Netflix stock rose after the company announced that it lost fewer subscribers than expected in the second quarter.
The streamer also stated that it plans to launch its low-cost, ad-supported tier in early 2023. This follows Netflix’s selection of Microsoft as its ad-supported offering partner.
Netflix warned investors last quarter that it expected to lose approximately 2 million subscribers but only lost approximately 970,000 during the three months ending June 30.
Here are the results:
- EPS: $3.20 vs $2.94 per share, according to Refinitiv.
- Revenue: $7.97 billion, vs. $8.035 billion, according to Refinitiv survey.
- Global paid net subscribers: A loss of 970,000 subscribers vs. expectations of a loss of 2 million, according to StreetAccount estimates.
The company, which has 220.67 million subscribers, expects net additions to reach 1 million in the third quarter, reversing some losses seen in the first half of the year. Analysts predicted that Netflix would grow by around 1.8 million subscribers.
Netflix also stated that its paid sharing plan is still in its early stages. This is an effort mentioned last quarter in which some members would be charged more for sharing their subscription with family members or friends who live outside their homes. The company stated that it is considering two different approaches in Latin American test cases that will inform a larger rollout in 2023.
The company warned of the impact of a stronger US dollar on its international revenue, which accounts for 60% of its total revenue. The dollar’s rise comes as the Federal Reserve raises interest rates to combat the country’s four-decade-high inflation.
Netflix addressed its slowing revenue growth last quarter, blaming it on competition, account sharing, and other factors such as sluggish economic growth and the Ukraine war.
“We’ve now had more time to understand these issues, as well as how best to address them,” the company said.
It remains content-focused, offering big-budget films on its service rather than in theaters, and allowing subscribers to binge all episodes of new shows at once. Season four of “Stranger Things” was hailed as a major success for the brand. It not only broke the company’s viewership records but was also nominated for several 2022 Emmys.
Netflix’s stock closed Tuesday at just over $200, down from around $700 a year ago.