- Netflix reported earnings for the second quarter on July 17 after the markets closed.
- The streaming-TV company missed expectations for subscriber growth by a wide margin, and the stock fell more than 10%.
- Netflix added 2.7 million paid members globally during the quarter, compared with the 5 million that Wall Street expected.
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Netflix added 2.7 million paid subscribers during the second quarter, missing its own guidance and Wall Street expectations for the period by a wide margin.
The stock plunged more than 10% to $317.91 on Wednesday afternoon after the company reported earnings.
Netflix blamed the miss on a weak slate of original TV shows and movies that drove fewer sign-ups than expected and price hikes in certain regions around the world.
The streaming company lost 126,000 paid subscribers in the US, where its growth has been slowing and new competitors like Disney Plus and HBO Max loom on the horizon. Netflix also missed on forecasts in all regions internationally and said it struggled slightly more in places where it rolled out price hikes during the year. Netflix added 2.8 million subscribers internationally.
"We don't believe competition was a factor since there wasn't a material change in the competitive landscape during Q2," Netflix said in its quarterly letter to shareholders. "Rather, we think Q2's content slate drove less growth in paid net adds than we anticipated."
During the second quarter, Netflix released series like "Dead to Me," which earned the actress Christina Applegate an Emmy nod this week, as well as shows like Ava DuVernay's "When They See Us" and movies like Adam Sandler's "Murder Mystery." The second quarter is usually slower period for Netflix because it releases fewer original movies and series.
Netflix's guidance for the third quarter suggests that the second quarter miss could just be a snag. Netflix is forecasting a solid 7 million paid net additions globally for the third quarter, which would be a boost from the 6 million subscribers it added during the period last year.
Wall Street had been looking for Netflix to reassure it that the service could keep growing at a steady clip during the second half of the year as subscription services from legacy media brands, including Disney Plus, are expected to roll out.
Netflix appears to be off to a strong start to the third quarter, with "Stranger Things" making the biggest four-day debut of any original on the service in July, the company previously announced. Popular Netflix originals like "The Crown" and "Orange Is the New Black," and movies like Martin Scorsese's "The Irishman," are also due out later this year.
Here were the key numbers in Netflix's Q2 earnings:
- Q2 revenue: $4.92 billion, versus Wall Street estimates of $4.93 billion and Netflix's forecast of $4.93 billion.
- Q2 earnings per share (GAAP): $0.60, versus Wall Street estimates $0.56 and Netflix's forecast of $0.55.
Q2 total paid subscriber growth (paid net additions/losses): 2.70 million, versus Wall Street estimates of 5.06 million and Netflix's forecast of 5 million.
- -126,000 in the US, versus Wall Street estimates of 309,240 and Netflix's forecast of 300,000.
- 2.8 million internationally, versus Wall Street estimates of 4.75 million and Netflix's forecast of 4.7 million.
Q3 total paid subscriber growth estimate (paid net additions): 7 million, versus 6.1 million in the third quarter of 2018.
- 800,000 in the US.
- 6.2 million internationally.