Netflix:
Netflix’s subscriber growth exceeded expectations in the third quarter, adding 5.1 million new streaming subscribers, surpassing Wall Street’s forecast by over 1 million users.
Netflix surpassed Wall Street’s expectations for subscriber growth in the third quarter, adding over 1 million more users than anticipated. The company also expressed optimism about further subscriber growth during the holiday season, coinciding with the return of the popular Korean drama “Squid Game.
Netflix’s stock price increased by 3.5% to $711.98 in after-hours trading following the release of its earnings report on Thursday.
According to analyst estimates compiled by LSEG, investors anticipated Netflix to attract 4 million subscribers between July and September. However, Netflix exceeded these expectations, likely driven by the popularity of new releases such as the murder mystery “The Perfect Couple” and the romantic comedy “Nobody Wants This.”
Netflix’s third-quarter earnings exceeded expectations, with diluted earnings per share reaching $5.40, surpassing the consensus forecast of $5.12. Revenue also came in slightly ahead of estimates, reaching $9.825 billion compared to the expected $9.769 billion.
Looking ahead, the company projected stronger customer growth in the final three months of the year, traditionally a peak period due to the Christmas holiday. However, Netflix did not provide a specific subscriber growth target.
In an effort to shift investor focus away from subscriber sign-ups, Netflix highlighted its revenue growth and profit margins. The company’s operating margin reached 30% in the quarter, a significant improvement from 22% a year earlier.
Netflix expressed satisfaction with its progress in revitalizing its business, stating that they are poised for a strong finish to the year with an impressive lineup of programming, including the highly anticipated second season of the Korean drama “Squid Game.”
The company attributed the increase in programming volume to the recovery from disruptions caused by last year’s Hollywood strikes. Netflix also highlighted the continued engagement of its subscribers, with an average viewing time of two hours per day per member.
As Netflix’s advertising business approaches its second anniversary, the company is actively working to increase revenue from ad-supported plans. However, they have clarified that advertising is not expected to be a major growth driver until 2026
A key component of Netflix’s growth strategy involves live events, particularly sports, which hold significant appeal for advertisers. In November, Netflix will broadcast a highly anticipated boxing match between YouTube star Jake Paul and legendary boxer Mike Tyson. This will be followed by the streaming of its first NFL games in Decembe
Mike Proulx, a research director at Forrester, emphasized the allure of live events for advertisers. He stated, “Advertisers seek to be part of major cultural moments. Compelling live programming has the power to unite people and create lasting memories. For brands, this translates into a captive audience that is receptive to advertising messages.”