Shares of streaming platform Netflix soared more than 14 percent after Tuesday’s bell after the company issued better-than-expected quarterly results. Netflix surpassed all the expectations of analysts and also added 2.41 million net global subscribers, more than what it had projected in the previous quarter.
The last few months have had Netflix talk about password sharing and the company will begin to crack down on this next year, giving people who currently borrow accounts the chance to create their own. Netflix will also be allowing people who share their accounts to create sub-accounts to pay for friends or family to use theirs.
For the third quarter, Netflix reported earnings per share of $3.10 compared to an expectation of $2.13, according to Refinitiv. Analysts had expected third-quarter revenue of $7.837 billion. Revenue for the quarter came in at $7.93 billion, surpassing estimates. Netflix reported the addition of 2.41 million subscribers compared to an expectation of 1.09 million subscribers, according to StreetAccount.
The Asia-Pacific region, where Netflix saw the most growth in net subscribers during the third quarter accounted for 1.43 million subscribers. The US-Canada region had the smallest growth in net subscribers with only 100,000 additions.
While speaking on an earnings call, the company’s Chief Financial Officer Spencer Neumann said that “We’re still not growing as fast as we’d like. We are building momentum, we are pleased with our progress, but we know we still have a lot more work to do.”
Netflix also announced a small change. Beginning with the next quarter, the company will no longer provide guidance for its paid memberships but will continue to report the numbers during its quarterly earnings release.
The company forecasts additions of 4.5 million subscribers during its fiscal first quarter, adding that it expects revenue of $7.8 billion which is due to foreign exchange, among other challenges.
In its report, the company said that “We had big hits across TV and film in Q3 – launching some of our most-watched series and films of all time, including Monster: The Jeffrey Dahmer Story, Stranger Things S4, Extraordinary Attorney Woo, The Gray Man, and Purple Hearts.”
“Our lower-priced ad-supported plan launches in 12 countries in November – just six months after our initial announcement. Our existing plans remain ad-free,” the company said teasing the addition of its new lower-priced ad-supported plan.
The company expressed optimism about its new advertising business, adding that while it doesn’t expect the new tier to hugely contribute to its fourth-quarter results, it projects that its memberships will increase over time.
“After a challenging first half, we believe we’re on a path to reaccelerate growth. The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us,” the company added in its report.
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Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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