Netflix will stop reporting subscriber numbers in 2025, stating that subscriber numbers are a decreasingly relevant measure for the status of the company. The announcement came in conjunction with the platform’s latest subscriber update.
The streaming service added 9.33 million subscribers for the first quarter of 2024, which means Netflix now has roughly 270 million subscribers across the world.
In the United States and Canada, paid subscribers grew by 2.53 million. In Europe, the Middle East, and Africa, there were 2.92 million more subscribers. In Latin America, 1.72 million subscribers joined, while another 2.16 million signed up in the Asia-Pacific market.
This was reported as a significant increase in subscriptions, blowing past projections.
At the same time, Netflix said in a letter to shareholders that reporting the number of subscribers the platform has isn’t as important as it used to be and that the reports will cease starting with Q1 2025.
Netflix said engagement and time spent on the service are the “best proxy for customer satisfaction,” Variety reported. The company will still announce “major subscriber milestones as we cross them,” it claimed, but will cease the quarterly subscriber reports.
Co-CEO Greg Peters reportedly said on an earnings call that the subscriber count has been a decreasingly relevant measure due in part to features on the platform. This included an example of how primary account holders can add an extra member on their accounts for a fee, and those members are not counted as additional subscribers.
“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” Netflix reported. “But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth.”
How good are the numbers?
Subscription numbers beginning to plateau are a real worry for the company, as international members pile into the service, making the reorientation of what the company views as successful an obvious step.
For Q1 2024, the revenue is a stark 15% increase over Q1 2023, with revenue of $8.73 billion and a net income of $2.33 billion. The aforementioned free cash flow is reportedly a whopping $2.13 billion.
For the second quarter of 2024, Netflix predicts almost $9.5 billion in revenue with a net income around the same as Q1, at $2.06 billion. The company expects revenue growth of between 13% and 15% for all of 2024, which would be at least double the growth it saw in 2022.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact. It’s why we stopped providing quarterly paid membership guidance in 2023 and, starting next year with our Q1 ’25 earnings, we will stop reporting quarterly membership numbers and ARM,” the company added.
The reports moving forward will note revenue that acts to “complement” the company’s financials and will forecast quarterly revenues, operating income, net income, and earnings per share, but not subscribers.
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