Netflix (NFLX) Q1 2023 Earnings call Transcript

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Spencer Wong--VP of Finance, IR & Corporate Development:

Hello, welcome to Netflix Q1 2023 earnings interview. I'm Spencer Wong, VP of Finance, IR, and Corporate Development. Joining me today are Co-CEOs Ted Sarandos and Greg Peters, and CFO Spencer Neumann. Our interviewer this quarter is Jessica Ehrlich. And as a reminder, we will be making forward-looking statements and actual results may vary. With that, Jessica, I'm going to turn it over to you for your first question.

Jessica Ehrlich--Interviewer:

Thank you. Let's start with Ted and Greg. You've worked together for over 15 years, but this is your first quarter as Co-CEOs. Are there any highlights you want to share?

Ted Sarandos--Co-CEO:

Because, as you pointed out, it's our first quarter together as Co-CEOs, but 15 years working together, and in those 15 years, you build a lot of respect and trust in each other to help you get through through some trying times and slow you down about there was no drama, but this was a pretty much business-as-usual quarter for us. Having done this together for so long, and Greg and I enjoy the same kind of respect and shorthand that I enjoyed with Reed for so many years. I know Greg did as well. So it's not as eventful as folks might have thought. And it's really been incredibly, wonderfully, professionally stimulating to have a Co-CEO and to get to tackle big problems together. So I think one of the things that we'll look back at Reed's incredible 25 years at Netflix, one of the great accomplishments is facilitating this very, very smooth transition and succession.

Jessica Ehrlich--Interviewer:

Great. So you've recently reduced prices in 116 countries. Is this a more local approach similar to what you did in India in 2021, or is the impetus to enable a successful introduction of password sharing and advertising tiers?

Greg Peters--Co-CEO:

I can take this on if you want. Jessica, this is really about, you know, we've talked for the last few quarters about further refining our pricing strategy and monetization. And if you think back to when we did our global launch in 2016, it was pretty much across the board, a bit of a skim approach and not particularly sophisticated in terms of our pricing. So think of this as kind of that next step in our evolution of a bit of a better market set, product-market fit pricing fit with the aim of growing our penetration in these markets and also better medium and long-term revenue. So it's better for our members than for our business, but I want to emphasize this is not material to our business anytime in the near term for sure. So it's a lot of countries, but it represents less than 5% of our revenue. And so it's something that will, over the long term, hopefully will benefit us. And, you know, we can point to an example of success, like what we saw in India. So last year, back in December of 2021, we dropped prices in India between 20% to 60%. We saw engagement over the past year grow by about 30%, and high growth in paid ads, and also revenue, FX-neutral revenue growth, actually accelerated from 19% in the year prior to 24% last year. So, you know, we're not saying every market is going to play out like that, but that's what it would look like in success.