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Illustration: Rebecca Zisser/Axios

Netflix on Tuesday said it added just 1.54 million subscribers this quarter, its lowest number of subscriber additions in years. The company also missed Wall Street expectations on earnings per share.

Why it matters: Investors were expecting low Q2 subscriber numbers, per Netflix's own guidance. What likely sent the stock sinking in the first few minutes following earnings was weak guidance again for the next quarter, when Netflix anticipates adding just 3.5 million subscribers.

Be smart: After a big subscriber miss last quarter, Netflix said that it hoped momentum will pick back up in the second half of the year. Its new guidance suggests that a bounce-back may not be as big as initially expected — or at least not in the third quarter.

Details: This quarter, Netflix acknowledged for the first time its gaming ambitions directly in its shareholder letter, after announcing last week that it hired its first-ever VP of game development.

  • The tech giant confirmed reporting from Axios Gaming editor Stephen Totilo that the company is looking to first focus on mobile games.
  • "We view gaming as another new content category for us, similar to our expansion into original films, animation and unscripted TV. Games will be included in members’ Netflix subscription at no additional cost similar to films and series," read the Q2 shareholders letter.

By the numbers, per CNBC:

  • Earnings per share (EPS): $2.97 vs $3.16 expected, according to Refinitiv survey of analysts
  • Revenue: $7.34 billion vs $7.32 billion expected, according to Refinitiv
  • Expected global paid net subscriber additions: 1.54 million vs 1.75 million expected, according to Factset

The big picture: Netflix acknowledged new streaming competition in a letter to investors, but didn't seem worried about it, saying it doesn't believe that continued consolidation in streaming "affected our growth much."

  • The company continued to name gaming and mobile video companies, like YouTube, TikTok and Fortnite parent Epic Games as its biggest competitors for users' time.

Go deeper ... Netflix's earnings over the past year:

Go deeper

Why some young people aren’t gaming

Expand chart
Data: Generation Lab's GAMING tomorrow prospectus; Chart: Will Chase/Axios

Time is more of a barrier than money when it comes to why some young adults don’t play video games, according to a new poll from Generation Lab, shared with Axios.

Why it matters: There are more entry points to gaming than ever, but there’s no guarantee that young people will embrace games simply because they’re more commonplace.

Felix Salmon, author of Capital
13 hours ago - Economy & Business

Giant earnings growth for the world's largest companies

Illustration: Aïda Amer/Axios

Never in the history of capitalism have the world's biggest companies grown as fast as the tech giants in recent years.

Why it matters: A series of stunning earnings reports this week — with another one likely to arrive Thursday afternoon, from Amazon — has underscored the astonishing growth among a group of companies that were already some of the most profitable of all time.

14 hours ago - Technology

Ad boom rains billions on Big Tech

Data: Company filings; Chart: Axios Visuals

Advertising growth was the chief driver of tech's blowout quarter, as the economy snapped back from the pandemic and a long-term shift to digital went into overdrive.

By the numbers: Facebook, Snapchat, Twitter, LinkedIn, YouTube and Google all posted record ad revenue growth rates in earnings reports for 2021's second quarter.