Earlier Wednesday, Netflix eliminated the lowest-priced ad-free plan, pushing consumers toward a lower-priced, ad-backed service or a costlier commercial-free plan.Cash flow forecasting helps you plan for cash gaps and surpluses before they happen. The early results from the password crackdown and Netflix’s new advertising tier convinced the company that it can phase out its least lucrative package. But the company said new sign-ups are already exceeding cancellations and that sales growth will accelerate in the months ahead, with third-quarter growth projected at 7.5 per cent. Netflix initially warned it would see an uptick in cancellations at the start of the crackdown and that it would see more growth in the back half of this year. Netflix lost customers in the first half of 2022, prompting a steep drop in the shares and leading to a sell-off in other media stocks. But that was when it was adding more than 25 million customers a year. Netflix had long said it didn’t care if people used someone else’s account. The plan has been controversial with users, and analysts weren’t sure how it would impact the company’s growth. Viewers using someone else’s subscription can now either pay to keep sharing or set up their own account. In May, the streaming leader started charging people in more than 100 countries to continue sharing their passwords, a key part of its plan to accelerate growth after a sluggish 2022. The company credited much of the boom to its crackdown on password sharing. Management expects similar growth this period. The results marked the company’s best second quarter since the depths of the pandemic three years ago and far surpassed Wall Street forecasts of 2.07 million new subscribers. Netflix added 5.89 million customers in the second period, more than doubling Wall Street estimates, and finished the quarter with 238.4 million members. The shortfall overshadowed a solid quarter by most other metrics. The results were fine “but not enough to move the stock higher given the move in past three months,” LightShed Partners analyst Rich Greenfield said after the results were announced. The company expects sales of $8.52 billion in the third quarter, compared with the $8.67 billion average of Wall Street estimates. Netflix also generated less revenue per customer in the most recent quarter. That was due in part to foreign exchange rates and to price cuts in some markets. While Netflix grew its subscriber base by 8 per cent, sales rose just 2.7 per cent to $8.19 billion, coming in slightly below analysts’ projections. The stock had risen 62 per cent this year on optimism surrounding those initiatives. The results disappointed investors, who sent the shares down as much as 10 per cent to $430.41 (€383.94) in extended trading late Wednesday. Netflix projected third-quarter revenue that fell short of Wall Street estimates, suggesting a crackdown on password sharing and a new advertising tier aren’t yet delivering the sales growth analysts anticipated.
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