Netflix (NFLX, Financial) shares rose 3% after reporting its Q1 earnings, showcasing a significant EPS beat—the largest in over two years. Although revenue growth was modest, the company provided optimistic Q2 guidance. Netflix reaffirmed its FY25 revenue and operating margin guidance, easing investor concerns about the impact of macroeconomic pressures on subscriber growth and retention, especially after a recent price hike.
Overall, Netflix's Q1 report was solid, though not extraordinary. The absence of subscriber metrics requires adjustment, as Netflix shifts focus to revenue, margins, and EPS. The Q1 EPS upside and strong Q2 guidance were driven by reduced expenses rather than revenue growth, explaining the moderate market reaction. Despite concerns about cancellations due to price increases amid macroeconomic challenges, Netflix's performance remains robust, highlighting its success as competitors struggle for profitability.
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