Netflix executives communicated on Thursday that the company remains robust despite ongoing economic challenges. However, the broader outlook for the full year reveals a more complex narrative.
In its recent report, Netflix achieved an impressive operating margin of 31.7% for the first quarter, significantly surpassing the anticipated margin of 28.5%, according to data from StreetAccount. The company also set expectations for the second quarter well beyond analysts’ forecasts, projecting a margin of 33.3%, compared to the average estimate of 30%.
Netflix described its performance as being ahead of its projections for the first quarter and indicated that it is currently tracking above the midpoint of its revenue guidance range for 2025.
Despite this positive outlook, Netflix chose not to revise its long-term projections, reflecting a level of caution regarding its performance in the latter half of the year.
The quarterly note to shareholders stated, “There’s been no material change to our overall business outlook since our last earnings report.”
Consumer sentiment in the U.S. has reached its second-lowest point since 1952, exacerbated by President Donald Trump’s new tariff policies, which have led to market instability.
During the earnings call, Co-CEO Greg Peters emphasized that Netflix has historically shown resilience during economic downturns. Home entertainment often represents a more affordable leisure choice compared to other options, with the ad-supported monthly subscription priced at $7.99.
The key concern remains whether an economic slowdown will affect American consumers’ spending habits and potentially lead to an increase in subscription cancellations for streaming services.
This quarter marks the first time Netflix has stopped disclosing its subscriber count, making it unlikely that the company will provide insights into any potential slowdown in its customer base, aside from its reported revenue and profits.
First-quarter revenues amounted to $10.5 billion, aligning closely with analyst expectations, while the guidance for the second quarter suggests revenues of around $11 billion, slightly above projections.
Peters assured investors, “Retention remains stable and strong. We haven’t observed significant changes in plan mix or plan uptake. Overall, things appear steady.”
