Netflix (NFLX) earnings 2Q 2023

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Netflix reports second-quarter earnings on Wednesday and investors will pay close attention to the streaming giant’s crackdown on password sharing, as well as the recently launched ad-supported tier.

Analysts are predicting — and some data sources have shown — that Netflix’s subscriber base will get a boost from the spring rollout of its password crackdown.

Here’s what analysts are expecting for the quarter, according to Refinitiv:

  • Earnings: $2.86 per share
  • Revenue: $8.30 billion

In May, Netflix began alerting members about its new sharing policy, which prevents freeloaders from sharing accounts. Under the new policy, members can either transfer a profile to someone outside of their household so they can pay for their own account, or the account holder can pay a $7.99 additional fee per person.

Netflix saw its subscriber base rise weeks after the rollout, according to a report from Antenna. Analysts from Wells Fargo and MoffettNathanson also expect to see a boost to subscriber additions.

Wells Fargo is raising its second quarter net additions estimate from 1.5 million to 2.1 million, according to a note from analyst Steven Cahall this week.

Investors will also watch for any details Netflix provides on its recently launched cheaper, ad-supported tier. Netflix introduced both the new sharing policy and ad tier in the last year as part of its response to its first subscriber loss in more than a decade in 2022.

On Wednesday, Netflix confirmed that it removed its “basic” ad-free plan, making its standard plan with ads its cheapest option at $6.99 a month. The standard and premium tiers without commercials cost $15.49 and $19.99, respectively, a month.

Netflix’s stock has risen with the rollout of these initiatives. The company’s shares have climbed more than 60% this year, and it notched a 52-week high on Tuesday amid expectations it would show growth this quarter.

Media companies have turned more to ad-supported streaming as a way to get to profitability.

During its pitch to advertisers in May, Netflix unveiled few details about its ad-supported tier, albeit enough to push its stock higher. The company said it had 5 million active users for the new tier, and 25% of its new customers were signing up for the tier in areas where it’s available.

Also top of mind during the earnings will be the effects of the Hollywood writers and actors’ strikes. As the media industry finds itself going through one of its most tumultuous periods in years, actors recently joined writers on the picket line, all but shutting down Hollywood.

Netflix is expected to fare better than other media companies during the strike due to its deep bench of content, particularly from international sources.

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