Netflix (NFLX) shares dropped by as much as 8% on Friday following the company's announcement of a second-quarter revenue forecast that fell short of estimates and its decision to discontinue reporting quarterly subscriber metrics, which are closely monitored by Wall Street.

On Thursday, Netflix projected second-quarter revenue to reach $9.49 billion, slightly below the consensus estimate of $9.51 billion.

The company also stated its intention to cease reporting quarterly membership numbers starting next year, as well as average revenue per member (ARM).

Netflix cited the evolving nature of its pricing and plans, which now include multiple tiers with varying price points depending on the country, as the reason for this decision. Each additional paid membership now has a distinct business impact, according to the company.

In its first-quarter earnings report released on Thursday, Netflix surpassed expectations across the board, adding over 9 million subscribers during the quarter.

The 9.3 million subscriber additions exceeded forecasts of 4.8 million and followed the 13 million net additions in the fourth quarter. Additionally, the company gained 1.7 million paying users in Q1 2023.

Revenue for the quarter exceeded Bloomberg consensus estimates, reaching $9.37 billion, marking a 14.8% increase compared to the same period last year. Netflix attributed this growth to various revenue initiatives, including efforts to combat password-sharing, the introduction of an ad-supported tier, and recent price hikes on certain subscription plans.

Despite these positive results, Netflix's stock has been highly volatile, with analysts cautioning that elevated expectations could pose risks to the stock price.

Earnings per share (EPS) for the quarter surpassed estimates, coming in at $5.28, well above the consensus expectation of $4.52 and nearly double the EPS figure reported in the year-ago period. Netflix anticipates second-quarter EPS to reach $4.68, ahead of consensus calls for $4.54.

Operating margins for the first quarter stood at 28.1%, up from 21% in the same period last year. The company expects margins to slightly decrease to 26.6% in Q2.

Free cash flow for the quarter totaled $2.14 billion, exceeding consensus estimates of $1.9 billion.

Meanwhile, ARM increased by 1% year over year, consistent with the fourth-quarter results. Analysts anticipate ARM to rise later in the year as the impact of the ad-tier and price hikes becomes more pronounced.

The adoption of ad-tier memberships saw a significant increase, rising by 65% quarter over quarter and accounting for over 40% of all Netflix sign-ups in the markets where it is available.