Netflix adds nearly six million subscribers in the second quarter with its new account policy

Netflix headquarters in Toronto (Canada).

Netflix It reached 238.4 million subscribers during the second quarter of 2023, up 8% from the same period last year, thanks to the account control policies shared by its users. In that period, it added 5.89 million customers, more than double what Wall Street estimated (2.07 million), after cracking down on those sharing their passwords. The results mark the company’s best second quarter since the height of the pandemic.

se This is the largest number of subscribers in the company’s historyWhich achieved a net profit of $ 1,488 million (1,328 million euros) on revenues of $ 8,187 million, representing an increase of 2.7% compared to the second quarter of 2022.

However, revenue forecasts for the third quarter were lower than Wall Street’s expectations, indicating that the crackdown on password sharing and the new advertising strategy still wasn’t generating the growth that analysts had expected. Shares of the platform fell 6% to $448.88 in extended trading, after rising 62% this year to Wednesday’s close.

Bloomberg quoted analyst Rich Greenfield as saying after publishing the results that the numbers provided on Wednesday are good, “but not enough to push the stock higher, given the movement of the past three months.”

Netflix Sales, the world leader in flow, up 2.7% in the second half, to $8,190 million, just below analyst expectations. This was partly due to exchange rate volatility and price cuts in some markets.

Earlier Wednesday, the company removed its lowest-priced free plan, pushing consumers toward a cheaper ad-supported service or a more expensive plan if they want to avoid ads. In May, it began charging users in more than 100 countries to keep sharing their passwords, a key component of its plan to accelerate growth after the 2022 recession. The plan has generated controversy among subscribers, and there have been questions about how it will affect results. Netflix has warned that there will be a spike in cancellations initially and that it will see further growth in the second half of this year.

The company’s third-quarter revenue forecast of $8.52 billion also fell short of Wall Street’s estimate, which had expected an average of $8.67 billion. The company said revenue from advertising and additional subscriptions for password sharers wasn’t large enough to offset other factors, such as the lack of, and in some cases even reductions in, subscription price increases. “While we’ve made steady progress this year, we still have work to do to accelerate our growth again,” the company said in a statement on its third-quarter growth forecast, which stands at 7.5%.

The results were particularly expected in light of the crisis caused by Hollywood due to the first simultaneous strike by the Actors Union and the Screenwriters Union in 63 years, which paralyzed the activity of the global entertainment industry. The massive strike does not appear to have had any consequences for the platform’s activity and in the statement to investors there is only one reference to it, to state that the “updated forecast” after the strikes only reveals “decreased content spending”.

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