FILE PHOTO: The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, U.S., July 12, 2023. REUTERS/Mike Blake/File Photo
LOS ANGELES (Reuters) -Netflix executives on Thursday backed the company's revenue outlook for the year and voiced confidence that the streaming service would weather any economic turbulence from President Donald Trump's erratic tariff plans. Following an earnings report that topped analyst expectations, Netflix co-CEO Greg Peters said the company had not seen any significant shifts in customer behavior, commentary that is likely to ease Wall Street concerns that Trump's policies would prompt lately frugal consumers to reconsider spending on streaming services.
Netflix shares rose 2.7% in after-hours trading. The stock has risen 9% so far this year, compared with a 10% slump in the broader S&P 500 index.
With more than 300 million global customers, Netflix has continued to sign up subscribers in markets around the world as consumers flocked to its lower-priced, ad-supported tier since its launch in late 2022.
Peters noted that the entertainment sector, and Netflix specifically, had proven resilient during previous downturns in the economy."We really do expect the demand to remain strong," he said.
He added that the company's lower-cost options also should help. The ad-supported tier accounted for 55% of new sign-ups in countries where it is available, the company has said.
The streaming giant also said its co-founder, Reed Hastings, had left his post as executive chairman to become the board's non-executive chair, "part of the natural evolution of our leadership structure and succession planning."
Netflix co-CEO Ted Sarandos said the company remained focused "on the things we can control, and improving the value of Netflix is a big one."
"In difficult economies, home entertainment value is really important to consumer households," Sarandos said, "and Netflix is a tremendous value in absolute terms and certainly in competitive terms."
The company projected its revenue would rise to $11.04 billion for April through June, above the analyst consensus of $10.90 billion.
For the year, Netflix reaffirmed its forecast of revenue between $43.5 billion and $44.5 billion, "which assumes healthy member growth, higher subscription pricing and a rough doubling of our ad revenue."
For the first quarter, Netflix reported revenue of $10.54 billion, edging past analysts' estimates of $10.52 billion, according to data compiled by LSEG.
Per-share earnings of $6.61 exceeded consensus estimates of $5.71. The company released hits such as the limited series "Adolescence", drama thriller "Zero Day" and the unscripted series "Temptation Island" during the quarter.
Netflix said revenue and operating income beat its own guidance "due to slightly higher subscription and ad revenue and the timing of expenses." It said advertising revenue was "still very small relative to subscription revenue."
PP Foresight analyst Paolo Pescatore said he believed Netflix was in a strong position to handle a recession.
"Netflix is an indispensable service in users' lives. It will be the last subscription that users will cancel given the broad and breadth of programming," Pescatore said.
(Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles; Editing by Devika Syamnath and Maju Samuel)
