Netflix’s Q3 Earnings Surpass Expectations with a Boost from Global Subscriptions

Back in July, Netflix released their second-quarter earnings report. The numbers were met with hesitancy, due to a miss on projections for both domestic and international new subscriptions. Numbers showed that only 1.68 million new customers were added, (160,000 from the U.S. and 1.52 million from international territories) against the forecasted 2.50 million, a slip investors found difficult to stomach. Despite this, Netflix forecasted that the following quarter’s results would offer signs of resilience.

Indeed, the third quarter results painted a more prosperous picture for the entertainment giant. With rejuvenated subscription growth and substantial overall earnings, Netflix managed to exceed both its own and Wall Street’s expectations. A grand total of 3.57 million new subscribers joined the network, 370,000 from within the U.S, beating their projected 304,000, and 3.2 million from the international market, eclipsing their anticipated 2 million.

Many attribute this growth to the success of Netflix’s critically acclaimed original series, “Stranger Things,” which clocked a whopping 14.07 million views in its first 35 days, placing it ahead of other Netflix powerhouses such as “House of Cards.”

The growth in overall subscriptions sees Netflix’s customer base now standing at 86.7 million users globally.

In terms of financial performance, the value of Netflix increased by $10 billion. Total revenue stood at $2.3 billion, above the $2.16 billion estimate. Profits climbed to a healthy $52 million, doubling projections of $26 million.

Looking ahead, Netflix plans to announce a roster of exclusive shows well into 2017. This strategy appeals highly to their expanding audience and is set to drive further subscription growth. In addition to their U.S. market, international markets are crucial to Netflix’s operations. Despite facing regulatory challenges in China, Netflix sees significant potential in other Asian and African territories.

For instance, in Nigeria, lifestyle changes are aligning perfectly with Netflix’s offerings. As the country’s 4G and other broadband services expand, Nigerians are switching over from traditional pay-TV operators to on-demand streaming services like Netflix. Its relatively low $9.99/4,500 Naira monthly subscription fee positions it as a popular choice for the burgeoning middle class users in many hyper-growth markets such as Nigeria and several other African countries. This trend is further supported by a Euromonitor report that forecasts rising consumer spending in major African cities through the 2020s.

Netflix’s growing catalog of regional exclusives gives it an edge over local competition across Africa and other markets. Despite these platforms offering catered content, Netflix’s breadth of exclusives has cemented its position as the industry leader and opens avenues to strike exclusive deals on a local level.

In conclusion, the third quarter has been a triumphant one for Netflix. A stark contrast to the rough patch hit in July, when share prices dropped by 13% to $85.84 following a shortfall of new subscriptions, gaining only 1.7 million against a forecasted 2.5 million.