Netflix lost about 1 million subscribers last quarter — a better than expected result for the streaming giant, which also forecast 1 million net new subscribers for the upcoming quarter.
The company had projected a loss of 2 million subscribers. Earlier this year, the 25-year-old company reported its first quarterly decline in subscribers — about 200,000 — in more than a decade.
The company's shares were up as much as 8% in after-hours trading. Netflix's share price has declined 67% this year, though it remains the largest global streaming platform, with more than 200 million subscribers worldwide.
In its quarterly letter to shareholders, Netflix said it was concerned about the pace at which its revenues would grow going forward. The company reported approximately $8 billion in quarterly revenues Tuesday, a marginal improvement over the $7.9 billion it reported in the previous quarter.
"Reaccelerating our revenue growth is a big challenge," Netflix said in an SEC filing. "But we’ve been through hard times before. We’ve built this company to be flexible and adaptable and this will be a great test for us," the statement read. The company re-emphasized its strength in the streaming landscape.
"We’re confident and optimistic about the future," the company said.
Netflix also confirmed it is planning to roll out a lower-cost plan that would feature advertisements, though it did not say how much that plan would cost. It said it would likely start off offering the plan in a handful of markets with large amounts of spending on advertising. The new ad-supported plan will not replace current ad-free subscriptions.
The streaming space is highly competitive, and is likely to remain so as HBO Max, one of Netflix's close rivals, is set to partner with Discovery+ to add its content library at $14.99 a month with no ads. Meanwhile, Disney has kept its Disney+, Hulu and ESPN+ bundle at $13.99 a month.
In the shadow of Netflix's historic loss of subscribers last quarter, HBO and the cable channel's HBO Max streaming service added 3 million new users.
Still, Netflix has remained dominant, having reported $1.6 billion in net income in March. Other streaming platforms like Disney+ and NBCUniversal's Peacock projected losses tied to their respective investments in new content.
Amid its fight to keep leading the pack in the streaming race, Netflix earlier this year announced plans to rein in password-sharing among its users.
Netflix estimates that 100 million households worldwide are using shared passwords, plus an additional 30 million in North America — something it said was making it more difficult to grow membership and revenues.
On Monday, Netflix said it was rolling out a new policy in five Latin American countries that would require an extra fee to be paid for each additional household using a Netflix account.
In its earnings report Tuesday, Netflix said it hoped to find find an easy-to-use paid sharing offering that will be rolled out in 2023.