Netflix posts Q2 earnings beat, Q3 revenue outlook disappoints

Netflix (NFLX) posted better-than-expected second quarter results. Earnings per share of $4.88 topped estimates of $4.74. Revenue of $9.56 billion was just above the Street expectation of $9.53 billion. The streamer also added 8.05 million subscribers in the quarter versus the 4.87 million expected.

For Q3, Netflix sees earnings per share of $5.10 which topped estimates of $4.74. However, the revenue outlook of $9.73 billion was short of the estimated $9.83 billion.

Netflix also raised its full-year operating margin and revenue growth outlooks.

Market Domination Overtime anchors Julie Hyman and Josh Lipton recap the breaking details of the report.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Stephanie Mikulich.

Video Transcript

Netflix earnings.

Uh let's run through the major numbers here.

Second quarter earnings per share, $4.88.

The company had a second quarter, 17% revenue growth here uh to $9.56 billion.

Both of those numbers ahead of analysts estimates, but let's pay attention to what they're saying of both about memberships as well as what's happening in the third quarter.

Second quarter, streaming paid members 277.65 million.

That is ahead of estimates.

Remember, Netflix isn't going to be reporting those numbers for much longer.

Um But the company says in the third quarter, those additions will be lower than a year ago.

The company also says third quarter revenue will be $9.73 billion.

That is below what analysts had been anticipating.

The second quarter.

Streaming numbers strong stronger than estimated, but it looks like that forecast is what's driving those shares down in the after hour session here.

So interesting to see that one more thing to mention, we're talking about forecasts for the full year.

Netflix says revenue growth will be 14 to 15%.

So what they did basically was bring up the lower end of that range by a percentage point had been 13 to 15%.

But that doesn't, um at least not initially here, Josh, the selling that we are seeing.

Yeah, and especially, you know, you think about the stock had such a nice strong run into the print.

I mean, expectations were elevated to begin with and we have it run like that.

A kind of mixed guide is not gonna get it done.

And at least that's what it looks like, you know, eq three eps, the guidance of 510.

That's a beat, right.

The street is at 474.

But your point, the revenue here of 9.7 three, that's a Miss street was 9.83.

Um It also looks like their free cash flow for the year.

They're looking for about 6 billion estimates were closer about 6.6.

Yeah, a couple of other things to mention here, the company is talking about their ads business and they said they're making steady pro progress, scaling that business a tier membership growing 34% quarter over quarter.

Um So that's something that pay attention to.

Also when we talk about the third quarter forecast that the company is giving as they point out the third quarter last year was the first full quarter that they had the paid sharing um changes that they had been making so tough comps.

In other words, when you're looking at that last year, third quarter.

So that's something to keep in mind here.

I'm continuing to go through the letters shareholders, but that stood out to me.