Netflix has again surprised doubters by revealing better-than-expected numbers for its second quarter.
The news once again confirmed that in global media, there’s Netflix, and then daylight between it and its flock of rivals, especially when it comes to making a buck out of the business.
It added more global subscribers and saw its advertising business bloom as it continued to morph into an updated version of a combination of a free-to-air channel and cable.
Prior to the release, some analysts had suggested the company had seen an easing in subscriber growth.
The streamer said its advertising-supported memberships grew 34% during the June quarter compared to the same quarter last year.
The streamer said its global paid memberships rose 16.5% year over year to 277.65 million. They were also up around 8 million from the first quarter’s 269.6 million.
This report will be one of the last updates Netflix will release regarding its membership numbers.
Revenue was about $9.6 billion for the quarter, up 17% compared to the same quarter last year, driven primarily by the increase in average paid memberships.
Netflix said it now expects full-year reported revenue growth of 14% to 15%, compared with previous guidance of 13% to 15%.
The company reported net income of $2.15 billion, up from $1.49 billion in the second quarter of 2023.
There are only two more quarters where the company will reveal subscriber data on a regular basis.
Last quarter, the company warned investors it would stop providing quarterly membership numbers or average revenue per user beginning in 2025, noting the company is “focused on revenue and operating margin as our primary financial metrics—and engagement (i.e., time spent) as our best proxy for customer satisfaction.”
Netflix said in its latest report that its cheaper, ad-supported tier has been gaining traction, with these subscribers accounting for more than 45% of signups in the markets where the option is offered.
But it’s not yet a moneymaker. Netflix noted on Thursday that the ad-supported business is still young, and it doesn’t expect ad revenue to be a “primary driver of our revenue growth in 2024 or 2025.”
“The near-term challenge (and medium-term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory,” the company said in its earnings release.
Netflix added it believes it’s on track to “achieve critical ad subscriber scale for our advertisers” in 2025, allowing it to further increase its ad-tier memberships in 2026 and beyond.
The shares fell 0.68% in regular trading and then 0.48% in the wake of the after-hours release. They remain up 32% year to date.