Netflix, the streaming giant, delivered impressive third-quarter financial results, exceeding analysts’ expectations and signaling a continued push into the ad-supported streaming market. The company reported revenue of $9.825 billion, a 15% year-over-year increase, surpassing the Street consensus estimate of $9.769 billion. Earnings per share also came in strong at $5.40, beating the anticipated $5.12.
Netflix’s global subscriber base reached 282.72 million, representing a 14.4% year-over-year growth. Notably, the company added 5.07 million new paid subscribers during the quarter, although this figure was lower than the 8.8 million net paid subscribers added in the same period last year. Despite the slight slowdown in subscriber growth, Netflix highlighted a significant increase in engagement. Average view hours per member have risen year-over-year, and users are spending an average of two hours per day on the platform. This consistent engagement indicates that users remain highly engaged with Netflix’s content offerings.
One of the key highlights of the earnings report was the performance of Netflix’s ad-supported plan. The company revealed that membership for this plan grew 35% quarter-over-quarter, and it represented over 50% of new sign-ups in the third quarter. Netflix’s ad-tech platform is on track to launch in Canada in the fourth quarter, with expansion to other territories planned for 2025. The company emphasized the popularity of the ad-supported plan among consumers seeking a more affordable option.
Looking ahead, Netflix is projecting revenue of $10.128 billion for the fourth quarter, representing a 14.7% year-over-year increase. Earnings per share are anticipated to reach $4.23, compared to $2.11 in the fourth quarter of 2022. Netflix acknowledges that its ad-supported plan is still in its early stages and will require time to fully develop as a revenue stream. However, the company is confident in its growth trajectory, aiming to reach critical ad subscriber scale in all its ad countries by 2025.
The company highlighted a compelling content slate for the fourth quarter, including the highly anticipated boxing match between Jake Paul and Mike Tyson, the second season of the popular show “Squid Game,” and two NFL games scheduled for Christmas. Netflix is also focused on improving all aspects of its service and delivering sustained revenue and profit growth in the coming years.
Given the strong content lineup and seasonality, Netflix expects higher paid net additions in the fourth quarter compared to the third quarter. The company projects its 2025 revenue to range from $43 billion to $44 billion.
Netflix’s stock price surged 4% in after-hours trading following the release of the earnings report, reflecting investor confidence in the company’s growth trajectory and the success of its ad-supported plan.