Netflix announced its Q2 financials on Wednesday that revealed it added 5.9 mn customers during the second quarter bringing it to a total of 238.4 mn global paid memberships.
The OTT platform’s Q2 revenue stood at USD 8,187 mn versus $8.30 bn expected by market, a growth of 0.3% QoQ and 2.7% YoY. The company expects revenue growth to accelerate in the second half of CY23 as it will have the full benefits of paid sharing plus continued steady growth in the ad-supported plan.
Operating income for the quarter stood at USD 1,827 mn, a growth of 6.6% QoQ & 15.8% YoY. Operating margin grew 130 bp QoQ and 250 bp YoY to 22.3%. The company is targeting a full year CY23 operating margin of 18% to 20%.
Total paid subscribers at the end of the quarter stood at 238.4 mn, a growth of 2.5% QoQ & 8.0% YoY. The total no. of US & Canada paid subscribers grew 1.6% QoQ & 3.1% YoY to 75.6 mn whereas the rest of the world subscribers grew 3.0% QoQ & 10.5% YoY to 162.8 mn. Netflix added a total of 5.9 mn paid members in the Q2CY23, as compared to losing nearly a million members in Q2CY22.
Wall Street seems to be less impressed by the results which resulted in shares falling down nearly 9% in after-hours trading. Netflix has been working to improve the monetization through initiatives like paid sharing and advertising. This will allow the company to generate more revenue off a bigger base, which can be reinvested to make Netflix even better for members.
Netflix is likely to crack down on account sharing in India and other markets such as Indonesia, Croatia, and Kenya starting July 20. The company will not offer the extra member option in these markets since they had recently cut prices in many of them, and the penetration is still relatively low, giving the company plenty of runway without creating additional complexity.
Netflix is constantly at the table negotiating with writers, with directors, with actors and producers with everyone across the industry. The strikes are a handful of complicated issues, and the company is committed to getting to an agreement as soon as possible. The company remains focused on creating a steady drumbeat of must watch shows and movies, improving monetization, growing the enjoyment of games and investing to improve service for members.
