Netflix’s Q1 Earnings: A Solid Quarter But the Full-Year Outlook Has a Speed Bump

Bull Market or Bear Market? Let’s talk about Netflix’s latest earnings report.

Netflix (NASDAQ:NFLX) just delivered a Q1 performance that’s got investors scratching their heads: revenue beat expectations, but the full-year guidance? Well, it’s a little underwhelming. Let me break this down for you—because when it comes to streaming wars, the margins matter more than the subscriber count these days.

The Q1 Win: Revenue Soars, but the Big Picture? Not So Fast

Netflix reported Q1 revenue of $10.54 billion, a 13% jump from last year and a slight beat of its own guidance. Earnings per share (EPS) hit $6.61, crushing estimates. The company’s pricing power is undeniable—hikes in the U.S., U.K., and Argentina drove margins higher, while its ad-supported tier now accounts for over 55% of new sign-ups in key markets.

But here’s the thing: Netflix is now laser-focused on revenue and operating income, not subscriber growth. Why? Because in 2024, it added 19 million subscribers—including a record-breaking 4.1 million in the U.S. alone—and ended the year with 302 million total subscribers. The message? “We’ll only share subscriber numbers when it’s a big deal,” said Ted Sarandos.

The Full-Year Guidance: A “Slight Miss” That Matters

Now, let’s get to the crunch: Netflix’s full-year 2025 revenue guidance is $43.5 billion to $44.5 billion. The midpoint here is $44.0 billion—but analysts were expecting $44.4 billion, according to Zacks. That’s a $400 million gap, which isn’t catastrophic, but it’s enough to make Wall Street pause.

Why the caution? Let’s look at the math. The guidance implies 15% revenue growth in Q2, which is strong, but the full-year target assumes the ad business and price hikes can keep pace without subscriber growth slowing. Meanwhile, competitors like Paramount and Disney are struggling with President Trump’s trade policies and rising content costs. Netflix? It’s rising its prices again—this time in France—and betting on live events (NFL games, boxing) to keep viewers hooked.

The Risks: Ad Fatigue and the $1 Trillion Mirage

Here’s where it gets tricky. Netflix’s ad-supported tier is a hit, but ad revenue is still a fraction of its total income. Scaling that into a profit machine won’t be easy. Meanwhile, the company nixed its long-term goal of hitting $1 trillion valuation by 2030, calling it “speculative.” Translation? They’re focusing on the next 12 months, not 10 years.

And then there’s the elephant in the room: economic uncertainty. While Netflix’s stock rose 9.2% year-to-date, a recession or a slowdown in discretionary spending could hit streaming harder than, say, groceries. The company’s operating margin of 29% is healthy, but it’s no guarantee against a pullback.

The Bottom Line: Hold the Course, but Keep a Close Eye

Netflix’s Q1 was a win—no doubt. The revenue beat and margin expansion show it’s still the king of streaming. But the full-year guidance? It’s a reminder that growth can’t always be exponential. Investors should be cautious here.

If you’re holding NFLX, stay put—but don’t chase it higher. If you’re buying now, wait for a dip. And remember: Netflix’s focus on revenue over subscribers means it’s prioritizing profit over scale. That’s a smart move, but it also means the next leg up will need to come from new revenue streams—like live events or international content—rather than just adding users.

In the end, Netflix’s Q1 proves it’s got the engine to keep racing. But the full-year guidance? It’s a yellow flag. Don’t crash the portfolio, but don’t ignore the warning light either.

Final Verdict: HOLD with a $440 price target (midpoint of 2025 guidance). Risks remain, but the ad strategy and pricing power are real. Stay alert, but don’t panic—unless the ad tier’s growth slows. Then you’ll know it’s time to hit the eject button.