Netflix added only 4m subscribers in the first quarter, a sharp slowdown from pandemic-driven gains last year as the US began to emerge from lockdowns.
At the end of March, it had 208m customers globally, it said on Tuesday, missing its own guidance for 210m.
Netflix also said it expected the second quarter to be slow, guiding for only 1m subscriber additions and a “roughly flat” customer base in North America, its largest market.
“We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year due to Covid-19 production delays,” Netflix told shareholders, warning that the pandemic would create “uncertainty” over its results.
First-quarter subscriber growth of 4m compared with 16m in the same period a year ago, during the first few months of the pandemic. It recorded 37m new subscribers in 2020 overall.
“The pandemic streaming party has firmly come to an end,” said Paolo Pescatore, analyst at PP Foresight.
As its subscriber base has soared, Netflix has increased revenue fast enough to cover both its operating expenses and its content spending, marking a milestone in the company’s history. In January, it announced it would no longer need to raise extra debt to cover the costs of producing television shows and films.
Revenues in the March quarter were up 24 per cent from the same period last year to $7.2bn, just above analysts’ forecasts for $7.1bn.
Net income jumped to $1.7bn, from $700m a year ago, which it partially attributed to Covid-related production delays, keeping costs down.
The shares dropped more than 10 per cent in after-hours trade. Netflix stock has climbed only 2 per cent this year, underperforming the broader market, after soaring more than 60 per cent last year to a high.
A key question for investors has been whether Netflix can maintain its lead over the competition, which now includes major streaming services from Disney, Apple and AT&T, and keep up momentum as consumers seek entertainment outside their homes again.
Netflix sought to ease these concerns on Tuesday, predicting that growth would heat up in the second half of the year with the return of hit shows such as Sex Education and The Witcher. The group expects to spend $17bn on content this year, with production up and running in most of the world.
It told shareholders it did not believe competition was a “material factor” in the disappointing first-quarter subscriber numbers.
Netflix remains well ahead of the pack. Its fiercest rival, Disney Plus, last month said it had reached 100m subscribers.