Netflix lost nearly 1 million subscribers in the most recent quarter — the latest evidence that the streaming giant is being sidelined by rivals and running out of room for growth overseas.
Still, it was better than the 2 million subscriber loss he predicted. California-based streamer Los Gatos said it expects to return to development in the current quarter, citing the launch of the first part of its hit show “Stranger Things” Season 4.
Shares of Netflix, which have fallen about 67% this year, rose 7% in after-hours trading due to concerns about future growth.
Last quarter, Netflix stunned the media world when it lost 200,000 subscribers in the first quarter and predicted the bleeding would continue.
The streaming giant blamed password sharing, spurt in connected TV adoption and sluggish economic growth among other things. It said it would crack down on account sharing and add a low-cost tier that supports advertising to help grow its customer base, which is about 221 million global customers.
On Tuesday, the company said it lost 970,000 customers in the second quarter, less than Wall Street’s expectation of 1.84 million.
The company assured investors that it has a better grip on retaining customers going forward. “We now have more time to understand these issues as well as address them in the best way possible,” the company said.
During the quarter, Netflix laid off some of its workforce, laying off 150 employees in May and another 300 in June. The firm also said that it reduced its real estate footprint, resulting in severance costs of approximately $70 million and an $80 million non-cash loss of certain real estate leases primarily related to rights to its office footprint. .
The World’s Biggest Streamer said it would continue to focus on content, offering big-budget movies on its service rather than in theaters, and making all its episodes of new shows available at once, allowing subscribers to Binge-watching will be allowed.
In the second quarter, Netflix said earnings-per-share came in at $3.20.
Netflix noted that the strong US dollar impacted revenue, which rose 9% to $7.97 billion. The firm said that without the foreign exchange effect, revenue would have increased by 13%.
Wall Street expected EPS of $2.96 on revenue of $8.04 billion.
In a letter to shareholders, co-CEOs Reed Hastings and Ted Sarandos said that season four of “Stranger Things” helped prevent the loss of some customers.
Only the first seven episodes were released in the second quarter, but they helped slow cancellations as users looked forward to the last two episodes released in the current quarter.
The series, starring Millie Bobby Brown, Finn Wolfhard and Winona Ryder, broke the service’s record for the biggest premiere weekend and became the most-watched English-language Netflix show globally, having largely spent its first four weeks. Watched 1.3 billion hours.”
The co-CEOs said that season four also “re-ignites interest in previous episodes, which experienced a more than fivefold increase in viewing from seasons one to three” versus a year earlier.
Meanwhile, Netflix said it is shooting to unveil its low-cost ad-supported tier in early 2023. The news follows Netflix’s decision to partner with Microsoft on its ad-supported offering.
“We will begin in some of the markets where ad spend is significant,” the co-CEO said in his letter to shareholders. “Like most of our new initiatives, we intend to launch, listen and learn, and iterate quickly to improve the offering. Therefore, in a few years our advertising business will look quite different from what it looked like on day one. will give.”
