(Alliance News) - Netflix Inc on Thursday offered reassurance that the economic uncertainty was yet to impact its business as it reported strong first quarter results and upbeat guidance.

Co-Chief Executive Greg Peters told an earnings call the company was clearly playing close attention to the economy, but had seen no significant changes in its business, noting retention remains "stable and strong", with no major changes to plan mix.

Peters said he takes some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times.

He thinks Netflix's low-cost advertising plans in its largest markets also gives the firm more resilience and expects demand for entertainment to remain strong.

Fellow co-CEO Ted Sarandos said the firm remains "focused on the things that we can control".

He too noted historically in tougher economies, "home entertainment value is really important to consumer households and Netflix is a tremendous value in absolute terms and certainly in competitive terms".

Peters said it had also been expanding the range of price points, including the low-priced ad plans which better allows the firm to offer the "right plan at the right price" to a wider range of consumers.

Chief Financial Officer Spencer Neumann said the business is seeing "strong, stable acquisition and retention trends" generally that resulted in healthy member growth in the quarter.

The comments came as the California-based streaming service said net income rose 24% to USD2.89 billion in the three months to March 31 from USD2.33 billion a year prior. Diluted earnings per share climbed to USD6.61 from USD5.28.

Revenue rose to USD10.54 billion from USD9.37 billion a year prior, while the operating margin improved to 31.7% from 28.1%.

Revenue and diluted EPS beat LSEG consensus for USD10.51 billion and USD5.71 respectively.

In response, shares in Netflix rose 4.6% in after hours trading in New York on Thursday. They had earlier closed up 1.2% at USD973.03.

Netflix said sales and profits were ahead of guidance due to slightly higher subscription and advertising revenue and the timing of expenses.

US, Canada & Australia revenue grew 9% year-over-year slowing from 15% in the fourth quarter of 2024 due to only a partial quarter impact from its price change, plan mix and the absence of advertising revenue from the Christmas Day NFL games.

Netflix expects UCAN revenue growth to reaccelerate in the second quarter.

Questioned about margins, Neumann expects content expense will grow and ramp-in the third and fourth quarters year-over-year basis given the timing of its slate.

He explained its biggest titles are returning in the back-half of the year with the fourth quarter typically having a heavier film slate.

This is reflected in margin guidance, he added.

On advertising, Peters said Netflix continues to expect to roughly double advertising revenue in 2025.

"We got many years of building ahead of us, but we've got a clear roadmap," he said.

On April 1, Netflix said it had launched its ad tech platform in the US, with roll out in its remaining ads countries on track for the coming months.

Noting the competitive market, including YouTube, Peters said "we're definitely competing hard for people's entertainment time".

But he said the biggest opportunity "we've got is actually going after the roughly 80% share of TV time that neither Netflix nor YouTube have today."

"We think of that as a real immediate opportunity," he added.

On new content, Sarandos said Netflix was "looking for the next-generation of great creators and we're looking everywhere," alongside its more recognisable names.

Games, video podcasts were also mentioned as possible areas of new growth.

The firm hailed a "solid slate" in the first quarter with the series Adolescence and three films, Back in Action, Ad Vitam and Counterattack, all breaking into its all-time most popular lists.

Netflix said the revenue and profit growth outlook remains solid, with no change to 2025 guidance forecast for revenue of USD43.5 billion to USD44.5 billion and an operating margin of 29%.

This assumes "healthy" member growth, higher subscription pricing and a rough doubling of advertising revenue, partially offset by forex net of hedging.

For the second quarter, Netflix expects revenue of USD11.04 billion, operating income of USD3.68 billion, net income of USD3.06 billion and diluted EPS of USD7.03.

Citi said second quarter operating income was above the USD3.28 billion guidance with diluted EPS outlook of USD6.25.

"All told, we expect shares likely to trade higher on Monday given the 1Q25 beat and healthy 2Q25 guide," Citi said.

Netflix said there has been no "material change" to its overall business outlook since the last earnings report, although at current foreign exchange rates, it is currently tracking above the mid-point of 2025 revenue guidance range.

It is the first quarter Netflix has not disclosed subscriber numbers. It has pledged to inform the market when significant landmarks are reached.

By Jeremy Cutler, Alliance News reporter

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