Netflix Q3 revenue guidance falls short against 'very high' expectations

Investing.com -- Netflix reported Thursday third-quarter revenue guidance that fell short of Wall Street estimates results even as the streaming giant reported better-than-expected Q2 results amid blowout subscriber adds, driven by a strong content slate and an ongoing crackdown on password sharing.  

Netflix Inc (NASDAQ:NFLX) was unchanged in afterhours trading following the results. 

Netflix reported earnings of $4.88 a share on revenue of $9.56B, topping estimates of $4.74 on revenue of $9.53B.

The streaming giant raked in 8M users in Q2, well above the 4.8M estimated, driven by a strong content slate.

"In Q2 we had a wide variety of hit series like Bridgerton S3, Baby Reindeer, Queen of Tears and The Great Indian Kapil Show, and popular films like Under Paris, Atlas (NYSE:ATCO) and Hit Man and The Roast of Tom Brady, which attracted our largest live audience yet," the company said. 

Ads tier membership grew 34% quarter on quarter, as the streaming giant continued to make steady progress scaling its ads business.

Ad-revenue isn't expected to be a primary driver of the company's revenue growth in 2024 or 2025, or the medium term, Netflix said, acknowledging that demand from advertisers is lagging the amount of ad-space it has available for sale. 

"The near term challenge (and medium term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory," it added.

For Q3, the company guided revenue of $9.37B, missing estimates of $9.81B, but EPS of $5.10 beat estimates of $4.74.

Citi analysts commented:

"While results were solid, we believe investor expectations were high heading into the print (given the recent run up in the equity)."