Netflix's (NFLX 2.47%) latest earnings report drew mixed reviews from the critics, i.e., Wall Street analysts.

The streaming company certainly gave investors diving into their first-quarter letter to shareholders a lot to like, even if the headline numbers were somewhat disappointing. The report showed strong progress with its ad-supported rollout and an update on its paid-sharing initiative, which holds a lot of promise. Still, a disappointing outlook for the second quarter produced some concerns.

Here's what to make of all of it.

The big thing that made me hit pause

Let's get the bad parts out of the way.

Netflix reported disappointing subscriber growth for the first quarter, and it missed revenue expectations. Usually, a subscriber and revenue miss from Netflix doesn't create a big concern for me. The company's results can be volatile but typically move in the direction investors want to see over time.

What made this miss different is that Netflix delayed the rollout of its paid-sharing feature in most markets, which it said would negatively impact its results in the first quarter. That means Netflix should've easily beat its expectations based on what it was seeing early in the first quarter when it provided guidance with the expectation of rolling out paid sharing globally.

Now, second-quarter guidance is disappointing, and management is pointing to the impact of paid sharing again. It's expecting revenue growth to slow again before reaccelerating in the third quarter.

A lot remains to be seen about how Netflix's dual rollout of the ad-supported tier and paid-sharing will impact subscriber and revenue growth. To that end, Netflix had some very good news on both fronts. Here are four good things that came out of the report:

1. Netflix's ad-supported tier is smashing expectations

While it got off to a slow start, Netflix's new ad-supported tier is now producing a very high average revenue per member.

Management said the Basic with Ads tier, which costs $7.99 per month, is producing average revenue higher than its Standard plan ($15.49 per month) in the United States. Management says engagement has been higher than expected, leading to more ad views and more revenue for Netflix.

As a result, it's going to expand the plan to bring the service up to the Standard tier -- two streams and 1080p. Theoretically, that will expand the appeal of the ad tier as well as increase engagement. That could push its average revenue even higher.

2. The impact of paid sharing is as expected

Management said it was directionally accurate in its forecast for the impact of paid sharing in the countries where it did roll out.

Specifically, it mentioned that Canada saw the initial cancel reaction but has since seen revenue reaccelerate from pre-rollout, and it now has a higher subscriber base after just two months. In fact, management says it's growing revenue faster than the U.S. after the rollout, which is a great sign for the potential of the plan in the future.

Still, management delayed the rollout globally. It says it found opportunities to improve the experience, specifically around travel and on-the-go viewing. It sounds like it had a lot of frustrated subscribers, which is to be avoided in a broader rollout. But if it can have relative success without a perfect rollout, taking the time to improve it before rolling it out in bigger markets should ensure even better results.

3. Free cash flow is booming for Netflix

Netflix generated $2.1 billion in free cash flow in the first quarter, and it now expects to generate $3.5 billion for the full year. That's an increase of $500 million above its previous forecast.

Investors have had to be extremely patient with Netflix to start producing meaningful free cash flow after a decade of investing heavily in original content. The days are finally here, as Netflix has reached a point where it expects its content amortization expenses to actually line up with its cash content spending, allowing revenue growth to produce free cash flow instead of reinvesting in a bigger content budget.

2024 will see a slight increase in cash content spending, but it'll still stay in the $17 billion range it's been spending for the last few years. That should lead to even more free cash flow next year as revenue continues to grow.

4. Netflix's share buybacks are back

Netflix repurchased 1.2 million shares for $400 million in the first quarter, an average price of around $333.

Management is sticking to its plans to keep two months of revenue in cash on the balance sheet. That's $5.4 billion based on the first-quarter run rate. With $7.8 billion on the balance sheet, it now has an additional $2.4 billion it can use to buy back more shares. To that end, management expects to accelerate its share repurchases throughout 2023.

If management was buying back shares at around $333, a price point where the stock currently trades, investors may want to follow suit. While the top-line results were disappointing, especially considering the circumstances, the areas with the biggest opportunity for revenue growth (ad-supported tier and paid sharing) are going well, and the company is quickly becoming a free cash flow machine.

Some more risk-averse investors may want to sit on the sidelines for another quarter while Netflix gets a better idea of how its latest efforts play out. But they're also risking missing the opportunity to invest at today's price.