Netflix Surpasses Earnings Expectations with 5 Million New Subscribers
Netflix exceeded Q3 subscriber expectations by gaining 5.1 million new streaming subscribers. Diluted earnings per share were US$5.40, surpassing the forecast of US$5.12. Netflix anticipates strong customer growth in Q4, with a focus on revenue growth and profit margins.
The streaming giant anticipates a surge in customer growth during the upcoming holiday season, coinciding with the return of the popular Korean drama "Squid Game."
Following the earnings announcement, Netflix's shares climbed by 3.5% to US$711.98 in after-hours trading. Analysts had projected 4 million new subscribers for the July-September period, but Netflix exceeded expectations with new content like "The Perfect Couple" and "Nobody Wants This."
Netflix reported diluted earnings per share of US$5.40, surpassing the forecast of USS$5.12, while revenue reached US$9.825 billion, slightly above the consensus forecast of US$9.769 billion.
Looking ahead, Netflix foresees a robust customer growth in the final quarter of the year, typically a strong period due to the holiday season. The company did not disclose a specific number but expressed confidence in outpacing the previous quarter.
Netflix has been redirecting investor focus towards revenue growth and profit margins rather than subscriber numbers. The company highlighted a significant increase in operating margin to 30% from 22% a year earlier, showcasing a positive trend in its financial performance.
In a letter to shareholders, Netflix expressed satisfaction with its business acceleration plan and excitement for a strong finish to the year with an impressive Q4 lineup, including the highly anticipated second season of "Squid Game." The company noted an increase in programming volume post disruptions from last year's Hollywood strikes.
As Netflix continues to expand its advertising business, it aims to boost revenue from ad-supported plans, with advertising not expected to be a primary growth driver until 2026. In the September quarter, over 50% of signups in eligible countries were for the ad-supported service.
Netflix's strategy includes live events such as sports, a significant attraction for advertisers. In the upcoming months, Netflix plans to stream a fight between YouTube star Jake Paul and Mike Tyson in November, followed by its first NFL games in December.
Forrester's research director, Mike Proulx, highlighted the appeal of live programming for advertisers, stating, "Advertisers want to be part of big cultural moments. Compelling live programming will always amass and unite people for a snapshot in time."
Netflix exceeded Q3 subscriber expectations by gaining 5.1 million new streaming subscribers.
Diluted earnings per share were $5.40, surpassing the forecast of US$5.12.
Netflix anticipates strong customer growth in Q4, with a focus on revenue growth and profit margins.
Source: REUTERS