After having, for the first time in its history, lost subscribers, two quarters in a row, was Netflix going to continue its descent? Stock market analysts were waiting for the leader in subscription video on demand. Netflix reassured them: the company announced, Tuesday, October 18, to have gained 2.4 million new subscribers, from July to September, more than double its forecast, set at 1 million. In previous quarters, the company with 223 million subscribers had lost 100,000, then 1 million members.
Sign of the rebound: after having lost 60% of its value since January, the title regained 14.3% on Tuesday after the close of trading.
“Thank goodness we are done with the quarters of decline. It’s important to be back in the positive, pleaded with analysts co-CEO Reed Hastings, in a video interview released after the results. Apart from the exchange effects linked to the very high level of the dollar, all the planets are in the process of aligning for us. »
Dollar strength
The exceptional strength of the American currency – in which the company pays most of its expenses, while the majority of its members are outside the United States – explains in part that its growth remains still slow, compared to the years previous ones. At 7.9 billion dollars (8 billion euros), its quarterly turnover fell slightly compared to the second quarter and grew by 5.9% compared to 2021, but, without currency effects, it would have increased by 13%, assures the company.
On the operating profit side, Netflix made $1.5 billion, or a 19% margin. This is in decline. For the fourth quarter, the platform expects its turnover to shrink further (7.8 billion dollars, or 0.9% growth compared to the previous year, for an operating profit narrowed to 330 million ), but ensures to see there also an effect of the change.
Netflix expects to win 4.5 million subscribers in the fourth quarter, usually the most dynamic, against 8.3 the previous year.
A cheaper version with ads
Under pressure, the leader in subscription video has, this summer, initiated a strategic shift: in early November, it will launch in France and in twelve countries a cheaper version (5.99 euros per month), with advertisements. The objective is to gain subscribers among audiences who find the prices too high or are not resistant to advertisements. But the effect will not be immediate: “While we are very optimistic about our advertising business, we do not expect a significant contribution in the last quarter, the increase in subscribers will be gradual, warns the company in its letter to shareholders. Our goal is to give customers more choice, not to change their subscription plan. »
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