20 July 2023
If you are covering the latest Netflix results, please see the following comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“Netflix posted fairly robust Q2 numbers, though the stock had recently proved very strong so there is a little disappointment that they were not a huge beat.
“Subscriber growth has reaccelerated as a result of the crackdown on password sharing, and as part of this shift Netflix will be stopping its most basic plan offering to new and rejoining members in the UK, with the ad supported plan taking its place.
“Netflix has not upped its prices this year which dampened revenue growth somewhat, but it continues to build scale and grow average revenue per user as more subscribers move to the ad supported tier providing a significant benefit from advertising uplift. Profitability was also much improved as Netflix’s content spend grew far slower than revenue growth.
“Netflix has maintained its position on live sports, with no intention of backtracking on its previous view that it is ‘not anti-sport but pro-profit’. However, Netflix is keen to continue its sports adjacencies following the success of its various series including Drive to Survive, Tour de France: Unchained, and Quarterback.
“Finally, in comparison to other media companies, the ongoing writer’s strike in the US has had relatively little negative effect on Netflix due to its geographically diverse writing base which has continued to boost content creation enough to smooth out the impact. ”
