Netflix reported first-quarter revenue of $12.25 billion, a 16% increase from a year ago. Diluted earnings per share came in at $1.23, nearly double the year-ago figure.
Why it matters
The results beat analyst estimates, but the market focused on what comes next. Netflix guided second-quarter revenue to $12.57 billion against a consensus estimate of $12.63 billion, and projected earnings of 78 cents per share versus the 84 cents Wall Street expected.
Guidance miss
The company attributed the softer outlook to higher content spending. “We expect Q2 to have the highest year-over-year content amortisation growth rate in 2026, before decelerating to mid-to-high single-digit growth in the second half,” the company said in its shareholder letter.
Shares dropped in extended trading on Thursday despite the headline beat. The guidance miss overshadowed an otherwise strong quarter.
Hastings departs
Netflix also disclosed that co-founder and chairman Reed Hastings will not stand for re-election to the board when his term expires in June. Hastings co-founded the company in 1997 and stepped down as co-CEO in January 2023.
The departure marks the end of an era for a company Hastings built from a DVD-by-mail service into the world’s largest streaming platform, with more than 300 million subscribers globally.
Advertising on track
Netflix reiterated its target of reaching $3 billion in advertising revenue in 2026, which would represent a doubling from the prior year. The ad-supported tier, launched in late 2022, has become a significant growth driver.
Revenue growth of 13% is projected for the second quarter. Analysts will watch whether the content spending ramp translates into subscriber retention as competition from Disney+, Amazon Prime Video, and Apple TV+ intensifies.