Investor’s love of Netflix may not have done the subscription company any favors regarding its second quarter earnings, since the figures reported on today’s call were lower than its fans in the financial sector had expected. This is despite Netflix reporting profits of $68 million and earnings per share of $1.26, with revenues up 52 percent to $789 million from the same time last year.
Analysts had projected revenues of $791.5 million and $1.11 per share, as Reuters reported, so the company’s stock fell on the news.
Subscriptions continue to climb. At the end of the quarter, Netflix had over 25 million global subscribers, up 70 percent from 15 million one year ago. Domestically Netflix added 1.8 million subscribers in Q2, 75 percent more than Q2 of last year, ending the quarter with 24.6 million domestic subscribers. It realizes that it will take a hit from disgruntled users canceling their subscriptions following the division of streaming and DVD rental plans, which resulted in a steep price increase for many customers. Netflix said this will show in its results next quarter, explaining, “It is expected and unfortunate that our DVD subscribers who also use streaming don’t like our price change, which can be as much as a 60 percent increase for them from $9.99 to $15.98, when it goes into effect for each subscriber upon their renewal date in September.”
The growing popularity of streaming-only plans, which account for 75 percent of new subscribers, lead Netflix to predict that this will be a temporarily drop. Its DVD service has “likely peaked,” the report said.
Among the other interesting bits of information in the call is that half of overall streaming hours are spent watching television programs as opposed to feature films.
Reuters post: http://tinyurl.com/3tsg265
Netflix earnings call: http://tinyurl.com/3gwdlpb