Netflix outpaced its own gloomy quarterly forecasts, stemming subscriber losses and posting higher revenue despite a more competitive streaming landscape and challenging economic environment.
The company’s financial results, released after Tuesday’s market close, were widely anticipated. Though the loss of 970,000 paying users might typically not pass for good news, it’s a veritable win compared with the 2 million the company had expected for the three-month period that ended June 30. That sent investors rushing in, powering the stock up nearly 8 percent in after-hours trading.
Shares surged 5.6 percent ahead of Tuesday’s release, closing at $201.63, amid a broad rally that sent the Dow Jones industrial average up more than 750 points, or 2.2 percent. The broader S&P 500 index and tech-heavy Nasdaq ended even higher, up 2.8 percent and 3.1 percent, respectively, as investors appeared buoyed by better-than-expected quarterly earnings that showed businesses were managing withering inflation and despite recession fears.
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 the report.
Netflix generated nearly $8 billion in revenue, an 8.6 percent increase over the same period last year, although the rate of growth is slowing and the company projects it to continue to ease. Netflix expects a gain of 1 million paid subscribers next quarter.
The company attributed its slowing revenue growth to a range of issues, including higher adoption rates of connected TVs, more streaming competition, account sharing and broader factors like sluggish economic growth and the war in Ukraine.
To beef up sales, the company said it will focus on evolving and improving its revenue lines, including a widely anticipated ad-based subscription plan and clamping down on free password sharing.
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