The Big Password Sharing Crackdown Will Bolster Netflix’s Q2 Results

Netflix
NFLX
is slated to report its Q2 2023 results on July 19th. We estimate that Netflix’s revenue will come in at about $8.3 billion for the quarter, roughly in line with consensus estimates. This would mark year-over-year growth of roughly 4%, although it would be down from a growth rate of close to 9% in the same quarter last year. We estimate that earnings will stand at $2.84 per share, also roughly in line with the consensus. So what are some of the trends that are likely to drive Netflix results? See our interactive dashboard analysis on Netflix Earnings Preview for more details on how Netflix’s revenues and earnings are likely to trend for the quarter.

Netflix has stopped providing specific guidance on subscriber additions over the last two quarters, noting that it would be focusing more on boosting its monetization via its crackdown on password sharing as well as its ad-supported tier. In late May, the company began rolling out restrictions on password sharing in the U.S., requiring users to pay an additional monthly fee of $7.99 to share accounts with users outside of their households. The move appears to have gotten off to a strong start, with analytics firm Antenna estimating that Netflix saw more new subscriber adds in the U.S. between May 25 and May 28 versus any other four-day period since Antenna began monitoring this data in 2019. While cancellations also rose through this period, they were apparently lower compared to new sign-ups. This is likely to help overall subscriber numbers and revenue for Q2.