Netflix attributed its long-awaited crackdown on account freeloaders during Q2 to its best subscriber growth in six quarters.
Netflix added 5.89 million paid members globally from April - June, blowing the doors off of equity analysts' consensus forecasts. The streaming company, which rolled out its new, more strict account-sharing policies in the U.S. back in May, also reported the addition of 1.19 million subscribers in Q2 in the U.S. and Canada.
Netflix no longer gives guidance on subscriber growth, but analysts had projected that the streaming company would add somewhere in the neighborhood of 1.8 million customers in the second quarter. Netflix now has 238.4 million customers worldwide.
Both the global and UCAN growth numbers were the best Netflix has seen since Q4 2021.
Netflix, meanwhile, met its own guidance on revenue, bringing in $8.187 billion during the second quarter, up 2.7% year over year. The company, however, missed on net income guidance with $1.488 billion vs. projections of $1.6 billion.
The Los Gatos, Calif.-based streaming company said it's still targeting a full year 2023 operating margin of 18% to 20%. Its market cap now approaching $224 billion, its bottom line remains the envy of an incumbent video entertainment industry -- which includes Disney, Warner Bros. Discovery, Paramount, NBCUniversal -- that remains mired in red ink.
You can read Netflix's Q2 letter to shareholders directly here.
Netflix said it's already launched its new account sharing policies in more than 100 of the countries it operates in, accounting for more than 80% of its revenue base. The streaming company said it will now proceed with rolling out the policies throughout the rest of its global footprint.
Netflix, meanwhile, also continues to push its nascent advertising business.
On Wednesday, the company cut its $9.99 basic commercial-free tier in the U.S., just as it did in Canada in June.
Domestic users who don't want to pay $15.49 a month for the two-streams-at-a-time, HD-resolution "Standard" plan, or the four-stream, 4K-capable $19.99-a-month "Premium" tier, will now have no choice but to take the $6.99-a-month, partially ad-supported "Basic With Ads" plan, and watch a few commercials in the process, if they want Netflix at all.
Perhaps due to the fact that its programming seems to be in a ratings slump right now, Netflix used its Q2 shareholder letter to hammer home its still very strong user engagement advantage.
Citing Nielsen data for U.S. audience performance, Netflix noted that it had the top original series domestically for 24 out of the first 25 weeks of this year.
Netflix also continued to leverage data from Nielsen's monthly U.S. viewership market share tracker, The Gauge. Comparing Gauge data from May 2021 to June 2023, Netflix illustrated marked upticks in both Netflix and overall streaming usage in the U.S. over the last two years.
The Netflix engagement message jibed with data released from MoffettNathanson earlier Wednesday morning.
