Netflix reports a massive 170% increase in net income in the fiscal second quarter

Netflix (NASDAQ: NFLX) published its quarterly financial results late on Thursday that fell shy of the experts’ forecast for earnings per share in the second quarter. The company also announced Ted Sarandos as its new co-CEO and offered him a seat in the Board of Directors. Sarandos has been serving as the Chief Content Officer at Netflix; a role that he is likely to keep moving forward.

Netflix Q2 financial results versus analysts’ estimates

According to Refinitiv, analysts had expected the company to print £4.84 billion in revenue in the second quarter. In terms of earnings per share (EPS), they had forecast £1.44. In its report on Thursday, Netflix topped the estimate for revenue posting a higher £4.90 billion but missed on the earnings front with a lower £1.27 of EPS in Q2.

The American media services provider boasted to have added 10.09 million paid net subscribers globally in the second quarter versus 8.26 million expected.

Shares of the company were reported about 9% down in extended trading on Thursday. At £381.17 per share, Netflix is currently 40% down year to date in the stock market after recovering from a low of £238 per share in March. Learn more about the value investing strategy.

Netflix guidance for the fiscal third quarter

For the fiscal third quarter, Netflix now estimates £5.04 billion in revenue and £1.66 of earnings per share. Analysts, on the other hand, have forecast £5.10 billion in revenue and £1.60 of EPS for Netflix in Q3. In terms of net subscriber additions, however, the company estimates only 2.5 million versus the experts’ forecast of 5.27 million for the current quarter. According to Netflix:

“In Q1 and Q2, we saw significant pull-forward of our underlying adoption leading to huge growth in the first half of this year (26 million paid net adds vs. prior year of 12 million). As a result, we expect less growth for the second half of 2020 compared to the prior year.”

At £573.37 million, the Los Gatos-based company said that its net income came in just under 170% higher in the second quarter as compared to £215.57 million in the same quarter last year. Its revenue was also reported about 15% up on a year over year basis.

At the time of writing, Netflix has a market cap of £184.71 billion and a price to earnings ratio of 106.78.