Netflix, Inc. (NASDAQ:NFLX) Q1 2024 Earnings Call Transcript April 18, 2024
Spencer Wang: Good afternoon, and welcome to the Netflix Q1 2024 Earnings Interview. I’m Spencer Wang, VP of Finance, IR and Corporate Development. Joining me today are Co-CEOs, Ted Sarandos and Greg Peters; and CFO, Spence Neumann. As a reminder, we will be making forward-looking statements and actual results may vary.
A – Spencer Wang: With that, we will now take questions that have been submitted by the analyst community. And we’ll begin first with some questions about paid membership reporting in our results and forecast. So for our first question, it comes from Justin Patterson of KeyBanc. And I’ll direct this at Greg initially. Greg, could you please talk about the decision to stop reporting quarterly membership and ARM data in 2025? Why eliminate this? And since you said success stems – starts with engagement, how are you thinking of expanding these disclosures?
Greg Peters: Yes. As we noted in the letter, we’ve evolved and we’re going to continue to evolve developing our revenue model and adding things like advertising and our extra member feature, things that aren’t directly connected to a number of members. We’ve also evolved our pricing and plans with multiple tiers, different price points across different countries. I think those price points are going to become increasingly different. So each incremental member has a different business impact. And all of that means that historical simple math that we all did, number of members times the monthly price is increasingly less accurate in capturing the state of the business. So this change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to the business.
So we’re going to report and guide on revenue, on OI, OI margin, net income, EPS, free cash flow. We’ll add a new annual guidance on our revenue range to give you a little bit more of a long-term view. We’ll also – we’re not going to be silent on members as well. We’ll periodically update when we grow and we hit certain major milestones, we’ll announce those. It’s just not going to be part of our regular reporting. And we want to do all of this thoughtfully and give everyone time to adjust this transition. So we’re going to continue to report subscribers until Q1 of next year, which links into our next annual revenue guidance for 2025. So we think that provides some long-range continuity. And we expect that will provide an effective bridge and transition.
But ultimately, we think this is a better approach that reflects the evolution of the business and it more matches and is consistent with how we manage internally to engagement, revenue and profit.
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