Netflix 2Q EPS Beats, But Outlook Spooks Traders

By FOXBusiness

Netflix Shares Fall After 2Q Earnings

CenterState Bank Executive V.P. Joe Keating, NBG Productions Chief Equities Analyst Brian Sozzi, and SFG Alternatives’ Larry Shover break down Netflix’ second-quarter earnings report.

Online entertainment streaming service Netflix, Inc. (NASDAQ:NFLX) posted better-than-expected second-quarter results, but the company reported subscriber numbers that were below expectations.

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The company reported 530,000 subscriber additions to its streaming service, below the 800,000 high-end of its guidance range that some on the Street had expected.  This brings the total number of domestic streaming subscribers to 23.94 million.

The company  forecast third-quarter total domestic streaming subscribers in the range of 24.9 million to 25.7 million, or net additions between 1 million and 1.8 million subscribers. The company expects the Olympics to have a negative impact on subscriber adds, but said that if it finishes the third-quarter with close to 1.8 million additions, it will still be on track for 7 million additions, adding, "otherwise it would be challenging to achieve that goal by year end."

The company also warned of a fourth-quarter loss, as a result of expansion into a fourth international market, which it plans to say more about "later in Q3," according to the release.

For the second quarter, Netflix posted a profit of $6.16 million, or 11 cents a share, compared with year-ago profit of $68.21 million or $1.30 a share.

Revenue came in 13% higher at $889.2 million, compared with year-ago revenue of $788.61 million. The Street had expected earnings of 5 cents a share on revenue of $888.9 million, according to a Thomson Reuters poll.

For the third quarter, Netflix forecast a net loss of $6 to possible profit of $8 million, with earnings per share anywhere between a loss of 10 cents a share to a profit of 14 cents a share.  The Street was expecting a profit of 11 cents a share, according to a Thomson Reuters analyst poll.

Shares of Netflix were down more than $12 a share after the bell, or 15.14%, upon the release of results.  The stock is down 71%, year-over-year.