Netflix Inc (NASDAQ:NFLX) stock rose 3.00% (As on July 20, 11:17:06 AM UTC-4, Source: Google Finance) after the company said that it lost 970,000 subscribers from April through June leaving the company with just shy of 221 million subscribers. It reported losing subscribers for the second quarter in a row as the streaming giant battles fierce competition and plateauing demand. The company had said in April it expected to lose 2 million customers in the second quarter, shocking Wall Street and raising concerns that the streaming TV boom had come to an abrupt end. The losses came in at about half that. Netflix lost 1.3 million customers in the United States and Canada in the second quarter, and 770,000 in Europe, the Middle East and Africa. That was offset by a gain of nearly 1.1 million members in the Asia/Pacific region. The world’s largest streaming service said it plans to launch its ad-supported option next year. It also warned that the strong dollar was hitting revenue booked from subscribers abroad. Netflix forecast customer additions for July through September to hit 1 million, while Wall Street analysts on average were expecting a forecast of 1.84 million, according to analysts polled by Refinitiv.
NFLX in the second quarter of FY 22 has reported the adjusted earnings per share of $3.20, beating the analysts’ estimates for the adjusted earnings per share of $2.94. The company had reported the adjusted revenue growth of 9 percent to $7.97 billion in the second quarter of FY 22, missing the analysts’ estimates for revenue of $8.04 billion. Free cash flow (FCF) in the quarter totaled +$13 million, compared with -$175 million in Q2’21. Cash declined $190m sequentially, primarily due to the Next Games acquisition ($69m) and the F/X impact on cash ($145m).
On the other hand, Netflix Inc plans to acquire Sydney-based Animal Logic, an animation studio that has worked on hits from “Happy Feet” to “The Lego Movies”. The move will accelerate Netflix’s efforts to build end-to-end animation production capabilities. The acquisition, which requires regulatory approvals, was announced just ahead of Netflix’s quarterly earnings report. Netflix said it expects the deal to close later this year.
In addition, the company recently announced Microsoft as their technology and sales partner and is targeting to launch this tier around the early part of 2023. They are investing heavily to expand their multi-billion advertising business into premium television video.