Netflix prioritizes free cash flow over subscriber counts

Netflix is changing the way it measures success, moving away from old metrics like subscriber growth. In 2023, the company stopped providing detailed subscriber data and will not report membership counts or average revenue per member in its upcoming first-quarter 2025 report. Instead, Netflix is focusing on three main targets: sustaining healthy revenue growth, expanding operating margins, and growing free cash flow. Among these, revenue growth is the closest to the previous focus on subscriber additions, but free cash flow has become the most important metric for investors. Recently, Netflix's stock reached a new all-time high, even though the company did not fully meet its targets. Free cash flow increased significantly in 2022 and 2023 but remained steady in 2024. It even dropped 13% during the critical holiday quarter of 2024. Despite this, the stock rose 13% after management projected a 13% revenue growth and an increase in operating margins and free cash flow for 2025. Investors should pay close attention to these three key metrics as Netflix continues to adapt and grow in the streaming market.