Netflix Names Ted Sarandos Co-CEO; Hits Another Fiscal Home Run, Adding Record 10M Subs, Revenue Up 25%

Netflix July 16 named veteran executive Ted Sarandos co-CEO with co-founder Reed Hastings. Sarandos, who has been Netflix since its beginning, is the current chief content officer — a position he will continue. The former home video executive now joins the company’s board of directors. Greg Peters, chief product officer, adds chief operating officer to his resumé.

“Having watched Reed and Ted work together for so long, the board and I are confident this is the right step to evolve Netflix’s management structure so that we can continue to best serve our members and shareholders for years to come,” Jay Hoag, lead independent director, said in a statement.

Meanwhile, Netflix continues to be immune to economic challenges posed by the coronavirus pandemic. The SVOD pioneer said it added 10 million subscribers in the second quarter, ended June 30. It now has more than 192 million subs worldwide. Netflix had projected 7.5 million net new subs and 190.36 million globally — up 25.6% from the previous-year period.

Netflix added 2.94 million subs in the U.S. and Canada, compared to a loss of 130,000 subs in the previous-year period. The service added 2.75 million subs Europe, the Middle East and Africa, versus 1.69 million last year. It added 1.75 million subs in Latin America, compared with 340,000 in 2019; and the SVOD added 2.66 million subs from 800,000 last year in Asia and Pacific Rim countries.

How strong is Netflix’s sub base? The net subscriber additions included a small percentage of subs Netflix canceled due to non-use of the service.

Revenue skyrocketed nearly 25% to $6.14 billion from $4.9 billion in the previous-year period. Net income reached record $720 million, compared with income of $271 million last year.

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Indeed, Netflix in the first half of 2020 saw “significant pull-forward” of subscriber growth with 26 million paid net adds, compared with 12 million the prior year.

“We live in uncertain times with restrictions on what we can do socially and many people are turning to entertainment for relaxation, connection, comfort and stimulation,” CEO Reed Hastings and CFO Spencer Neumann said in an understatement in the shareholder letter.

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The executives said they expect less growth for the second half of 2020 compared to the prior year — with just 2.5 million net sub adds in Q3 (ending Sept. 30) and 195.45 subs worldwide. The streamer added 6.8 million subs in the prior-year period.

“We’re expecting paid net adds will be down year over year in the second half as our strong first half performance likely pulled forward some demand from the second half of the year,” Hastings and Neumann wrote.

The executives said that due to long production lead times, 2020 plans for launching original shows and movies continue to be largely intact. For 2021, Netflix expects the current paused productions will lead to a more second half weighted content slate in terms of big titles.

“We anticipate the total number of originals for the full year will still be higher than 2020,” they wrote.

Recent acquisitions include The Trial of the Chicago 7​ from Aaron Sorkin and ​previously reported The SpongeBob Movie: Sponge on the Run​ (global excluding U.S. and China). Netflix also acquired nearly completed seasons of unreleased original series like ​”Cobra Kai”​(seasons 1, 2 and a brand new season 3) and ​”Emily in Paris,” s​tarring Lily Collins.

“The pandemic and pauses in production are impacting our competitors and suppliers similarly,” Hastings and Neumann wrote. “With our large library of thousands of titles and strong recommendations, we believe our member satisfaction will remain high.”

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