Netflix shares jumped after the company said it lost fewer subscribers than expected in the second quarter.
The streamer also stated that he intends to introduce a cheaper ad-supported tier in early 2023. Microsoft be his partner in the promotional offer.
“We will likely start with a few markets where advertising spending is significant,” the company said in a statement. shareholder letter. “Like most of our new initiatives, we intend to roll it out, listen and learn, and iterate quickly to improve the offering. Thus, our advertising business in a few years will probably look very different than on the first day. …”
Netflix warned investors last quarter that it expected to lose about 2 million subscribers. but only lost about 970,000 for a three-month period ending June 30.
Here are the results:
- earnings per share: $3.20 vs. $2.94 per share, according to Refinitiv.
- Income: $7.97 billion vs. $8.035 billion, according to a Refinitiv survey.
- Global Paid Network Subscribers: Loss of 970,000 followers vs. Expected loss of 2 million according to StreetAccount estimates.
The company, which currently has 220.67 million subscribers, said it expects new subscribers to reach 1 million in the third quarter, offsetting some losses seen in the first half of the year. Analysts had forecast Netflix growth of around 1.8 million.
Netflix also noted that it is in the early stages of its paid-sharing plan. This effort, which was mentioned last quarter, will charge some members for sharing their subscription with family members or friends who live outside of their home. The company said it is considering two different approaches in test cases in Latin America, which could inform a wider rollout in 2023.
The company warned of the impact of the stronger US dollar on its international revenue, which accounts for 60% of its revenue. The dollar’s rise comes as the Federal Reserve raises interest rates to fight inflation, which has reached a four-year high in the United States.
Last quarter, Netflix drew attention to a slowdown in revenue growth that it said was the result of competition, account sharing and other factors such as sluggish economic growth and the war in Ukraine.
“Now we have had more time to sort out these issues, as well as how best to solve them,” the company said.
It remains content-focused, offering big-budget movies on its service rather than in theaters, and giving subscribers all episodes of new shows at the same time. The company touted the fourth season of Stranger Things as a big win for the brand. Not only did it set the record for most views for the company, but it was also nominated for several 2022 Emmy Awards.
Shares of Netflix, which were worth about $700 last year, closed just above $200 on Tuesday.