Netflix Reports Strong Quarterly Earnings

Investing.com — Netflix (NASDAQ:NFLX) has reported better-than-anticipated quarterly income, signaling the streaming giant's focus on profitability over rapid subscriber growth.

Subscriber Growth

The company added 5.07 million subscribers during its third quarter, compared to 8.76 million net new subscribers in the same period last year. This reflects the waning effects of the crackdown on password sharing that began in 2023. Despite this, the figure exceeded Wall Street estimates, boosting shares in early US trading.

Advertising Revenue

Revenue from advertising, a significant focus for investors, is expected to double by 2025. Netflix has planned a series of streaming live events, including two NFL games on Christmas Day, to attract advertisers.

Resilience in Ad-Supported Tier

Over half of the new subscribers in markets with Netflix's ad-supported tier opted for this option, highlighting resilience in this vital segment.

Content Release Trends

The trend helped mitigate concerns about a slate of new releases in 2024, which Netflix previously described as "patchier than normal" due to last year's writers' and actors' strikes. However, they noted improvements with the latest season of "Emily in Paris," the limited series "The Perfect Couple," and the film "Beverly Hills Cop: Axel F" contributing to quarterly results.

Financial Performance

Earnings per share for the quarter ended on September 30 reached $5.40, with revenue rising to $9.83 billion, surpassing projections of $5.12 and $9.77 billion, respectively.

Net income is expected to decline in the current quarter, though Netflix plans to implement price increases in Italy and Spain to enhance revenue. Recent price hikes have also occurred in other regions.

Gregory Peters, Netflix's Co-CEO, emphasized the need to deliver more value to members each quarter, occasionally requesting higher payments to fuel investment.

Analysts from Evercore ISI noted that markets had anticipated price raises in other regions, including the US.

Future Earnings Forecast

For the fourth quarter, per-share income is anticipated at $4.23, with revenue projected at $10.13 billion, surpassing expectations of $3.89 and $10.04 billion.

*(Yasin Ebrahim contributed reporting.)