Apr 18, 2024 - Business

Netflix will stop reporting subscriber numbers in 2025


Photo by Beata Zawrzel/NurPhoto via Getty Images

Netflix's stock crashed Thursday after the streaming giant said it would no longer report subscriber growth numbers to Wall Street, and instead focus on delivering key financial metrics, like operating margin and profitability.

Why it matters: Despite blowing past Wall Street expectations on revenue, earnings and subscriber additions last quarter, investors were clearly jolted by the reporting change.

Driving the news: Netflix grew subscribers by 16% year-over-year last quarter, bringing its total number of paid members to 264.2 million.

  • The company's operating margins and profits have been rising steadily since the company introduced new revenue streams, including its ad-supported tier.
  • Last quarter, it drove over $2 billion in free cash flow and over $2 billion in net income.

The big picture: Netflix said it's focusing on new metrics to account for changes to its business model.

  • Because the company has reached saturation in several mature markets, it's starting to drive more revenue from its existing users through things like ads and password-sharing crackdowns.
  • The company is also investing in new business lines, like games and live programming, to improve user engagement.
  • Those products could drive different types of revenue opportunities in the future, like more ads or in-app purchases.
  • Netflix has begun experimenting with some live programming and sports, but it hasn't indicated any plans to invest as heavily in that arena as its traditional media rivals, like Disney/ESPN and Warner Bros. Discovery.

Zoom in: In focusing on financial growth metrics over subscriber growth, Netflix is once again setting the tone for how Wall Street will evaluate the streaming sector.

  • Most of Netflix's streaming peers are not yet consistently profitable, forcing some to cut headcount and pull back content investments.

What's next: Netflix said it will keep investors posted when it hits key subscriber milestones.

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