Netflix Q2 2023 Earnings: Will revenue missing estimates pull Netflix share price lower?
Netflix Q2 results: Key insights
- Netflix reported second-quarter revenue of $8.2 billion up 2.8% y-o-y, shy of analysts' forecasts of $8.3 billion and it was also its slowest revenue growth since December 2022.
- Netflix added 5.9 million subscribers during the April to June 2023 quarter, taking its total subscribers to 238.4 million.
- Netflix to begin clampdown on password sharing during the quarter to boost earnings.
- The US and Canada contributed to the majority of incomes, followed by Europe and Middle East, Latin America and Asia Pacific.
Netflix share price and Netflix results:
Netflix shares dropped 7% in pre-market trading on July 20 2023 as the video streaming platform’s revenues for the quarter ended June 2023, failed to meet analyst expectations.
However, Netflix reported a strong rise in global memberships and added about 5.9 million new subscribers worldwide during the quarter, taking its global memberships to nearly 239 million subscribers.
The firm’s decision to stop password sharing and the launch of its ad-supported subscriptions have helped the firm to garner new customers, especially in the EMEA and LATAM regions.
Netflix shares have gained about 62% so far this year and lost 3% during the January to March period.
Netflix share historical performance:
| 1 Day | 1 Month | 1 Year | 5 Years |
|---|---|---|---|
| +0.6% | +10% | +121% | +32% |
(Data as on July 19, 2023)
Decoding Netflix Q1 earnings:
Netflix Revenue
- Revenue rose 2.7% to $8.2 billion from a year ago, but raised some doubts about the pace of revenue and earnings growth for the upcoming quarter.
- Netflix revenues have been subdued over the past couple of quarters as the streaming sector continues to suffer from intense competition. Fewer players are competing for the attention of multiple users.
- From April through June 2023, Netflix added 5.9 million streaming subscribers, surpassing estimates.
| Apr - June'23 | Apr - June'22 | YoY Growth |
| $8,187 million | $7,970 million | 2.72% |
Netflix net profit
Net income attributable to ordinary shareholders gained 3% to $1.5 billion from $1.4 billion a year earlier.
Netflix expects revenue growth to accelerate in the second half of 2023 as the full benefits of paid sharing and continued steady growth in the ad-tier shows.
| Apr - June'23 | Apr - June'22 | YoY Growth |
| $1,488 | $1,441 | 3.23% |
Netflix Subscribers:
Netflix reported an overall subscriber base of 239 million at the end of the June 2023 quarter, which was 8% higher than the corresponding quarter in the previous year.
Netflix’s crackdown on password sharing and its launch of an ad-supported streaming service has helped the firm to add more subscribers.
| Apr - June'23 | Apr - June'22 | YoY Growth | |
| Global Streaming Paid Memberships (in million) | 238.39 | 220.67 | 8% |
| Global Streaming Paid Net Additions (in million) | 5.89 | -0.97 |
Netflix dividend
Netflix board did not release any dividend for the quarter.
Netflix Q2 2023: Analyst View
- Bank of America has a ‘buy’ call on the stock with a share price target of $525. The broker expects revenues to speed up in the upcoming quarters amid ad-supported services.
- Jefferies has a ‘buy’ call with a target price of $520. The broker sees Netflix to report high-single-digit/double-digit revenue growth in the upcoming quarters.
- Wells Fargo has an "overweight" rating on the stock and has a share price target of $500.
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