The sky isn’t falling for Netflix — but the streaming giant needs to convince investors it has a workable plan to sustain double-digit revenue and earnings growth ahead.
The company on Thursday posted Q2 results in line with Wall Street expectations, but Q3 revenue guidance was below expectations. That fueled fears that on a per-user basis, Netflix’s engagement is decelerating, indicating headwinds for subscription and ad revenue growth. Its stock price tumbled to an 18-month low.
Not helping soothe concerns: Netflix said that, starting in 2027, it will release its huge viewing-metrics reports yearly instead of every six months. Certainly some investors were left wondering: What is Netflix trying to hide? Note that this comes after Netflix last year stopped reporting quarterly subscriber numbers as those have started to level off.
To hear Netflix tell it, the fears are overblown. For one thing, the company said it’s changing to a once-per-year data dump to “keep the focus on our primary financial metrics — revenue and operating profit.”
Just raw viewing numbers don’t tell the whole story, according to Netflix co-CEO Greg Peters. “There is not a linear relationship between view hours and revenue and profit because all hours are not created equal,” he said on the Q2 call.
