Netflix (NASDAQ:NFLX) stock gained about 10% in the extended trading session. However, the stock fell to a 0.5% gain after reporting the first-quarter results. The stock has fallen by over 2% in pre-market trading today as of 8:09 AM ET. Overall, the company provided conservative guidance. Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) will likely release their earnings results on April 29. Walt Disney (NYSE:DIS) will likely release its earnings on May 4.
Although the earnings missed analysts’ consensus estimate, the revenue marginally beat the estimates, which was expected. The upbeat revenues were driven by higher-than-expected subscriber numbers in the quarter. The coronavirus outbreak, which has forced people to stay at home, led more people to subscribe to online streaming services like Netflix.
Netflix’s Q1 performance
Netflix’s revenue was $5.77 billion in the first quarter, which was in line with its guidance. The revenues beat the estimate of $5.76 billion and increased by about 27.6% YoY in the quarter due to higher-than-expected subscriber growth. Currency headwinds dented the company’s first-quarter revenue by $115 million. The company’s ARPU (average revenue per user) also increased 8% YoY on a constant-currency basis.
Netflix reported an EPS of $1.57 in the first quarter. The earnings missed the consensus estimate of $1.65 and management’s guidance of $1.66 per share. The earnings also fell significantly from the EPS of $0.76 in the first quarter last year due to the negative impact of coronavirus. Lower operating margins also weighed on the first-quarter earnings.
Netflix reported an operating margin of 16.6% in the quarter, which was lower than 10.2% in the first quarter last year and the company’s forecast of 18.0%. Netflix incurred incremental content costs in the quarter after its production house closed. Although shutting down the film and TV production temporarily boosted the free cash flow, it could delay some programming by a quarter.