Netflix (NFLX) Profits Q2 2021

Netflix shares fell about 1% after the bell on Tuesday after the company reported earnings that were not factored into bottom line and subscriber additions. The company’s revenue slightly exceeded estimates and confirmed speculation it would grow more in games.

• Earnings per share (EPS): $ 2.97 vs. $ 3.16 expected, according to Refinitiv analyst survey
• Returned: $ 7.34 billion vs. $ 7.32 billion expected, according to Refinitiv
• Global Paid Net Subscriber Additions: 1.54 million against 1.75 million expected, according to Factset

Analysts did not expect a successful quarter for subscriber additions, expecting 1.75 million users according to Factset. The company said it added 1.54 million users to end the quarter with more than 209 million paid subscriptions.

“COVID has created some inconsistency in our membership growth (higher growth in 2020, slower growth this year), which is gaining ground. We continue to focus on improving our service for our members and their bring the best stories from around the world, ”the company said in a letter to investors.

Netflix said its revenue growth in the last quarter came from an 11% increase in average paid streaming subscriptions and 8% growth in average subscription revenue.

Most eyes were on what Netflix was anticipating for its third quarter. Netflix said it expected 3.5 million net additions, while investors had anticipated 4.87 million net subscriber additions in the third quarter, according to FactSet data. Much of the optimism comes from Netflix’s upcoming content roster, as much of it has been pushed back into the second half of this year and into next year.

In the first half of this year, Netflix said it spent $ 8 billion in cash on content and expects content depreciation to be around $ 12 billion for the entire year.

“If we meet our forecast, we will have added over 54 million net additions paid in the past 24 months or 27 million on an annualized basis over this period, which is consistent with our annual rate of net additions before COVID “the company said. mentionned.

The company has confirmed that it is moving into the gaming space as well. Netflix has said it sees gaming as a new category of content, comparing it to its expansion into the original films, animation and television. unscripted.

The potential games will be included in Netflix subscriptions at no additional cost, the company said. Initially, the focus will be on mobile games.

“We are more excited than ever with our film and TV series offering and expect a long track of increasing investment and growth in all of our existing content categories, but since we are almost a decade into our Pushed into original programming, we believe the time is right to learn more about the value of games to our members, ”the company said.

The company recently hired video game director Mike Verdu from Facebook, where he was vice president of augmented reality and virtual reality content, as the company gets more into gaming.

Netflix also faces the pressure of difficult year-over-year comparisons, as consumers were in the midst of the Covid-19 pandemic last year and spending significantly more time online and in need of entertainment. .

Netflix said that in the second quarter, its engagement per member household was down from last year, but still up 17% from the second quarter of 2019.

“The pandemic has created unusual instability in our growth and skews year-to-year comparisons as acquisition and engagement per member household has increased in the early months of COVID,” the company reported .

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