Netflix Adds Nearly Six Million New Subscribers After Sub-Sharing Policy Change, and Earnings Grow. In the second quarter of the year, the platform registered 5.9 million new customers, bringing the total number of subscribers to 238 million. Revenues were $8.2 billion, up 2.7% while net income was $1.49 billion, up from $1.44 billion in the same period a year earlier. Profits above expectations and subscriptions up 8% in the second quarter, but revenues below the consensus for Netflix, which took the hit on Wall Street immediately after the publication of the accounts, with a drop of almost 9% in the after hours. In the past three months, earnings per share of 3.29 dollars were recorded, against the 2.86 dollars of the consensus, on revenues of 8.20 billion, up 3%, against the 8.30 billion of expectations.
Profit towards 1.5 billion
Net income was $1.49 billion, up from $1.44 billion a year earlier. The net number of new subscribers was 5.9 million, thanks in part to the tightening on account sharing. Netflix has commented that it expects a sharp increase in revenues in the second half of the year, when the overall benefits deriving from the surcharge for shared subscriptions ($7.99, ed) and the constant growth of subscriptions for plans with advertising will begin to be seen. Now, Netflix expects revenue up 7% to $8.5 billion for the third quarter, with subscriber growth in line with the past quarter. The streaming company said it will no longer be offering its basic $9.99-a-month ad-free plan to new customers in the US and UK. Subscribers with this tariff system will be able to keep it until they voluntarily cancel it. The cheapest ad-free plan will cost $15.49 a month for new members of the platform.
Revenue in each region is now higher than before the change, with subscriptions already outnumbering cancellations, the company said. Therefore, the group will immediately extend its policy of sharing paid user accounts to almost all countries where the service operates. To fix the situation after a difficult 2022, Netflix wants to generate more revenue from each user. As a result, the cheapest ad-free subscription package disappeared on Wednesday in the US and UK. If you are currently subscribed to the 'Basic' package, you can keep it until you switch packages or cancel your subscription, reads a message to users.
Despite significant subscriber growth, Netflix investors were disappointed by weak sales growth and poor third-quarter prospects, said eToro's Josh Gilbert. With shares gaining more than 120% in the past 12 months, the margin for error was minimal and so while the revenue numbers haven't been terrible, there is still work to be done for the streaming giant. Revenue climbed to $8.19 billion in the second quarter, up marginally from a year earlier but below analyst estimates; in turn, forecasts were also lower at $8.52 billion, down from $8.67 billion. Subscribers rose to 5.89m, well above estimates and in stark contrast to the loss of 970k in the same period last year. While the new ad-tier and password policies are clearly growing subscriber numbers, they aren't doing enough to increase revenue per user, as indicated by revenue forecasts. However, if its ad-tiers continue to experience massive user growth, advertisers will come knocking hard on its door, which should help manage revenue. Expectations were high ahead of this outcome, so investors shouldn't be too deterred by the weakness in the share price after a solid run and huge turnaround from last year. Netflix has shrugged off the woes of the past few years, but the growth story may still take some time to fully unfold.