Reed Hastings, CEO of Netflix
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Shares of Netflix fell slightly after the bell on Tuesday after the company reported some gains that were lost at the bottom line. The company’s revenue slightly exceeded estimates and confirmed speculation that it will expand further into gaming.
- Earnings per share (EPS): According to the Refinitiv analyst survey, $ 2.97 was expected versus $ 3.16
- Income: $ 7.3 billion vs. $ 7.3 billion projected, according to Refinitiv
- Global Net Pay Subscriber Increases: 1.54 million versus 1.19 million projected, according to Street Account
Analysts had not expected a quarter of overproduction in terms of subscriber additions, and expected 1.19 million users according to Street Account. The company said it added 1.54 million users to end the quarter with more than 209 million paid members.
“COVID has created a bit of a lump in our member growth (higher growth in 2020, slower growth this year), which is making its way. We continue to focus on improving our service to our members and delivering “The best stories in the world,” the company said in a letter to investors.
Netflix said its revenue growth over the past quarter comes from an 11% increase in average paid broadcast subscriptions and an 8% increase in average revenue per member.
Most eyes were on what Netflix is forecasting for its third quarter. Netflix said it expects 3.5 million net additions, while investors had expected 5.46 million net subscriber additions in the third quarter, according to FactSet data. Much of the optimism comes from Netflix’s upcoming content list, as a large amount had backtracked in the second half of this year and next.
During the first half of this year, Netflix said it has spent $ 8 billion in cash on content and expects content payback to be around $ 12 billion year-round.
“If we get our forecast, we will have added more than 54 million net income paid over the last 24 months or 27 million annually over this time period, which is consistent with our annual rate of net increases prior to COVID “the company said. dit.
The company confirmed that it was also pulling into the play space. Netflix said it sees the game as a new category of content, compared to its expansion into original movies, animation and unscripted television.
Potential games will be included in Netflix subscriptions at no additional cost, the company said. Initially, it will focus on mobile games.
“We are excited as always with our range of films and TV series and look forward to a long track record of increasing investment and growth in all of our existing content categories, but as we have been in our drive for almost a decade in the original programming, we believe it is the right time to learn more about how our members value games, ”the company said.
The company recently hired video game executive Mike Verdu from Facebook, where he was vice president of augmented reality and virtual reality content, as the company makes a deeper boost in gaming.
Netflix is also facing the pressure of harsh year-over-year comparisons, as last year consumers were in the midst of a Covid-19 pandemic and spent much more of their time online and needed entertainment.
Netflix said that in its second quarter, its share per member household fell compared to last year, but continued to increase by 17% compared to the second quarter of 2019.
“The pandemic has created unusual stings in our growth and distorts year-on-year comparisons as acquisition and commitment per member household increased during the first months of COVID,” the company reported.
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