Netflix Q2 Earnings Highlights: Stock Climbs On Subscriber Beat, Guidance, Ad-Supported Update

Streaming giant Netflix Inc NFLX reported second-quarter financial results after market close Tuesday. Here are the key highlights.

What Happened: Netflix reported second-quarter revenue of $7.97 billion, up 8.6% year-over-year. The total came in below a Street estimate of $8.04 billion, according to data from Benzinga Pro.

The company reported earnings per share of $3.20 in the second quarter, beating a Street estimate of $2.96.

Netflix ended the second quarter with 220.67 million subscribers, down from a reported 221.64 million in the first quarter. Netflix previously guided to lose 2 million subscribers in the second quarter, but reported a loss of 0.97 million instead.

“Fellow shareholders, Q2 was better-than-expected on membership growth, and foreign exchange was worse-than-expected, resulting in 9% revenue growth (13% constant currency,” the company said in a shareholder letter.

Revenue for the company’s APAC region saw 23% year-over-year growth and 1.1 million subscribers added.

“Stranger Things” was highlighted as a key offering and record breaker in the third quarter, with season four generating 1.3 billion hours viewed in its first four weeks.

Seasons one through three also saw increased viewers, with Netflix reporting a fivefold increase the month after season four was released for the older seasons.

Netflix reported it had 1,334 billion minutes viewed during the 2021-2022 television season, which was almost the same as the next two nearest competitors.

Paramount Inc PARA PARAA unit CBS and Comcast Corporation CMCSA unit NBC rank second and third at 753 billion minutes and 597 billion minutes, respectively.

“As Nielsen will announce on Thursday, our share of US TV viewing reach an all-time high of 7.7% in June, demonstrating our ability to grow our engagement share as we continue to improve our service,” Netflix said in a statement. 

Related Link: How Netflix Stock Looks Heading Into Its Q2 Earnings Print

What’s Next: The company is forecasting for third-quarter revenue to hit $7.84 billion, up 5% year-over-year.

Netflix forecasts it will add 1 million net subscribers in the third quarter.

“We’re in a position of strength given our $30 billion-plus in revenue, $6 billion in operating profit last year, growing free cash flow and a strong balance sheet,” the company said.

Netflix highlighted upcoming ad-supported plans that will complement its existing plans. The company recently announced Microsoft Corporation MSFT as a partner for advertising. The ad-supported plan is targeted for a launch in “the early part of 2023.”

“Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners.”

The company said its ad-supported plan could lead to “substantial incremental membership and profit growth.”

NFLX Price Action: Netflix shares are up 7.87% to $217.49 in after-hours trading Tuesday. As Benzinga reported earlier Tuesday, Netflix shares have fallen in nine of the last 10 earnings reaction days since 2020, including five straight reports.

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