Reed Hastings, chief executive officer of Netflix
Joan Cros Garcia | Corbis | Getty Images
Shares of Netflix were down 11% after the company released its earnings report for its second quarter of 2019 Wednesday. The company reported global net adds of 2.7 million, well below guidance of 5 million. The company blamed its Q2 content slate for the subscriber miss.
Here are the key numbers:
- Earnings per share: 60 cents, vs. 56 cents expected, per Refinitiv consensus estimate
- Revenue: $4.92 billion vs. $4.93 billion expected, per Refinitiv
- Domestic paid subscriber additions: a loss of 126,000 vs. a gain of 352,000, forecast by FactSet
- International paid subscriber additions: 2.83 million vs. 4.81 million, forecast by FactSet
Netflix said in addition to its content slate, its first quarter subscriber growth was so strong that “there may have been more pull-forward effect than we realized.” The company also said in its letter to shareholder that the missed forecast was most pronounced in regions that saw price increases.
Netflix is projecting a stronger third quarter on the heels of heavy viewership of the third season of “Stranger Things.” Netflix forecast 7 million global paid net adds for the next quarter and provided revenue guidance of $5.25 billion. The company expects subscriber numbers will be boosted by its strong content slate in the third quarter, including the final season of “Orange is the New Black” and a new season of “The Crown.”
Netflix acknowledged that it will soon lose two of its most-watched shows, “The Office” and “Friends.” NBC announced in June that it plans to remove “The Office” from Netflix in 2021 and move it to its own streaming service. Earlier this month, WarnerMedia announced its new streaming service, HBO Max, will include exclusive rights to stream “Friends” when it launches publicly in the spring of 2020. Netflix previously spent $80 million to keep “Friends” just through the end of this year, according to Vulture.
Netflix said the loss of these shows is “freeing up budget for more original content.”
Even with the announcement of several new streaming services, Netflix told shareholders, “We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intesity and our penetration varied across regions (while our over-forecast was in every region).”
This story is developing. Check back for updates.
WATCH: Netflix’s DVD business is still alive and profitable — here’s what it looks like
