Netflix's Q2 earnings report led to an initial 6% drop in after-hours trading due to a revenue outlook falling short of Wall Street expectations. However, the stock rebounded during the earnings call, buoyed by robust content performance and strong subscriber growth.
The company’s revenue reached $9.56 billion, a 16.8% increase from the previous year, surpassing the $9.53 billion forecast. Netflix added over 8 million new subscribers in the quarter, driven by hit content such as the latest season of "Bridgerton" and other key programming.
Netflix’s third-quarter revenue projection of $9.73 billion missed the consensus estimate of $9.83 billion. Nevertheless, the company raised its full-year revenue growth forecast to 14%-15% and expects operating margins to increase to 26%.
Significant content-related developments include Netflix securing streaming rights for two NFL games on Christmas Day as part of a three-season deal. The ad-supported tier has grown substantially, now boasting 40 million global monthly active users, up from 15 million last November. To support this growth, Netflix will phase out its basic ad-free plan in the US and France, following similar moves in the UK and Canada.
Despite these positive indicators, Netflix’s decision to stop reporting subscriber numbers and average revenue per member starting next year has raised concerns about the long-term sustainability of its growth and content strategy.
