Netflix (NASDAQ:NFLX) Surpasses Q1 Earnings and Revenue Estimates

• Earnings Per Share (EPS) of $6.61, beating the estimated $5.67 and marking a significant year-over-year improvement.
• Revenue reached approximately $10.54 billion, surpassing the estimated $10.50 billion and indicating strong market position.
• Despite strong earnings, Netflix faces challenges with its free cash flow, lagging behind competitors like Disney.

Netflix (NASDAQ:NFLX) has reported a strong performance in its first-quarter earnings for 2025. The company achieved earnings per share (EPS) of $6.61, surpassing the estimated $5.67. This marks a significant improvement from the $5.28 EPS recorded in the same quarter last year. The earnings surprise for this quarter was 16.17%, showcasing Netflix's ability to consistently outperform expectations.

In terms of revenue, Netflix generated approximately $10.54 billion, exceeding the estimated $10.50 billion. This represents an increase from the $9.37 billion in revenue reported in the same period last year. Despite a slight miss on the Zacks Consensus Estimate by 0.04%, Netflix has exceeded consensus revenue estimates in three of the last four quarters, highlighting its strong market position.

Despite the positive earnings report, Netflix faces challenges with its free cash flow, which continues to lag behind competitors like Disney. Disney, with a smaller share of the streaming market, enjoys higher free cash flow margins. This situation highlights Netflix's profitability disadvantage, requiring ongoing investments to maintain growth. In contrast, Disney can expand its business and profits without facing similar constraints.

Netflix's stock price experienced a significant increase following the strong earnings report. However, the company's financial metrics reveal some areas of concern. Netflix has a price-to-earnings (P/E) ratio of approximately 47.77 and a price-to-sales ratio of about 10.68. Its enterprise value to operating cash flow ratio is around 57.60, indicating a high valuation relative to its cash flow generation.