LOS ANGELES: Streaming video pioneer Netflix disappoints Wall Street with second-quarter revenue that falls short of analyst estimates, sending shares tumbling more than 5% in after-hours trading.

       The revenue figure, along with a weaker-than-expected forecast for revenue in the third quarter, overshadowed the addition of 5.9 million new streaming customers from April through June and earnings that easily topped predictions.

       Shares of Netflix were down 5.6% after the results at US$451 (RM2,057) apiece.

       Netflix has been looking for new ways to make money as streaming competition intensifies and it nears market saturation in the United States.

       The company launched a cheaper tier with advertising last November, and started asking password borrowers to pay in a widespread crackdown that rolled out in May.

       The company said it expected revenue growth to accelerate in the second half of the year, adding it aimed to continue to create compelling shows and movies, improve monetisation, boost its video game business and make users’ experience better.

       “While we’ve made steady progress this year, we have more work to do to reaccelerate our growth,” the company said in its quarterly letter to shareholders.

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       The company reported diluted earnings-per-share of US$3.29 (RM15) for the second quarter, ahead of the US$2.86 (RM13) consensus forecast of analysts surveyed by Refinitiv.

       Its nearly six million subscriber additions outpaced the 1.9 million that Wall Street expected.

       Netflix had a total of 238.4 million subscribers worldwide as of the end of June.

       Quarterly revenue climbed 2.7% from a year earlier to US$8.2bil (RM37.4bil), shy of analyst forecasts of US$8.3bil (RM38bil). The company estimated third-quarter revenue would hit US$8.5bil (RM38.7bil).

       Wall Street had been forecasting US$8.7bil (RM39.7bil).

       Analyst Craig Huber of Huber Research Partners said some shareholders may have become too bullish about Netflix’s advertising tier and the password crackdown.

       “Some investors’ expectations for (the third quarter) got too far ahead of what is looking like reality in management’s guidance,” Huber said.

       While the company added subscribers, it said average revenue per member fell 3% from a year earlier. That was partly because many of the new sign-ups came in countries where Netflix charges lower prices.Netflix said its advertising tier remained a small part of its membership base and that current ad revenue is not material.

       The company said it was confident of building advertising into a multibillion-dollar revenue stream over time.

       Pivotal Research Group analyst Jeffrey Wlodarczak attributed some of the share slide after the results to investors selling to take profits.

       Netflix stock has gained 62% this year, including over 8% in the current month.

       Net income for the second quarter topped estimates at US$1.5bil (RM6.8bil).

       Like its competitors, Netflix is grappling with strikes by tens of thousands of Hollywood actors and writers.

       The labour action has forced many film and television productions to shut down, though analysts say Netflix has an advantage because of its global production.

       Netflix raised its 2023 free cash flow estimate to US$5bil (RM23bil), up from US$3.5bil (RM16bil), in part because it would spend less on content with productions shut down.

       Netflix co-CEO Ted Sarandos, who noted he grew up in a union household and recalled the hardship of his father going on strike, said he hoped the labour tensions would be resolved soon.

       “Let me start by making something absolutely clear: This strike is not an outcome that we wanted,” Sarandos said. — Reuters