Netflix lost almost a million subscribers in the second quarter, but increased revenue

First modification: 07/20/2022 – 04:01

It could be worst. Netflix Inc. announced on Tuesday that it lost 970,000 subscribers from April to June, avoiding the worst case scenario forecast by the company, although the figure was below Wall Street’s expectations for the current quarter.

For next year, the streaming company plans to launch a new category of cheaper subscription, albeit with advertising, and warned that the strength of the global dollar was affecting the income obtained from subscribers abroad.

Netflix had said in April that it expected to lose two million customers in the current quarter, shocking Wall Street and raising questions about its long-term growth prospects.

Although second-quarter subscriber churn was not as severe as expected, Netflix estimated its new customer additions for the July-September period at 1 million. Investors on Wall Street were expecting 1.84 million fewer subscribers, according to analysts surveyed by Refinitiv.

Netflix’s fortunes have changed as rivals including Walt Disney, Warner Bros Discovery and Apple Inc. invest heavily in their own streaming services, taking away a piece of the market pie it long enjoyed alone.

9% growth, despite a strengthening dollar

In a letter to shareholders, the company explained that it had taken a closer look at the slowdown, which it had attributed to a variety of factors including password sharing, competition and a slowing economy.

From April to June, earnings per share were $3.20. Revenue increased 9% to $7.9 billion, but the strength of the US dollar weighed on revenue, which would have increased 13% without the impact of foreign exchange.

Despite the data, Netflix is ​​still the dominant streaming service worldwide, with almost 221 million paying subscribers. In April, the company said it was facing customer churn in part because of a campaign against password sharing and the launch of the cheaper ad-supported subscription. Last week, Netflix announced that Microsoft Corp. was its sales and technology partner for the ad-supported offering.

Several analysts attribute the smaller hit in subscriber churn to the popularity of the “Stranger Things” series, as it looks to turn some of its biggest hits into franchises.

with Reuters