SAN FRANCISCO: Netflix shares declined on Tuesday after the streaming giant reported quarterly profit that missed market expectations.
The company recorded a profit of $2.5 billion on revenue of $11.5 billion in the recently ended quarter.
Netflix attributed the profit shortfall partly to a $619 million expense from an ongoing dispute with Brazilian tax authorities.
The company stated in a shareholder letter that excluding the Brazil cost, it would have exceeded its operating margin forecast.
“We don’t expect this matter to have a material impact on future results,“ Netflix said in the letter.
Netflix shares fell more than five percent to slightly over $1,173 in after-market trading following the earnings release.
Viewership in Britain and the United States reached their highest levels in about three years.
This growth was powered by a content lineup that included its most popular film ever, “KPop Demon Hunters.”
An ad-supported membership tier had its best sales quarter to date as Netflix continues to challenge traditional television.
“Netflix had its best ad sales quarter to date but still did not provide a figure for how large the ad business is,“ said Emarketer senior analyst Ross Benes.
“This gives the impression that the sustained revenue growth achieved this quarter, and forecasted for next quarter, will predominantly continue to come from subscription fees.”
Netflix describes itself as one of the world’s leading entertainment services with over 300 million paid memberships in over 190 countries.
Analyst Benes noted rumours that Netflix is bidding on global entertainment company Warner Brothers Discovery.
“For that potential purchase to best compliment Netflix, the planned split of WBD would make its studio more attractive without bogging it down with TV networks that aren’t as agile as Netflix,“ Benes told AFP.
Netflix expressed confidence in its momentum for the current quarter.
The company cited attention-getting shows including the final season of “Stranger Things” and “The Diplomat.”
A new “Knives Out Mystery” is also scheduled for release this quarter.
The platform will additionally ramp up live events including professional American football and boxing. – AFP