The Zhitong Finance App learned that Netflix (NFLX.US) released first-quarter financial results that exceeded market expectations after the market on Thursday. Despite this, due to the streaming giant's announcement that it would stop reporting the number of subscribers for the quarter, its stock price fell more than 8% in post-market trading.

According to this financial report, Netflix's revenue for the first quarter reached 9.37 billion US dollars, up 14.8% year on year, higher than market expectations of 90 million US dollars; net profit was 2,332 billion US dollars, surging 78.7% year on year; and earnings per share reached 5.28 US dollars, far exceeding market expectations of 4.52 US dollars. Netflix added 9.33 million new subscribers in the quarter, almost double analysts' expectations. In particular, the US and Canadian markets showed strong performance. This growth also boosted its sales and earnings performance beyond expectations.

Notably, however, Netflix mentioned in a letter to shareholders that from 2025, the company will no longer publish the number of quarterly members and average revenue per member (ARM), but will instead use user engagement — that is, the time users spend on the platform — as the main measure of customer satisfaction.

Netflix Co-CEO Greg Peters explained that as the company's business changes, such as allowing account hosts to add additional members at an incremental monthly fee through paid sharing programs, and achieving higher engagement and higher revenue in advertising programs, the influence of subscriber numbers is weakening. He added that as the company grows from simple pricing and plans to multiple levels, the business impact of each new paid membership varies greatly from country to country depending on the price point.

The company further notes that although membership growth was once a strong indicator of its future potential, membership has become one of many components of the company's growth as it is now generating significant profits and free cash flow, as well as developing new revenue streams such as advertising and additional membership features. Therefore, the company believes that providing more information on engagement, such as weekly top 10 and most popular lists, is more useful than simply reporting subscription data.

The market reacted mixed. On the one hand, investors are concerned that this change may indicate a slowdown in user growth. In particular, Netflix warns that user growth in the second quarter may be lower than in the first quarter due to “seasonal factors.” On the other hand, although tech giants such as Apple (AAPL.US) and Amazon (AMZN.US) do not disclose user data for their streaming services, other media companies such as Disney (DIS.US), Warner Bros. Discovery (WBD.US), and Paramount Global (PARA.US) are still publishing their data.

Paolo Pescatore, technical and media analyst at PP Foresight, said, “Netflix's move to stop disclosing quarterly subscriptions may not go smoothly, especially given the increase in subscriptions last year.”

Citibank analyst Jason Bazinet said, “We are concerned that reduced disclosure may disappoint Wall Street.”

In response, Netflix emphasized that although strategic adjustments may cause controversy, the company believes this will help more accurately reflect the company's long-term value and changes in strategic focus.