Netflix (NASDAQ: NFLX) delivered its second-quarter earnings after the market close on Thursday, reporting subscriber growth of 27.3% for the period. The 10.1 million new subscribers brought the company's total to nearly 193 million, vaulting past the 190 million management had forecast. Netflix said this was the result of "better-than-forecast acquisition and retention."
Revenue increased 25% year over year to a record $6.1 billion. Net income jumped to $720 million, delivering earnings per share of $1.59, up 165%, but falling short of the $1.81 Netflix had forecast. The miss was largely the result of one-time, non-cash charges of $339 million. Average revenue per user (ARPU) edged higher, but excluding the impact of changes in foreign exchange rates, ARPU climbed 5%. Lower content and marketing expenses contributed to the bottom line.
A change at the top
Netflix also announced that Chief Content Officer Ted Sarandos had been promoted to co-CEO, a role in which he will share duties with current CEO Reed Hastings. Sarandos was also appointed to the company's board of directors, and will continue to be chief content officer.
"Ted has been my partner for decades," Hastings said of the move. "This change makes formal what was already informal -- that Ted and I share the leadership of Netflix."
Management did its best to rein in investors' expectations about the remainder of the year, saying that the company saw "significant pull-forward" in the first half, resulting in 26 million net new subscribers compared to just 12 million in the first half of 2019. Netflix expects markedly slower growth rates in the back half of 2020. To put this into perspective, Netflix added 28 million members for all of 2019.
At the time of this publication, Netflix shares had slipped by around 9.5% in after-hours trading, after gaining 0.8% during the trading day. And it's important to remember that going into earnings, Netflix stock had gained 63% so far this year.
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