The streaming market leader Netflix presented the eagerly awaited business figures for the first quarter on Thursday. This is how the balance turned out.
The company recorded earnings per share (EPS) of $1.23. The group thus beat the average analyst estimates, which had previously been $0.762 per share. Compared to the same period last year, in which Netflix earned a profit of $0.660 per share, the result increased.
In terms of sales, the group exceeded the experts’ market expectations. While analysts on average had expected revenue of $12.18 billion, actual sales in the past quarter amounted to $12.25 billion. This represents an increase compared to the same quarter last year, when there were still $10.38 billion on the books. Netflix thus met the experts’ forecast growth target.
With a view to the entire fiscal year, market observers’ forecasts continue to be an important indicator for investors. Analysts are currently expecting average earnings per share of $3.19 for the current year, compared to $2.53 per share in the previous year. In terms of annual sales, 48 analysts are now expecting an increase to an average of 51.35 billion US dollars, which would mean a significant increase compared to the 45.27 billion US dollars in the previous year.
Netflix: More AI in the production of films and series
Netflix expects to use more artificial intelligence in the production of films and series in the future. AI will not change the fact that great artists are needed to make great art, said co-chief executive Ted Sarandos after presenting fresh quarterly figures. But technology can give these artists better tools to realize their visions.
AI software is already being used at Netflix today, among other things, for planning recordings and for special effects – but they are only scratching the surface, emphasized Sarandos. At the beginning of March, Netflix bought the company InterPositive, founded by Hollywood star Ben Affleck, which specializes in AI tools for filmmakers. In addition, artificial intelligence is now also used in the program recommendations that users see on the Netflix platform.
The use of AI is a hot topic in Hollywood right now. Studios see great potential for cost savings, but creatives fear that people could gradually be forced out of the business.
Earnings forecast disappoints Wall Street
In the last quarter, Netflix made the decision to abandon the approximately $83 billion takeover plan for the studio and streaming business of Hollywood veteran Warner Brothers. The reason was that rival Paramount offered more than $110 billion for the entire Warner Bros. Discovery group, including television channels such as CNN. Netflix admitted defeat instead of following up. Sarandos sees this as a sign that Netflix is disciplined in its spending.
It was assumed on Wall Street that abandoning the Warner takeover would significantly ease the strain on Netflix’s finances. Analysts on average expected a profit forecast of 84 US cents per share for the current quarter. However, Netflix only promised earnings of 78 cents per share.
The strong performance in the last quarter also counted for little. Netflix increased its sales by 16 percent year-on-year to 12.3 billion dollars (10.4 billion euros). The bottom line is that profits rose by almost 83 percent to $5.28 billion. Calculated per share, Netflix earned $1.23 – significantly exceeding the average analyst forecast of 76 cents per share. Netflix only publishes user numbers occasionally.
Long-time boss leaves the board of directors
When presenting its quarterly figures, Netflix also announced that co-founder and long-time boss Reed Hastings would be leaving the board of directors. The 65-year-old will not stand for re-election when his mandate expires in June, it was said. Hastings had already said goodbye to his position as head of Netflix several years ago and then only helped determine the strategy from the supervisory board. After a question from analysts, Sarandos emphasized that Hastings’ departure was not due to differences surrounding the Warner takeover plans.
This is how Netflix shares move
In after-hours trading on the NASDAQ, Netflix shares temporarily fell 9.68 percent to $97.35.
Benedict Kurschat, Claudia Stephan, Martina Köhler, finanzen.net editorial team with material from dpa-AFX
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