LOS ANGELES: Netflix beat Wall Street earnings forecasts for the second quarter on Wednesday (Jul 19) but fell short on revenue even as a password-sharing crackdown helped the company pick up 5.9 million new streaming TV customers.
Shares of the streaming video pioneer were down 4.3 per cent in after-hours trading at US$457.00.
Netflix's projection for third-quarter revenue also fell short of analyst estimates. The company said it expected revenue growth to accelerate in the second half of the year.
"While we’ve made steady progress this year, we have more work to do to reaccelerate our growth," the company said in its quarterly letter to shareholders.
Netflix said it planned to kick-start revenue growth by "creating a steady drumbeat of must watch shows and movies; improving monetization; growing the enjoyment of our games; and investing to improve our service for members."
The company reported diluted earnings-per-share of US$3.29 for the second quarter, ahead of the US$2.86 consensus forecast of analysts surveyed by Refinitiv.
Its nearly 6 million subscriber additions outpaced the 1.9 million that Wall Street expected.
Netflix has been looking for new ways to make money as streaming competition intensifies and it nears market saturation in the United States. The company launched a cheaper tier with advertising last November, and started asking password borrowers to pay in a widespread crackdown that rolled out in May.
Quarterly revenue climbed 2.7 per cent from a year earlier to US$8.2 billion, shy of analyst forecasts of US$8.3 billion. The company estimated third-quarter revenue would hit US$8.5 billion. Wall Street had been forecasting US$8.7 billion.
Net income for the second quarter topped estimates at US$1.5 billion.
The company, like its competitors, is grappling with strikes by tens of thousands of Hollywood actors and writers. The labor action has forced many film and television productions to shut down, though analysts say Netflix has an advantage because of its global production.