Netflix shares fell sharply in after-hours trading on Thursday due to investor uncertainty over leadership changes and a lack of new financial gains, despite the company beating Wall Street’s first-quarter revenue forecasts.

Netflix reported a 16% increase in revenue to $12.25 billion, slightly above analyst forecasts. Net income nearly doubled, mainly due to a one-time termination fee from canceling the Warner Bros. Discovery deal, highlighting the nature of this profit growth.

Netflix maintained its full-year revenue forecast and expects second-quarter revenue to grow by 13%. Management said content spending will rise earlier in the year, with the biggest increase expected in the second quarter, then slow later.

Netflix said costs from the canceled Warner Bros. Discovery deal will affect 2026 expenses, while overall merger-related costs are as expected.

The earnings report coincided with news that co-founder and chairman Reed Hastings will step down from the board in June. Hastings previously stepped down as CEO in 2023 and is expected to focus on philanthropy. Co-CEO Ted Sarandos emphasized that Hastings and the board supported the Warner Bros. Discovery deal, denying that his departure is linked to the failed acquisition.

Netflix reiterated its goal of reaching $3 billion in advertising revenue by 2026, which would be double last year’s figure. The ad-supported tier, launched in 2022, is now a key part of Netflix’s growth strategy, along with raising subscription prices and cracking down on password sharing. Netflix said subscription revenue was slightly above plan, helping operating income rise by 18% for the quarter.

Netflix also mentioned that it is still talking with the NFL about expanding its live sports partnership, after streaming Christmas Day games for the past two years. The company said that moving into video podcasts and covering the World Baseball Classic helped push its main internal engagement metric to a record high in the first quarter.