Netflix (NFLX) is set to release its first-quarter results after the market closes on Thursday. This report comes after the streaming giant lost its bid to acquire Warner Bros. Discovery (WBD) to Paramount Skydance (PSKY) and recently raised its subscription prices.
Analysts expect Netflix to report revenue of $12.17 billion, according to Bloomberg consensus data. In the same quarter last year, the company’s revenue was $10.54 billion. Adjusted earnings per share are projected to be $0.76, up from $0.66 in the first quarter of the previous year. The company also executed a 10-for-1 stock split in mid-November.
This earnings report is the first since Netflix withdrew from a heated bidding war to acquire Warner Bros. Discovery. Paramount Skydance ultimately won the bid and agreed to pay for the breakup fee. Wedbush analyst Alicia Reese noted, “Netflix has an incremental $2.8B to spend on content and ad stack improvements this year from its WB deal break-up fee, which we expect to extend its competitive lead.” Warner Bros. shareholders will vote next week on the $110 billion offer.
Investors had grown concerned about the potential merger and the associated debt, so there was a sense of relief when the deal fell through, which sent Netflix shares higher. Brian J. Pitz from BMO Research wrote, “We see a cleaner Netflix story post-WBD merger break, as investors refocus around core and near-term fundamentals and seek evidence that Netflix can scale a massive $10B+ advertising business over the long term.”
This is also the first earnings report since Netflix increased its subscription prices for the second time in just over a year. Pitz believes these price hikes will “contribute roughly $1.5B in incremental revenue in 2026 estimates, providing 3.3% growth from pricing alone.” Netflix raised the price of its ad-supported Standard plan by $1 to $8.99 per month. The ad-free Standard and Premium tiers increased by $2 to $19.99 and $26.99 per month, respectively.
Jessica Reif Ehrlich, an analyst at Bank of America, sees the company’s ability to raise prices as a sign of strength. “Given the overarching concerns regarding engagement over the last 12-18 months, we view these increases as a validator of Netflix’s confidence in their underlying strength and durability.” The Street expects Netflix to report over 331 million paid subscribers worldwide for the first quarter.
