Netflix stock rose Wednesday after the company reported better-than-expected Q2 subscriber figures.- The
streaming giant lost fewer than half the 2 million subscribers it expected to shed in the quarter.
Netflix stock rose Wednesday after the streaming-media giant reported it lost only half as many subscribers in the second quarter than it expected, and as it forecast a rebound in coming months.
Its shares were up 1% at $203.66 at last check, after putting on 7% in premarket trading as traders absorbed its quarterly earnings report released Tuesday after the bell.
In its financial update, Netflix said it shed 970,000 subscribers in the three months to June 30, beating analysts' expectations for a 2 million drop forecast by the company itself earlier this year. It now has 220.67 million users worldwide.
But its second-quarter revenue came in lower than expected, rising 8.6% to $7.97 billion, versus the $8.035 billion forecast.
Netflix pointed to a stronger US dollar as weighing on its revenue in the quarter, describing it as a significant headwind for all multinational US companies.
"We have high exposure to this unprecedented appreciation in the USD because nearly 60% of our revenue comes from outside the US and swings in F/X have a large flow through to operating profit as most of our expenses are in USD and don't benefit from a stronger USD," it said in a letter to shareholders.
"The appreciation of the US dollar (USD) vs. most other currencies since our April earnings report was the primary reason for the variance to our revenue guidance forecast," it added.
In its letter, the streamer was bullish on the third quarter, saying it expects to add 1 million new subscribers in the third quarter, with revenue growth of 5%.
However, Tuesday's report marks the second straight quarter of subscriber losses for Netflix, which it has never seen before. Its subscriber count fell by 200,000 in the first quarter of 2022, the first time in a decade that it hadn't logged growth.
Netflix stock has fallen 67% this year as it tries to reverse a subscriber slowdown that it has blamed on password sharing by as many as 100 million households and tougher streaming competition, among other factors.
"Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we've done for the last 25 years, and to better monetize our big audience," Netflix said in its letter.
Netflix has cut headcount and is exploring ways to turn password sharing into a revenue stream in Latin America — on Monday, it said it is testing an "add a home" feature there that carries an additional cost.
The company also stressed the importance of delivering hit shows like the recent season four of "Stranger Things", which it described as its biggest season of English-language television ever.
On an earnings call, chief executive Reed Hastings cited a number of the platform's big hits, such as thriller "Ozark" and of course supernatural drama "Stranger Things" on a conference call as highlights that had helped stem the loss of subscribers.