Netflix (NASDAQ:NFLX) shares declined more than 4% in early Friday trading in the U.S., despite reporting solid second-quarter earnings and lifting its full-year revenue guidance. The results, however, fell short of the higher expectations set by some analysts.
The company benefited from the success of the final season of its blockbuster series Squid Game, along with subscription price hikes and member growth. Netflix posted a quarterly diluted earnings per share of $7.19, surpassing estimates of $7.08, according to LSEG data reported by Reuters. Revenue for the quarter ending June 30 reached $11.08 billion, slightly above the forecast of $11.07 billion.
Earlier this year, Netflix raised prices on its U.S. plans. Revenues from the U.S. and Canada, which account for a large share of the company’s growth, increased by 15% in the second quarter, up from 9% in the previous quarter.
“Year-over-year revenue growth was primarily a function of more members, higher subscription pricing and increased ad revenue,” Netflix said.
The company is close to concluding upfront ad deals with major U.S. agencies for 2025 and expects its advertising revenue to “approximately double” compared to last year.
Netflix has been expanding its offerings, including live events, to boost engagement and attract advertisers. It raised its annual revenue forecast to between $44.8 billion and $45.2 billion, up from $44.5 billion previously. The operating margin guidance was also lifted to 29.5% from 29%.
This improved outlook was partly supported by a weaker U.S. dollar, though analysts at Vital Knowledge described this as a “low-quality source.”
Jefferies strategists noted that while the full-year revenue guidance was “relatively in line with what investors were looking for into this quarter,” the overall performance “just did not meaningfully exceed” expectations.
Netflix shares have jumped more than 43% year-to-date, fueled by optimism around the company’s efforts to maintain its leadership in the streaming market.
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