NEW YORK: Netflix Inc has reported its slowest sales jump in three years and forecast a fourth consecutive quarter of slowing growth, a projection that amplifies concerns about the performance of the world’s leading online TV network.
Netflix delivered sales of US$12.9bil in the third quarter, in line with Wall Street’s expectations, and forecast sales of US$13.4bil in the year’s final three months, falling short of what analysts have predicted.
The pace of growth has fallen from 17.6% in the final quarter of last year to a projection of 11.5% for this year’s fourth quarter. The company blamed its sales shortfall on the advertising business, which is on pace to deliver US$300mil less than the company expected.
Shares fell as much as 7% in trading after the results were announced.
“I know we can do better,” Netflix co-chief executive officer (CEO) Greg Peters said on a call with analysts. “That better is our upside.”
Over the past week, Peters and co-CEO Ted Sarandos have overhauled the company’s leadership to address what they see as a decline in programming quality.
Netflix fired chief content officer Bela Bajaria and film chief Dan Lin just days after announcing cuts of 6% of the staff, or about 1,000 people. The last time Netflix made such substantial reductions was in 2022, when it reported its first quarterly subscriber loss in more than 10 years.
The company’s operating margin forecast for the fourth quarter of 26% is impacted by costs associated with the job cuts.
Earnings of 87 US cents per share in the third quarter exceeded analysts’ projections for 82 US cents.
Netflix remains a clear leader in streaming, however. — Bloomberg
