Netflix Shares Gain 4% on Strong Q1 2025 Earnings Report

Netflix (NFLX.US) reported first-quarter results that beat expectations on both revenue and earnings per share. The results show that despite economic challenges and declining consumer sentiment in the U.S., entertainment spending remains very strong—both in North America (where revenues slightly missed expectations still up almost 10% YoY) and globally (where performance exceeded forecasts). The company’s operating income rose 27% year-over-year, and revenue increased by 13% year-over-year.

This reassured Wall Street and reinforced Netflix’s position as both a defensive and growth tech stock. The company also stated that it currently sees no risk of an economic slowdown resulting from Trump-era policies or potential weakness in the U.S. economy. It maintained its full-year 2025 guidance. This quarter also marked the first time the company did not disclose the number of new or lost subscribers.

Netflix Q1 2025 Results

• Earnings per share (EPS): $6.61, versus $5.68 expected
• Revenue: $10.54 billion, versus $10.5 billion expected
• Operating margin: 31.7%, compared to 28.1% a year earlier and 28.6% expected

Regional Revenues:

• U.S. and Canada: $4.62 billion, up 9.3% YoY, below estimates of $4.68 billion
• EMEA (Europe, Middle East, and Africa): $3.41 billion, up 15% YoY, above estimates of $3.31 billion
• Latin America: $1.26 billion, up 8.3% YoY, in line with estimates
• APAC (Asia-Pacific): $1.26 billion, up 23% YoY, above estimates of $1.24 billion

Cash Flow:

• Cash flow from operations: $2.79 billion, up 26% YoY, above estimates of $2.21 billion
• Free cash flow (FCF): $2.66 billion, up 25% YoY, above forecasts of $2.04 billion

Outlook for Q2 2025

• EPS forecast: $7.03, versus consensus estimate of $6.24
• Revenue forecast: $11.04 billion, versus $10.88 billion expected
• Operating income forecast: $3.68 billion, versus $3.28 billion expected
• Operating margin: 33.3%, compared to a forecast of 30%

Following the strong earnings report, Nasdaq 100 (US100) futures edged slightly higher, currently up by just under 0.3%.

Full-Year 2025 Guidance

• Revenue forecast: $43.5–$44.5 billion, compared to Wall Street expectations of $44.33 billion
• Operating margin: 29%, roughly in line with expectations of 29.2%
• Free cash flow: around $8 billion, slightly below the $8.51 billion market estimate

Netflix not only delivered a strong quarter but, more importantly for investors, issued very optimistic forward guidance. The company expects full-year revenue growth to exceed previous estimates. While the full-year forecasts for operating margin and free cash flow came in slightly below expectations, the market views this as Netflix exercising prudent forecasting—aiming not to disappoint investors.

The higher profitability suggests that Netflix’s high-margin advertising business is performing very well and continues to grow rapidly. The results also benefited from recent subscription price increases and high viewership of the series Adolescence.

Netflix stock (D1 timeframe)

If the current uptrend holds, Netflix could open tomorrow around $1,020 per share. Recently, the stock successfully defended a key support level—the 200-day exponential moving average (EMA200, red line). The historical high for Netflix stands at $1,050.

Source: xStation5

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