Netflix Reported Better Than Expected Q1 Earnings: Here’s How Analysts Reacted
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Netflix (NYSE: NFLX) released its Q1 2025 earnings yesterday after the markets closed. The streaming giant’s earnings were ahead of estimates, and it maintained its 2025 guidance despite the turmoil from tariffs. Here are the key takeaways from the earnings and how analysts reacted to the report.
Netflix reported revenues of $10.54 billion in the quarter, which was 13% higher YoY and slightly ahead of estimates. The company’s operating income rose 27% to $3.35 billion. Netflix reported an adjusted EPS of $6.61, which was well ahead of the $5.71 that analysts were expecting.
Netflix Reported Better-Than-Expected Earnings
Netflix’s Q1 earnings were better than analysts’ estimates, as well as the company’s guidance. According to Netflix, its Q1 revenues were ahead of its forecast “due to slightly higher-than-forecasted subscription and ad revenue.”
Notably, beginning this quarter, Netflix has stopped providing subscription numbers. It, however, sounded quite upbeat on its outlook and maintained the annual revenue guidance of $43.5 billion-$44.5 billion. During the earnings call, co-CEO Greg Peters said, “Based on what we are seeing by actually operating the business right now, there’s nothing really significant to note.”
He added, “We also take some comfort that entertainment historically has been pretty resilient in tougher economic times. Netflix, specifically, also, has been generally quite resilient. We haven’t seen any major impacts during those tougher times, albeit over a much shorter history.”
Netflix Provided Upbeat Guidance
For the second quarter, Netflix guided for revenues of $11.03 billion at the midpoint, compared to actual revenues of $9.56 billion in the corresponding quarter last year. It expects its operating income to rise to $3.67 billion, which is over $1 billion higher than the corresponding quarter in 2024.
Notably, over the long term, Netflix expects ad revenues to be a significant contributor to its earnings and has launched its own ad tech platform. “We believe our ad tech platform is foundational to our long-term ads strategy,” said Netflix.
The company added, “Over time, it will enable us to offer better measurement, enhanced targeting, innovative ad formats and expanded programmatic capabilities.”
While the company hasn’t said so officially, reports suggest that it is aiming to reach a market cap of $1 trillion by 2030. The company is targeting its revenues to double and its operating income to triple by then. It has also reportedly set a goal of reaching 400 million subscribers by then, which would mean adding around 100 million more subscribers between 2024 and 2030.
Sounding confident about the company’s long-term outlook, Peters said during the earnings call, “We still got hundreds of millions of folks to sign up. And from a revenue perspective, we’re about 6% of consumer spend and ad revenue in the countries we serve in the areas that we serve. So, we believe we’ve got plenty of room to grow our engagement, our revenue and our profit.”
How Analysts Reacted to NFLX’s Q1 Earnings
Netflix’s Q1 earnings impressed Wall Street analysts, and several raised their target price on the streamer post the confessional. “Solid first-quarter results were headlined by profitability beat (both operating and net income) with outperformance benefiting from revenue ahead of the company’s guidance (in-line with our above-consensus forecast) and expense timing,” said Guggenheim analyst Michael Morris.
Morris, who raised his target price by $50 to $1,150, added, “Second-quarter guidance was similarly ahead of our/consensus prior estimates.”
Morris believes that Netflix has the potential to increase its subscriber base even further. In his note, he said, “We continue to see opportunity to grow members with management noting they ‘still have hundreds of millions of folks to sign up’ with the service comprising less than 10 percent of TV hours and around 6 percent of consumer spend/ad revenue.”
MoffetNathanson analyst Robert Fishman also raised Netflix’s target price to $1,150. In his note, Fishman said, “When looking at U.S. revenue per hour viewed, Netflix still appears to be underearning relative to its engagement and even after the recent price increases still has a consumer surplus to further raise prices.”
Netflix Is Seen as a Recession-Proof Business
Nancy Tengler, the CIO and CEO of Laffer Tengler Investments, believes that Netflix is a “recession play” and subscriptions like Netflix and Spotify are “the last thing to go” when consumers cut spending during slowdowns.
Pivotal Research analyst Jeffrey Wlodarczak raised Netflix’s target price by $100 to $1,350 and said that the company offers “very attractive” price to value for its service, while its advertising business should deliver strong growth.”
“Our view remains unchanged that Netflix has won the global streaming race as further evidenced by these results and this is what, in our opinion, winning looks like,” added Wlodarczak.
Referring to Netflix maintaining its 2025 guidance, he said, “Commentary suggests high confidence in guidance, including ads, even in a weaker macro environment as consumers value TV more during economic uncertainty.”
BMO analyst Brian Pitz raised Netflix’s target by $25 to $1,200, while stressing “Entertainment typically remains resilient during uncertain macro.”
Pitz added, “Management noted that, given its current positioning within the advertising industry, it provides them with ‘some insulation’ as the ad market appears to be weakening.”
Edward Jones Maintained Its Hold Rating on NFLX Stock
Edward Jones, which has a “hold” rating on Netflix, maintained its neutral stance and did not tinker with its target price. “In his note, Jones said, “Netflix is no longer reporting subscriber additions, but we feel that financial results for the quarter were strong.”
Edward Jones analyst Dave Heger added, “We are encouraged that the company’s operating profit is tracking above our expectations, and guidance for the second quarter reflects a continuation of this result.”
Meanwhile, Netflix stock was trading higher in after-market hours after reporting an impressive set of numbers. The stock is up nearly 10% so far in 2025 while the broad-based S&P 500 is down by a similar quantum.
