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Investing.com -- Shares in Netflix (NASDAQ:NFLX) fell by more than 4% in early U.S. trading on Friday after the streaming giant’s second-quarter earnings and outlook were solid, but failed to live up to heightened analyst expectations.
Fueled in large part by the success of the final season of its mega-hit series "Squid Game," as well as subscription price increases and membership growth, Netflix posted quarterly diluted per-share profit of $7.19, above estimates of $7.08, according to LSEG data cited by Reuters. Revenue in the three months ended on June 30 came in at $11.08 billion, compared to projections of $11.07 billion.
The firm previously hiked prices across its existing U.S. plans at the start of the year. Revenues from the U.S. and Canada, which make up the bulk of growth rose 15% in the second quarter, up from 9% in the prior three-month period.
"Year-over-year revenue growth was primarily a function of more members, higher subscription pricing and increased ad revenue," the company said.
The company said it was nearing the end of upfront negotiations with major agencies in the U.S. for 2025 and still expects its ad business to “approximately double” revenue year-over-year.
Netflix, which has been pushing to fold in new offerings like live events to bolster viewership and draw in advertisers, also lifted its annual revenue guidance to a range of $44.8 billion to $45.2 billion -- up from $44.5 billion previously. The outlook for operating margins was also brought up to 29.5% from 29%.
The improved forecast was partly underpinned by a recent weakening in the U.S. dollar, which analysts at Vital Knowledge argued was a "low-quality source."
Strategists at Jefferies added that while the full-year revenue forecasts were "relatively in line with what investors were looking for into this quarter," the overall results "just did not meaningfully exceed" estimates.
Netflix’s stock price have surged by more than 43% so far this year, undergirded by hopes that the firm will continue to strengthen its position as one of the most dominant players in the streaming sector.
(Yasin Ebrahim contributed reporting.)