‘Bridgerton’, ‘Baby Reindeer’ help boost Netflix earnings
Netflix on Thursday touted its strong business growth in the second quarter, as its subscriber count grew by 8.05 million to about 278 million in the period.
Revenue rose 17% to nearly $9.6 billion from the same period last year, the Los Gatos, Calif., company reported.
Net income was $2.1 billion, up from $1.49 billion a year earlier.
The results topped Wall Street’s estimates for revenue, earnings and subscriber additions.
Analysts on average had projected that Netflix would increase its customer base by around 4.5 million subscribers, according to FactSet.
Netflix said it will open retail stores in Dallas and King of Prussia, Pa., next year in a move to create real-life experiences for fans of shows like ‘Bridgerton.’
Netflix reported earnings of $4.88 a share, topping analyst expectations of $4.74. Analysts had projected revenue of $9.53 billion, according to FactSet.
Netflix has impressed investors as the company cracks down on password sharing, grows its lower-priced ad-supported subscription tier and puts out a steady stream of popular original programs.
The steamer’s stock price has increased roughly 35% so far this year. Its shares closed at $643.04 on Thursday, down 0.7%. The shares fell about 2% in after-hours trading.
Netflix has 270 million subscribers after beating Wall Street expectations. But that’s not what the company wants investors to focus on.
“If we execute well — better stories, easier discovery and more fandom — while also establishing ourselves in newer areas like live programming, games and advertising, we believe that we have a lot more room to grow,” Netflix said in a letter to shareholders Thursday.
Netflix has remained the dominant subscription streaming platform in part because of its content prowess with licensed titles and its own franchises, including the Shonda Rhimes Regency-era alt-history romance series “Bridgerton.”
In the second quarter, Netflix was helped by the release of popular programs including the third season of “Bridgerton”; limited drama series “Baby Reindeer,” which received 11 Emmy nominations Wednesday; the Jennifer Lopez action movie “Atlas”; and “The Roast of Tom Brady,” which the streamer said attracted its largest live audience so far.
The company forecast revenue growth of 14% to 15% this year.
And in another bright spot, the number of sign-ups for subscriptions with ads grew 34% in the second quarter compared with the previous quarter.
That boost was helped by Netflix ending its cheapest ad-free subscription tier, the Basic plan, in the United Kingdom and Canada. The company said in a Thursday shareholder letter that it will begin phasing out the Basic plan in France and the U.S.
Despite the growth in its advertising business, Netflix is making changes to its ads leadership, with Peter Naylor, its vice president of ad sales, leaving the company. Netflix said it plans to hire a head of U.S. and Canada ad sales to replace Naylor’s more global job.
“Peter’s enthusiasm, industry knowledge and relationships have been invaluable in getting our advertising business off the ground,” said Amy Reinhard, Netflix president of advertising.
On a call with analysts, Netflix executives touted progress in its gaming efforts, with more than 100 games launched so far.
The company has released games based on some of its most popular shows, including reality dating series “Too Hot to Handle,” which Netflix says can help drive gamers to watch the show or the show’s fans to spend more time with Netflix playing the games.
“I think our opportunity here to serve super fandom with games is really fun and remarkable,” Netflix co-Chief Executive Ted Sarandos said in the earnings presentation Thursday.
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