Good enough.
Netflix didn’t blow the roof on its second-quarter earnings. The company said it lost about 1 million global subscribers in the quarter, marking the second quarter in a row that it has hemorrhaged customers. And it lost 1.3 million subscribers in the U.S. and Canada, marking the third time in the past five quarters that it has lost paid users in its top-grossing region based on average revenue per user.
For the third quarter, Netflix forecast it would add just 1 million new subscribers — below the average analyst forecast of 1.8 million, according to StreetAccount. If Netflix goes ahead and adds 1 million customers next quarter, it will still have lost subscribers this year through the nine months. Compare that to analysts’ forecasts from earlier this year of nearly 20 million net additions.
Still, Netflix shares jumped more than 6% in after-hours trading. The company predicted it would lose 2 million subscribers in the quarter. A drop of 1 million is better than that.
(LR) Reed Hastings and Ted Sarandos attend the world premiere of the Netflix TV series ‘Marseille’ at Palais Du Pharo in Marseille on May 4, 2016 in Marseille, France.
Stefan Cardinale | Corbis | Getty Images
Perhaps investors’ positive sentiment toward the company is due to the company’s concrete plans to revive growth — most of which won’t begin until 2023.
Netflix announced that the ad-supported product will launch in early 2023. That’s actually a delay from late 2022, when Netflix had hoped to debut the cheaper tier, according to a New York Times report in May.
In its quarterly letter to shareholders, Netflix also outlined its plans to address password sharing, noting that it launched two different approaches in Latin America to “find an easy-to-use paid sharing offering that we believe works for our members and our business that we can launch in 2023.”
Netflix added: “We are encouraged by our early knowledge and ability to convert users to paid sharing in Latin America.”
The company closed its letter to shareholders with a bit of pep talk. Investors seem to be listening to head coaches Reed Hastings and Ted Sarandos.
“Reaccelerating our revenue growth is a major challenge,” the company wrote. “But we’ve been through tough times before. We built this company to be flexible and adaptable, and this will be a great test for us and our culture of high performance. We are fortunate to be in a position of strength as a leader in streaming entertainment across all metrics (revenue, engagement, subscribers, profit and free cash flow). We are confident and optimistic about the future.”
WATCH: CNBC full Netflix earnings discussion
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