Why did the Netflix share price lift despite losing 970,000 subscribers?

We check what the streaming giant reported today.

Key points
  • Netflix shares leapt 7.85% in after hours trade in the US
  • The company reported a net income of more than $1.4 billion 
  • Subscriber numbers were lower, however, it was a better result than expected 

The Netflix Inc (NASDAQ: NFLX) share price soared in the US after the company released quarterly results showing net income of more than $1.4 billion.

Netflix shares jumped 7.85% to $217.46 on the NASDAQ during after-hours trade. In Tuesday's trading, Netflix shares climbed 5.61%. For perspective, the NASDAQ leapt 2.93% on Tuesday.

Let's take a look at what Netflix reported today.

A couple stares at the tv in shock, with the man holding the remote up ready to press a button.

Image source: Getty Images

Netflix reports quarterly results

Highlights of the Netflix Q2, 22 results include:

  • Total revenue of $7.97 billion
  • Revenue jumped 1.3% on the previous quarter and 8.55% compared to Q2, 21
  • Loss of 970,000 global streaming paid memberships
  • Total of 220.67 million global streaming paid memberships
  • Operating margin of 19.8%
  • Net income of $1.441 billion, up 6.5% compared to Q2,21
  • Diluted earnings per share (EPS) of $3.20, up from $2.97 per share in Q2,21

What else did Netflix report

Despite the loss of subscribers, Netflix said membership was "better than expected". The company said it is in a position of strength.

Average revenue per membership (ARM) increased 7% year on year, excluding the impact of foreign exchange.

Revenue in the Asia Pacific region jumped 23% compared to the previous year, excluding foreign exchange, and is now almost as big as the company's Latin America business.

Europe, the Middle East, and Africa revenue also climbed 13% year on year, while Latin America revenue rose 19% and US Canada revenue gained 10%.

Netflix added 1.1 million subscribers in the Asia Pacific region in the quarter, up from one million in the previous corresponding year.

The best Netflix movie in quarter two was Hustle, featuring Adam Sandler. This attracted 186 million hours of viewing. This was followed by Senior Year, starring Rebel Wilson, with 161 million viewing hours.

Netflix is also investing in animated features and building on non-English programming. Netflix said:

While we always have room to improve, we're very pleased with how far we've come in providing so much satisfaction and enjoyment to our members.

What's ahead?

Netflix wants to accelerate revenue growth and improve monetisation. The company is planning to add a new lower-priced plan with advertising in early 2023. This will be in addition to existing plans that are free of ads.

Netflix plans to roll this plan out in markets where advertising spend is high. Commenting on this initiative, the company said:

Our global ARM [average revenue per membership] has grown at a 5% compound annual rate from 2013 to 2021, so it makes sense now to give consumers a choice for a lower priced option with advertisements, if they desire it.

Netflix is also working on plans to monetise up to 100 million homes that are not paying for Netflix, despite using the services. Netflix added:

We know this will be a change for our members. As such, we have launched two different approaches in Latin America to learn more.

Our goal is to find an easy-to-use paid sharing offering that we believe works for our members and our business that we can roll out in 2023.

Share price snapshot

The Netflix share price has dived 62% in the past year, while it has lost 66% year to date.

However, in the past month, Netflix shares have soared nearly 18%. For perspective, the NASDAQ has dropped nearly 12% in the past year.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Netflix. The Motley Fool Australia has recommended Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ASX Share Market News

IPO written on a chalk board with a rising rocket.
IPOs

Could Anthropic's IPO be the biggest and most consequential ever?

The consequences of Anthropic's proposed Nasdaq listing could be far-reaching.

Read more »

colleagues on a lunch break looking at iPhone
Broker Notes

Top brokers name 3 ASX shares to buy now

Here's what brokers are recommending as buys this week.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news.
Broker Notes

Buy, hold, sell: Electro Optic Systems, Soul Patts, ANZ shares

Let's start the day with some new views from the experts.  

Read more »

two women looking intently at computer screen
Broker Notes

Buy, hold, sell: Northern Star Resources, Computershare, Sunrise Energy shares

One of these ASX stocks has screamed 65% higher in 2026. Should you take the money and run?

Read more »

Yield written on wooden blocks with a hand putting coins on top, with a plant and pen on the table.
ASX Share Market News

2 ASX shares with dividend yields above 8%

These stocks offer significant dividend payouts.

Read more »

Couple on their laptop in their home kitchen.
ASX Share Market News

5 things to watch on the ASX 200 on Wednesday

Will it be a good day for Aussie investors on hump day? Let's find out.

Read more »

wondering about asx shares represented by woman surrounded by question marks
Broker Notes

Buy, hold, sell: Mineral Resources, Whitehaven, Fortescue shares

Bell Potter has published new research notes on these mining and energy companies.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
52-Week Lows

This ASX share looks like a bargain buy after hitting a 52-week low: Here's why

Find out what is pushing this depressed ASX share lower, and why I think it could rebound.

Read more »