Netflix released second-quarter earnings on Thursday and highlighted another period of growth for the streaming company with revenue hitting a quarterly record and EPS beating estimates.
The standout metric was the number of new subscribers added. The company added 8.2m subscribers during the period compared to estimates of just 5m.
Revenue rose to $9.6bn during the period, beating estimates of $9.5bn and a small increase on the prior quarter’s $9.4bn in revenue.
Netflix’s growth has been consistent and steady, but it is slowing. Shares were flat in the premarket as investors reacted to softer revenue projections in the coming quarters.
Once known for a blowout revenue increases, Netflix is becoming more of a utility company than a racy technology stock.
“Netflix is once again showing why it’s king of the streamers. Second quarter results were impressive, and subscriber growth shot the lights out once more. The ad-supported product is proving more popular than many could have hoped. It allows Netflix to penetrate new markets geographically and taps into users who are priced out of the fully paid service,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“But this is a new challenge for Netflix; you can’t simply chuck a load of non-tailored adverts into your product to keep users happy, even if that’s what they signed up for. Squeezing every possible dollar from the new ad-watching user base is proving a challenge, and with users growing so fast, it’s struggling to fill all the ad slots it has at its disposal. Now, that’s a pretty good problem to have, and Netflix has so much user data that it’s better placed than any of its peers to provide relevant, tailored, ads to its subscribers. But markets will want to see Netflix take full advantage of this new revenue stream, and fast.”