Netflix Inc. (NFLX, Financial) released its second-quarter results on July 17 after the market closed. The company registered stronger-than-expected earnings, but sales failed to meet analysts' projections.
Shares tumbled 10% following the announcement.Â
Key metrics
The streaming giant reported earnings of 60 cents per share for the quarter, surpassing Refinitiv's consensus estimate of 56 cents. Revenue grew 26% to $4.92 billion, which fell $4.93 billion short of expectations.
Netflix recorded operating income of $706 million, reflecting a 53% gain year over year. The perating margin was 14.3%.
Subscriber details
Netflix reported a loss of 126,000 paid U.S. subscribers. Analysts were anticipating a gain of 352,000 subcribers.
On the global front, the company added 2.83 million paid subscribers, which also fell short of the 4.81 million analysts had projected. The company attributed the poor performance to a weak content slate and a price hike.
In a statement, the company said:
"We don't believe competition was a factor since there wasn't a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions. Rather, we think Q2's content slate drove less growth in paid net adds than we anticipated."
Besides the weak content slate, the company said its subscriber growth in the first quarter was so robust that “there may have been more pull-forward effect than we realized.”
Looking ahead
Netflix expects to post strong viewership in the third quarter with the release of the third season of “Stranger Things.” The media service provider projects global paid net adds of 7 million along with $5.25 billion in revenue. The company is confident in its solid content offering, which it believes will help attract subscribers in the third quarter. The most anticipated shows slated to air during the period include the final season of “Orange is the New Black” and a new season of “The Crown.”
Disclosure: I do not hold any positions in the stocks mentioned.
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