Netflix Once Again Evolved And Eclipsed Its Streaming War Rivals

With its first quarter results, Netflix Inc NFLX blew past estimates on all fronts. While waiting for its streaming rivals to catch up, like the legacy entertainment giant, Walt Disney Company DIS, Netflix eclipsed them.

An impressive fiscal first quarter.

For the quarter ended on March 31st, Netflix posted revenue of $9.37 billion, surpassing LSEG’s estimate of $9.28 billion as revenue rose almost 16% YoY. Net income significantly jumped from last year’s comparable quarter when it amounted to $1.30 billion, or $2.88 per share to $2.33 billion, or $5.28 per share.

Subscribers jumped 16% YoY as Netflix added 9.3 million subscribers during the first three months of the fiscal year, fueled by global password-sharing crackdown and the introduction of the ad tier option that is less expensive compared to the standard one. Netflix now has 269.6 million subscribers, surpassing Street Account’s 264.2 millionestimate.

Revenue guidance was slightly below Wall Street’s estimates.

Despite an impressively stellar report, Netflix shares fell after the streaming giant released disappointing revenue guidance. During the second quarter, Netflix guided for revenue to grow almost 16% to $9.49 billion, coming in slightly below Visible Alpha’s $9.5 billion estimate. Netflix forecasted the income will drop to $2.06 billion, and EPS to $4.68.

As for the full year, Netflix guided for revenue growth between 13% and 15%. But, it lifted its full-year operating margin guidance to 25% due to exchange rate movements. 

A change in the streaming war dynamics.

As of next year, Netflix will no longer report quarterly subscriber gains, implying that it wants its performance to be judged by mature financial metrics such as revenue, operating margin and free cash flow, along with engagement metrics to assess customer satisfaction. Streaming wars have been largely defined by a race to grow members and Netflix is now changing the rules by choosing to focus more on growing profit. However, it will still announce major subscriber milestones once they are reached. 

Its rivals have spent a year in the chase, and no one has quite reached the streaming promised land. With Netflix continuing to grow, it is a moving target that is hard to catch. Disney expects to hit profitability on the streaming front by the end of the year, but Netflix is undoubtedly the winner of streaming wars. Disney has also been following Netflix’s lead in an effort to infuse magic into its streaming business, beginning with the password crackdown.

Netflix won.

With its latest report that marked its best start since 2020, Netflix showed its evolutive capacity and positioned itself for continued success in the competitive streaming space, one that it still dominates. Even the Disney CEO Bob Iger admitted that Netflix is “the gold standard in streaming”, and that it would be great for the world’s greatest entertainment company to accomplish what Netflix did on the streaming front. 

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.