Shares of video streaming platform Netflix were up after the company announced that it lost fewer subscribers than it had envisioned in the second quarter. The company reported earnings per share of $3.20 compared to the $2.94 per share that analysts had expected for the quarter, according to Refinitiv. Revenue, however, fell below the $8.035 billion that analysts had expected, according to Refinitiv. Revenue for the second quarter came in at $7.97 billion. Netflix also reported a loss of 970,000 in global paid net subscribers compared to a loss of 2 million that had been expected, according to StreetAccount.
The earnings report comes shortly after the company announced that it’ll start charging more for account sharing and would be starting with select countries next month. Netflix also mentioned that it plans to unveil a lower-cost, ad-supported tier by early next year. In its shareholders’ letter, the company said that “We’ll likely start in a handful of markets where advertising spend is significant. Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one.”
Netflix’s shares had soared because it reported fewer subscriber losses than it had envisaged. Last quarter, the company had warned investors that it expects to lose about 2 million subscribers in the next quarter. But for the quarter ended June 30, the company lost only 970,000 subscribers, less than half of what it had expected.
Currently, the company has 220.67 subscribers and expects to add 1 million subscribers in the third quarter, which will remedy some of the losses the company incurred during the first half of the year. Analysts expect this growth in subscribers to come in at 1.8 million.
Like other companies, Netflix warned of the impact of the strengthening US dollars on its international revenue. International revenue makes up about 60 percent of its total revenue.
The company spoke about its slowing revenue growth which has been a result of increasing competition, the Russia-Ukraine war, account sharing, economic uncertainties, etc. “We’ve now had more time to understand these issues, as well as how best to address them,” the company said.
The company plans on providing more interesting content, as well as offering big-budget films on its platform instead of theaters and providing all episodes of new shows all at once. In the third quarter, the company hit a new record with season four of its drama series “Stranger Things.” The show was nominated for several awards for the 2022 Emmys and also topped viewership records.
The imminent quarter is expected to be a better one for the company as it has been embarking on strategies to remedy the losses it suffered these past months.