Netflix to Stop Reporting Quarterly Subscriber Numbers, Focus on Revenue and Margins

Netflix to stop reporting quarterly subscriber numbers in 2025, shifting focus to revenue and margins as it matures as a streaming service. This move signals a shift in the industry, prioritizing profitability over pure subscriber growth.

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Nitish Verma
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Netflix to Stop Reporting Quarterly Subscriber Numbers, Focus on Revenue and Margins

Netflix to Stop Reporting Quarterly Subscriber Numbers, Focus on Revenue and Margins

Netflix announced that it will stop reporting quarterly subscriber numbers starting in the first quarter of 2025, shifting its focus to revenue and operating margins as its primary financial metrics. The company said that as it generates substantial profit and develops new revenue streams like advertising, membership growth is just one component of its overall growth.

In the first quarter of 2023, Netflix added 9.3 million subscribers, nearly double the consensus forecast, reaching a total of 269.6 million global subscribers. However, the company's revenue forecast missed analyst targets, causing its stock to fall 4.2% in after-hours trading.

Netflix executives urged investors to focus on revenue and margins, rather than subscriber numbers. The company believes that engagement, measured by time spent on the service, is a better indicator of the health of its business than just subscriber growth, as it reflects factors like retention, acquisition, and the value customers place on the service.

The decision to stop reporting quarterly subscriber numbers is seen as a significant move in the streaming industry, which has historically tied company performance to subscriber gains or losses. Analysts said the change would likely upset investors and make it harder to model Netflix's business.

Why this matters: Netflix's shift away from subscriber metrics signals a maturing streaming market where profitability and engagement are becoming more important than pure growth. The move aligns Netflix more closely with traditional media companies and could set a precedent for other streamers to follow.

Netflix co-CEO Greg Peters said that each incremental member has a different business impact, making the simple subscriber count metric less accurate in capturing the state of the business. The company will continue to provide updates on subscriber growth when it hits major milestones, but it will not be part of the regular quarterly reporting. Instead, Netflix will focus on reporting other metrics like operating income, margins, net income, free cash flow, and earnings per share.

Key Takeaways

  • Netflix to stop reporting quarterly subscriber numbers from Q1 2025.
  • Netflix added 9.3M subscribers in Q1 2023, beating forecasts, but revenue missed.
  • Netflix urges investors to focus on revenue and margins, not just subscriber growth.
  • Analysts say the change will upset investors and make Netflix's business harder to model.
  • Netflix's shift signals a maturing streaming market where profitability matters more than growth.