Can International Content Boost Netflix's Seasonally Weak Q1 Results?

Netflix NFLX is slated to report first-quarter 2025 results on April 17. 

The streaming giant heads into its first-quarter 2025 earnings with strong momentum following significant paid subscriber additions of 19 million in fourth-quarter 2024, but faces typical seasonal headwinds. The streaming giant's strategic focus on international content may prove crucial to maintaining engagement during this traditionally challenging quarter.

Click here to know how the company’s overall first-quarter performance is expected to be.

International Content Strategy

Netflix continues to bolster its global content slate, launching several high-profile international titles in the first quarter. The company premiered The Trauma Code: Heroes on Call, its first Korean medical series, alongside Finnish film Little Siberia and Spanish thriller The Snow Girl 2: The Soul Game. 

Latin American productions gained prominence with Caught, an Argentinian thriller adaptation, while Asian offerings included the Chinese romantic comedy I am Married...But! and the fourth season of the Korean reality show Single's Inferno.

This international push aligns with Netflix's long-term growth strategy, as the Zacks Consensus Estimate projects first-quarter EMEA revenues of $3.3 billion (up 11.8% year over year), Asia-Pacific revenues of $1.22 billion (up 20.1%), and Latin America revenues of $1.25 billion (up 8.1%).

NFLX’s Q1 Estimates

Analysts forecast more modest subscriber growth following fourth-quarter's blowout performance, with the Zacks Consensus Estimate projecting 4.36 million net additions in the first quarter. 

This reflects typical first-quarter seasonality combined with potential price increase impacts after Netflix raised subscription costs across most plans in the United States, Canada, Portugal, and Argentina in January.

The company anticipates total revenues to be $10.416 billion, suggesting growth of 11.2% year over year. The consensus mark for revenues is pinned at $10.54 billion, above the company’s expectations, indicating 12.5% year-over-year growth.

NFLX has projected earnings of $5.58 per share. The Zacks Consensus Estimate for the same is pegged at $5.74 per share, currently above the company’s expectations. The estimate has remained steady over the past 30 days. 

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote

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Investment Perspective

While Netflix's fundamentals remain strong, with the company guiding for a 29% operating margin in 2025, currency headwinds, intensifying competition from rival platforms like Apple AAPL, Amazon AMZN and Disney DIS, and the potential impact of recent price increases on retention present near-term challenges.

Investors already holding positions should maintain them heading into earnings, but those considering new or additional investments might benefit from waiting for a more attractive entry point after first-quarter results provide clearer visibility into 2025 performance trends. NFLX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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