Netflix added more than 10 million paying subscribers and posted revenue of $6.15bn for the second quarter of 2020.
Its revenue exceeded the firm’s estimates of $6.08bn and marked year-on-year growth of 25%. Earnings per share fell below expectations at $1.59 vs analyst forecasts of $1.81.
The influx of subscribers surpassed analysts’ forecast of 8.07 million.
Netflix’s Q2 earnings follow a record number of subscribers in Q1, which was fuelled by a spike in demand for stay-at-home entertainment during the coronavirus pandemic.
The streaming giant added 10.1 paying subscribers – a record for Q2 that dwarves the 2.7 million from the same period a year ago.
It brings the net total of new paying subscribers to 26 million for the first half of 2020. For the same period in 2019 it added 12 million.
Netflix Q2 earnings cement top position
Netflix’s strong results further cement its position as the largest streaming company. In a letter to shareholders, Netflix acknowledged the growing competition from WarnerMedia, Disney, NBCUniversal, Apple and Amazon. It also mentioned social media firm TikTok, describing its growth as “astounding” and that its success shows the “fluidity of internet entertainment”.
However, coronavirus uncertainty caused the firm to predict that paid subscribers would fall below prior estimates in the third quarter, with a forecast of 2.5 million vs 6.8 million for the year prior quarter.
This prompted Netflix’s share price to dip by 10% in after-hours trading. Its value has since recovered to levels higher than before the Q2 earnings were announced on Thursday.
“The next quarter for Netflix could be tougher, with warm weather and new-found demand for other diversions like going to the pub and eating out,” said Helen Firth, executive strategy director at brand consultancy firm Landor.
“There’s also the challenge of growing competition, with Disney+ turning heads with Hamilton and new service Peacock due to launch this month. Netflix may have to ramp up production on its original content, which has been stalled during lockdown, to give users new reasons to stay home and chill.”
Netflix said that it is beginning to resume productions in many parts of the world but said there is “no one-size-fits-all approach”.
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New job titles, same faces
Netflix chief content officer and 20-year veteran of the company Ted Sarandos has also been appointed co-CEO of the company, joining Netflix co-founder and CEO Reed Hastings.
“This change makes formal what was already informal – that Ted and I share the leadership of Netflix,” said Hastings.
To be totally clear, I’m in for a decade — let me be really clear on that,” he added. “I’m in for a decade. As co-CEO, it’s two of us full time. It’s not like a part-time deal.”
Greg Peters has also been appointed chief operating officer, which he will continue to do alongside his chief product officer role.