Netflix reported earnings after the bell on Monday, seeing its shares quickly tumble 15 percent in after-hours trading after missing the mark on subscriber growth.
In the second quarter of the year, the digital entertainment company added just 1.7 million members, beneath the company’s own forecast of 2.5 million new customers. This is also significantly below the 3.3 million members that Netflix added in the same period last year. The company now has 83 million total subscribers.
“We are growing, but not as fast as we would like or have been,” said a letter to shareholders. “Disrupting a big market can be bumpy.”
The company said that part of the reason for the disappointing quarter was that “churn picked up slightly and unexpectedly.” They blame this on press coverage about price increases.
Net income was $41 million for the period, compared to $26 million last year. Earnings per share was at 9 cents, up from 6 cents last year, and well above the 2 cents that was forecasted by Wall Street. Revenue was $2.1 billion, in line with what analysts were expecting.
In the second quarter, the company released the fourth season of “Orange Is The New Black,” a popular Netflix original series. They also touted the release of their second Adam Sandler film, “The Do-Over.”
The company saw a particularly disappointing quarter in the U.S. Netflix added just 160,000 subscribers, when they had been anticipating 500,000. Netflix issued guidance for the third quarter of 300,000 new U.S. members, well beneath the 695,000 Wall Street was forecasting.
International subscribers grew by just 1.5 million. Netflix cited the regulatory climate in China as an obstacle.
Netflix shares closed Monday at $98.81. Shares were down 14 percent year-to-date.
Overall, “the big picture is very intact and we’re very excited about it,” said Netflix CEO Reed Hastings on an earnings call. “We’re looking at the broad growth of internet television which is continuing to be very positive,” said Hastings.