September 25, 2023

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Netflix earnings: password crackdown delivers millions of new members

Second-quarter sales rose 2.7% to $8.19 billion, coming in slightly below analysts’ estimates, as did the projection for the current period. That is due partly to foreign exchange rates and to price cuts in some markets.

The company finished the quarter with 238.4 million members, up 8% from a year ago.

While analysts have raised concerns about losses from streaming at many of Netflix’s competitors, including Walt Disney Co. and Warner Bros. Discovery Inc., Netflix is delivering higher profit quarter after quarter. Second-quarter earnings, at $3.29 a share, beat the $2.85 a share average of analyst estimates.

“While streaming is intensely competitive, we’ve shown that with strong execution and focus, it can be a great business,” the company said in a letter to shareholders.

The company raised its 2023 forecast for free cash flow to $5 billion, from at least $3.5 billion previously, as a result of a strike by writers and actors, which has shuttered production and cut spending.

The password crackdown will provide a temporary boost in subscribers. Netflix had long said it didn’t care if people used someone else’s account. But that was when it was adding more than 25 million customers a year. Netflix lost customers in the first half of 2022, prompting a steep drop in the shares and leading to a selloff in other media stocks.

—Bloomberg News


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