Netflix (NASDAQ:NFLX) exceeded earnings forecasts for the third quarter, reflecting its strategic pivot toward profitability over aggressive subscriber expansion. The streaming giant added 5.07 million new subscribers during the period, down from the 8.76 million added in the same quarter last year, marking the diminishing impact of its password-sharing crackdown. Despite the slower growth, Netflix surpassed Wall Street expectations, boosting its stock by more than 10% intra-day today.
Revenue from advertising, a key focus for investors, is projected to double by 2025. Netflix has lined up major live streaming events, including two National Football League games on Christmas Day, to attract advertisers and expand its ad-supported revenue stream. Over half of the new subscribers in markets offering Netflix’s ad-supported tier opted for this option, signaling resilience in this crucial business area.
The latest season of “Emily in Paris,” the limited series “The Perfect Couple,” and the film “Beverly Hills Cop: Axel F” contributed to its strong quarterly performance.
For the quarter, Netflix reported earnings per share of $5.40 and revenue of $9.83 billion, both surpassing expectations of $5.12 per share and $9.77 billion in revenue. Despite an anticipated dip in net income for the current quarter, Netflix plans to counterbalance this with price hikes in key markets like Italy and Spain, following similar increases in other regions.
Looking ahead to the fourth quarter, Netflix projected earnings per share of $4.23 and revenue of $10.13 billion, once again beating Wall Street analyst estimates of $3.89 and $10.04 billion.