Netflix Forecasts Q3 Subs Gain Following Further Losses

Netflix lost another 970,000 customers in the second quarter, below its own forecasts, and is projecting a return to growth in Q3, anticipating a gain of 1 million subs.

Netflix reported Q2 revenues of $8 billion, an 8.6 percent year-on-year growth, with a net income of $1.4 billion. It ended Q2 with 220.67 million customers and projects it will end Q3 with 221.67 million subs.

As it focuses on driving revenue growth, Netflix has set early 2023 as the target launch date for its new ad-supported tier, for which it has partnered with Microsoft. “We’ll likely start in a handful of markets where advertising spend is significant. Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one. Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners. While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”

Netflix is also continuing to explore models for paid sharing of accounts.

Revenues for the U.S. and Canada were $3.5 billion, with a membership base of 73.3 million (down by 1.3 million in the quarter). In EMEA, Netflix secured revenues of $2.4 billion, with memberships down by 770,000 to just under 73 million. LatAm revenues were $1 billion from 39.6 million subs, a slight gain. AsiaPac added more than a million customers to reach 34.8 million, with revenues of $908 million.