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Netflix Only Added 1.7 Million Subscribers In Q2, Far Fewer Than Expected

Netflix delivered disappointing subscriber numbers as part of its Q2 2016 earnings release Monday, which showed that the company had only added 0.16 million subscribers in the U.S. in the three months ending June 30. That’s far below the 0.9 million the company added during the same quarter a year ago, and even below the company’s conservative April guidance of 0.5 million for the quarter.

The second quarter has traditionally been weak for Netflix, but growth seems to have gotten worse over the past three months due to the company’s price increases for long-time customers. CEO Reed Hastings and CFO David Wells acknowledged as much in their letter to investors, saying that some members may have been confused by the press coverage of the increase.

“We are growing, but not as fast as we would like or have been,” they wrote. “Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

Shares were down close to 15 percent in after-hours trading immediately following the earnings release.

International subscriber additions also disappointed with 1.52 million net additions, which was below Netflix’s own guidance of 2.00 million new subscribers abroad, and far below the 2.37 million it added a year ago. Altogether, Netflix added just 1.7 million subscribers inside and outside of the United States in Q2, compared to 3.3 million during the same quarter in 2015.

Netflix’s revenue and earnings numbers were a bit of a brighter note for investors: The company generated a total of $2.1 billion in  revenue across all of its businesses during the three months ending June 30, compared to $1.64 billion during the same quarter a year ago. The company’s net income was $41 million, compared to $26 million for Q2 of 2015. This equals earnings per share of $0.09 compared to $0.06 a year ago. Analysts had expected $0.03 earnings per share, as well as revenue of $2.11 billion.

Despite missing on international subscriber additions, Hastings said during the company’s earnings call that it was still worthwhile for the company to expand to 130 new markets in early 2016. That expansion helped Netflix to learn more about individual markets, and eventually led to the decision to localize in Turkey and Poland in the coming months, he said.

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