And we really like the kind of the opportunity ahead of us. We’re so small in every aspect. We’re only 6% roughly of our revenue opportunity. We’re lesser than 10% of TV share in every country in which we operate. There’s still hundreds of millions of homes that are not Netflix members and we’re just getting started on advertising. So the key is to, as you just heard from Greg and Ted, continually improve our service, drive more engagement, more member value. As we do that, we’ll have more members. We’ll be able to occasionally price in that value and also have a big highly engaged audience for advertisers. So more to come on ’25 guidance, but that’s – we feel good about the outlook. And then, I guess the second part of the question, I’m trying to remember Spencer.
I’m sorry.
Spencer Wang: I can take – I’ll be the bad guy on this one, Spence. So the second question was, do you expect Q2 subscriber growth to be higher or lower than Q2 of the prior year? So Barton, as you know, we don’t give formal subscriber guidance. We did give an indication in the letter for you that we expect fairly typical seasonality. So paid net adds in Q2 of this year will be lower than Q1 of this year. And that’s the limit of the color we’ll provide there.
Spence Neumann: Thanks, Spencer.
Spencer Wang: No problem, Spence. So to follow-up on the revenue guidance question, we have Jason Helfstein from Oppenheimer, who is asking for some more color on the drivers of the full year revenue guidance with respect to subscriber growth versus ARM growth and how that – those two dynamics will play into the revenue forecast, Spence?
Spence Neumann: Yes. You want to take this one as well?
Spencer Wang: Yes.
Spence Neumann: Okay. I’ll jump in. Others can chime in as well. But when you think about the outlook for the year, it’s in terms of the mix of revenue growth. It’s kind of pretty similar to – we expect it will be pretty similar to what you see in Q1 where it’s primarily driven by member growth because of the kind of the full year impact of paid sharing rolling through the year and continued strong acquisition and retention trends. But you are – we are seeing some ARM growth as well. We saw it in Q1, about 1% on a reported basis, 4% FX-neutral. And what’s – I just want to be clear, what’s happening is that with ARM is price changes are going well. And that’s why we’re seeing those strong acquisition retention trends because it’s testament to the strength of our slate, the overall improvement in the value of our service.
But we’ve only really changed prices in a few big markets and that was U.S., U.K., France late last year. And only on some of the planned tiers in those markets, not even all the planned tiers. And since then, it’s been mostly pretty small countries other than Argentina. And Argentina, as you can see, we’re sort of pricing into the local currency devaluation and you see that in the difference between FX-neutral and reported growth in Q1. So mostly, what you’re seeing in our growth profile this year is the fact that we haven’t taken pricing in most countries for the past two years really. And we also have some ARM kind of headwinds in the near-term that you see in Q1. You’ll probably see throughout most of this year, which is that one, we have some this planned mix shift as we roll-out paid sharing.
So while it’s highly revenue accretive, as you can see in our numbers and our reported growth – strong reported growth in Q1 and outlook for the year, that growth – as we spin-off into new paid memberships, they tend to spin-off into a mix of planned tiers that’s a little bit of a lower-price view than what we see in our tenured members. And we’re also growing our ads tier at a nice clip as you’ve seen. I’m sure we’ll talk about it and monetization is lagging growth there. I’m sure we’ll talk about that a bit as well. We also have some country mix shifts. So that whole combination of factors results in pretty modest ARM growth, still some ARM growth, but pretty modest in Q1 and probably throughout the year. But again, the key there is that this is all we’re kind of managing this business transition in a way that’s really healthy for overall revenue growth as you see with 15% reported revenue growth in the quarter, strong outlook for the year and we’re building into a much more kind of durable and healthy foundation for revenue growth going forward across a larger base of paid members and a really kind of strong and scaled highly engaged audience to build into our advertising over time and a strong paid sharing solution and also to kind of penetrate into those households.
So we’ll increasingly kind of see that mix in our revenue growth and we start to see some of it this year.
Spencer Wang: Great. Spence, the next question comes from Kannan Venkateshwar from Barclays and it’s for you, which is do you expect margin growth trajectory to continue being on the present path for a few years? Can you attain margins that are comparable to legacy media margins?
Spence Neumann: Well, thanks, Kannan. Our focus is on sustaining healthy revenue growth and growing margins each year. That’s what we talk about a lot of we also talked about in the letter. And we feel good about what we’ve been delivering, 21% margins last year, that’s up from 18% in the year before. And now, we’re targeting 25% this year, which is up a tick from the start of year when we were guiding to 24%. So I’d say, just like we have in the past, we’ll take a disciplined approach to balancing margin improvement with investing into our growth. We’ve managed that balance historically pretty well, growing content investment, growing profit, growing profit margin and growing cash flow. You should expect we’ll continue to do that, but the amount of annual margin expansion in any given year could bounce around a bit with FX and other investment opportunities.
