Shares of Netflix (NFLX) - Get Report fell sharply after hours Thursday after the company reported mixed second quarter results with earnings falling well short of expectations while revenue topped estimates. Guidance for Q3 subscriber additions also came in well below analyst expectations.
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The company reported second quarter earnings $1.59 per share on revenue of $6.14 billion. Analysts were expecting the company to report earnings of $1.81 per share on revenue of $6.08 billion.
Netflix shares dropped 9.9% to $475.00 after hours following the release.
The company reported a 27% increase in paid subscribers, giving it a global count of 192.95 million subscribers, while average revenue per user grew 5%, excluding a $298 million foreign exchange cost.
The company added 10.1 million paid subscribers in the quarter, beating analyst expectations of 8.26 million.
However, for the third quarter, the company expects to add just 2.5 million paid subscribers, while the consensus estimates were for there to be 5.27 million paid net adds. In its letter to shareholders, Netflix said that it saw significant "pull-forward" in subscriber adds in Q1 and Q2 due to the coronavirus pandemic. "As a result, we expect less growth for the second half of 2020 compared to the prior year," the company wrote.
Paid net adds are also expected to be down year over year in the second half as the company lacks some of the big hits like "Stranger Things" it had available in the second half last year.
Netflix says that its main priority is to "restart our productions safely and in a manner consistent with local health and safety standards."
The company says that due to to the fact that its content production lead time is so long, its 2020 plans for launching original shows and films is mostly intact.
However, the first half of 2021 will have fewer original series launches than usual due to the time lost to the coronavirus pandemic so far.
The company also announced that Ted Sarandos was being promoted to co-CEO with Reed Hastings. Sarandos was also elected to the company's Board of Directors.
Hastings will continue to serve as the company's Chief Content Officer.