

PP Foresight analyst Paolo Pescatore described the Q1 report as mixed. Although Netflix’s focus is to become less dependent on subscriber growth, “this metric still moves the needle for key stakeholders,” he said.

Looking ahead, the company expects its diluted EPS to be $2.86 in the second quarter, below analysts’ expectations of $3.05 per share. Netflix expects revenue to be $8.242 billion in Q2, compared to Wall Street estimates of $8.476 billion.

Netflix shares were up 13.1% year-to-date going into the Q1 earnings report.