Netflix reported its second-quarter 2023 earnings Wednesday, revealing its paid subscribers increased by 5.89 million in the quarter ended June 30.
Analysts had projected the streamer gaining 1.769 million new subscribers in Q2 — the period in which Netflix began notifying customers in the U.S. and other countries that users on their accounts who live outside their households would need to be added as an “extra member” (or pay for their own subscriptions).
Netflix smashed Wall Street’s expectations by instead rising to 238.39 million global subscribers in Q2 compared to its 232.5 million total in Q1. That growth marks an 8% year-over-year increase in subs.
In a letter to shareholders accompanying the Q2 results, Netflix noted: “We anticipate Q3’23 paid net adds will be similar to Q2’23 paid net additions.”
Netflix clarified that “extra member accounts are not included in our paid membership count but add revenue” that is included in its ARPU (average revenue per user).
Paid memberships rose 1.17 million in the U.S. and Canada, 2.43 million throughout Europe, the Middle East and Africa, 1.2 million in Latin America and and 1.1 million in the Asia-Pacific region.
Wall Street forecast earnings per share (EPS) of $2.86 on $8.3 billion in revenue, according to analyst consensus data provided by Refinitiv. Netflix reported diluted EPS of $3.29 on $8.2 billion in revenue, which marks 2.7% year over year growth in revenue.
The streamer says it turned a profit of $1.5 billion in Q2 with an operating income of $1.8 billion. Free cash flow for the quarter stood at $1.3 billion.
For Q3, Netflix is projecting revenue of $8.5 billion and a profit of $1.6 billion.
Netflix stock closed Wednesday at $475.30 per share. The regular U.S. stock markets will reopen at Thursday at 9:30 a.m. ET.
Earlier Wednesday, Netflix confirmed it is eliminating its Basic plan, its cheapest streaming plan without ads, in the U.S. and U.K. in an attempt to boost customers on the ad-supported Standard With Ads, which the company first launched last November. In May, Netflix said it had signed up more than 5 million members for its ad-supported plans, with 25% of new subs taking the package.
“Our starting prices of $6.99 in the U.S. and £4.99 in the U.K. [for Standard With Ads] are lower than the competition and provide great value to consumers given the breadth and quality of our catalog,” a Netflix spokesperson told Variety.
Netflix executives will speak about the quarter in greater detail during a pre-recorded analyst interview scheduled to post at 6 p.m. ET.
More to come…
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