In a significant shift in its operating strategy, Netflix has announced that it will no longer report its quarterly subscriber numbers and average revenue per membership. This change, which takes effect starting with the company’s earnings report for the first quarter of 2025, aims to focus on more comprehensive financial metrics, such as revenue and operating margin, as well as customer engagement, which is measured by time spent on the platform.
According to a letter to shareholders, Netflix has undergone significant growth and evolution, shifting from a company that relied heavily on membership growth as an indicator of its future potential to one that now generates substantial profit and free cash flow. As a result, the company believes that focusing on membership growth alone is no longer a reliable metric. Instead, it will prioritize revenue and operating margin, which provide a more accurate picture of the company’s financial health.
One of the reasons for this change is the complexity of Netflix’s various plans and pricing structures. The company now offers multiple tiers of service, each with different features, prices, and revenue potential. For example, its cheapest tier, which includes advertising, generates more revenue per membership than its higher-tier plans. This complexity makes it challenging to provide a single, meaningful metric for membership growth, as different tiers have different business impacts.
Netflix has also pointed to the development of new revenue streams, such as its extra member feature and advertising, which will contribute to the company’s growth. In this context, membership numbers become a less relevant metric, as the company’s overall revenue and profitability are more important indicators of its success.
The company will still announce major subscriber milestones, such as reaching significant new subscriber marks, but the quarterly subscriber numbers and average revenue per membership will no longer be reported. This change aligns with the practices of other major technology companies, such as Apple and Google, which do not regularly release subscriber numbers for their respective services.
The shift in Netflix’s reporting practices may come as a surprise to some investors and analysts, but it is unclear whether this change will have a major impact on the company’s stock performance or overall business strategy. Nevertheless, the move reflects Netflix’s growing maturity and focus on long-term sustainability, as it continues to evolve and adapt to the rapidly changing media terrain.