The streaming giant increased the number of subscribers by nearly 6 million in the second quarter, following changes to the rules for password sharing. The stock is down five percent in after-hours trading on Wall Street.
Netflix presents figures for the second quarter on Wednesday evening. Photo: ANTHONY WALLACE / AFPPublished:
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Netflix reported earnings per share of $3.29 in the second quarter, compared with expectations of $2.85 per share, according to analysts polled by Bloomberg.
The company had sales of 8.20 billion dollars in the quarter, against the expected 8.29 billion dollars, the figures from the electricity giant show.
The number of subscribers in the quarter increased by 5.89 million, after the company in May announced changes in subscription sharing outside the household for customers in the USA.
In total, the company now has over 238 million subscribers.
Netflix has worked for a long time to tighten the rules for password sharing. The company has increased the price for users in the US who share the subscription with others, and analysts expected in advance that the measure would result in more subscribers and higher revenue per user.
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Shares fall in after-trade
The share falls five percent in after-market trading on Wall Street after revenue came in weaker than expected and the company’s guidance for the third quarter disappoints, reports Marketwatch.
According to the company, it is too early to see the result of changes in subscription sharing and advertising-financed subscriptions in the revenue figures for the second quarter.
Netflix said on Wednesday that it expects an increase in revenue in the second half of the year, and the company’s forecasts for the third quarter are now revenue of $8.5 billion – an increase of 7 percent from last year, according to CNBC.
The new rules for subscription sharing are now being rolled out to customers outside the US as well, the company reports.
The streaming company made a profit of 1.49 billion dollars in the second quarter.
In the first quarter of the year, the electricity giant delivered worse than expected: The service gained 1.75 million new subscribers in the quarter, against the expected 2.4 million new subscribers.
Cut prices
In the first and second quarters of last year, Netflix lost close to 1.2 million subscribers. Before that time, the company had never experienced negative subscription growth. The trend reversed in the third quarter, and Netflix has since then made several moves to lure back customers.
Among other things, the company launched a major initiative with advertising-funded subscriptions where users can choose to watch advertising in exchange for cheaper subscriptions. In the US, such subscriptions cost $6.99 per month.
In February, Netflix reduced prices in over 30 countries.
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Netflix cuts prices in over 30 countries
The cut came from the company trying to remain attractive to its customers, as competition from other streaming services has increased in recent years. Streaming services such as HBO Max and Disney+ are growing worldwide, and have led to greater competition in the market.
Netflix has cut prices in some countries in the Middle East, Europe, South America and Asia. In some cases, the cost of a subscription is halved.
Earlier on Wednesday, Netflix announced that it is dropping its cheapest and ad-free subscription in the US and UK. This means that new subscribers no longer get the opportunity to draw this, writes CNBC.
2023-07-19 20:12:10
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