Hollywood Reporter: Reed Hastings to Give Up Executive Chairman Role at Netflix, as Streamer Shifts Focus to Revenue and Income

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In its first quarterly earnings report without disclosing subscriber numbers, Netflix pointed Wall Street toward revenue and operating income as the streaming giant seeks to control the story of its growth potential.

Netflix reported $10.5 billion in revenue, operating income of $3.3 billion, and a margin of 31.7 percent. All up substantially from a year ago.

Netflix also said that Reed Hastings, its founder and executive chairman, would give up that role to become chairman and non-executive director of the company. Hastings moved from co-CEO to executive chairman two years ago.

The company beat Wall Street expectations handily, continuing to demonstrate its strength in the marketplace.

The company also raised prices in many markets (including the U.S.) earlier this year, a move that also included the first hike to its ad-supported plan. The hikes likely bolstered the company’s margins, given its low churn.

Netflix said that in Q2 it expects revenue to grow by 15 percent, and to have operating margins of 33 percent, owing to the price increases. The company says that it expects to continue rolling out price increases in different markets, and to expand its advertising and ad tech platform, growing that business as well. It says it is “on track to reach sufficient scale with our member base in all ads countries in 2025.”

Netflix announced its plan to end subscriber number reporting a year ago, noting that it would still do so when critical milestones were hit. It ended on a high note, with the company adding a record-shattering 19 million subscribers in its Q4 report three months ago. Netflix ended 2024 with 302 million global subscribers.

Third parties will continue to try and measure Netflix’s subscriber growth through their own efforts, with Antenna reporting that Netflix added 4.1 million subscribers in the U.S. last quarter. That would imply continued healthy sub growth in Q4.

Netflix’s decision to stop reporting subscriber numbers came as the story it sought to tell Wall Street shifted. Its password-sharing crackdown continues to pay dividends, but is likely shrinking in efficacy by the month. Meanwhile, its growth businesses include advertising and gaming, which are nascent and growing, with live events also a piece of the puzzle. To that end, Netflix has focused more efforts on time spent as a key metric, alongside topline numbers.

And the change comes amid a great deal of market uncertainty, with tariffs and recession fears still top of mind. Co-CEO Greg Peters said that the company was “playing close attention, clearly, to the consumer sentiment and where the broader economy is moving.”

Peters and co-CEO Ted Sarandos also downplayed a Wall Street Journal report that suggested that the company was targeting a $1 trillion market cap. Sarandos framed the meeting as being about “long-term aspirations.”

He added, “It’s important to note that this is not the same as forecast. Our operating plans are the same as our external forecasting guidance.”

In its shareholder letter, the company once again detailed how it views its competition, as well as its programming strategy. Both point to a future that is much more internationalized than it has been in the past, with more live event programming.

The company suggested that experiments where it licensed content from creators like Ms. Rachel and The Sideman were working, and that it is poised to expand its strategy of acquiring major live events like NFL games and boxing matches.

“While our initial live efforts have primarily focused on the U.S., we expect to extend this strategy to other countries over time,” the company wrote.

Indeed, content and programming from around the world was a common thread in the letter.

“To grow around the world and to delight and satisfy such a large and diverse audience, our strategy is to continuously improve and expand our entertainment offering, starting with great shows and movies from across the globe, which first and foremost appeal directly to local audiences because we believe they want to see authentic stories,” the company wrote. “We then make it easy for anyone, anywhere to watch them.”

And asked about creator content on the earnings call, Sarandos said that he expects to see more video podcasts on the Netflix platform, as well as more deals with high-quality creators.

“I think we could help those creators reach an audience. Our model can also support more ambitious efforts for them, could help derisk them, unlike the kind of typical [user generated content] models,” he said.

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