Netflix revenues and profits rise but stock plummets as Q2 subs miss expectations wid

Netfliox MENANormally any business that adds nearly 1.7 million customers in a quarter would be lauded copiously but Netflix isn’t any normal business and such a performance is regarded as rather a disappointment.

For its second quarter of 2016 ended 30 June 2016, the subscription VOD leader added in total 1.68 million new members somewhat short of the 2.5 million it had promised in its previous financial report and the 2015 Q2 figure of 3.3 million.

The company boasted a total of 83.18 memberships, 79.9 million of which were paying customers. For the US this split was 47.13 million and 46 million, a net growth of 160,000 quarter on quarter while the grand non-US streaming audience was 36.15 million, up 1.532 million on a sequential quarterly basis. Proving that its physical media business was just about still alive and kicking, Netflix also finished Q2 2016 with 4.5 million DVD members in the US, and a contribution profit of $71 million.

Attempting to explain the falls, Netflix said that subs were likely suppressed by some of its members perceiving news of plans to ‘un-grandfather’ longer tenured members as an impending new price increases. Acknowledging the disappointment of the additions it said: “We are growing, but not as fast as we would like or have been. Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

For its SVOD business in the quarter, Netflix generated a total of £1.966 billion, $1.208 billion of which was derived from the US. The non-US streaming revenues of $758 million were not enough to prevent a quarterly loss of $69 million in international operations.

For the business as a whole for the quarter was encouraging with total revenues for the three-month period standing at $2.105 billion, up 28% year on year. However, this was not enough to prevent a 5% fall in year-on-year profits to $ 70.370 million.

Wall Street was not impressed at all by this though. Financial news agency Seeking Alpha reported that by the end of trading on 18 July Netflix share prices fell by as much as 15.5% and that as a result, the firm's market capitalisation plummeted as much as $6.56 billion, bringing the firm's total market value down from $42.32 billion to $35.76 billion.