Netflix beat Q3 revenue with streamer adding 2.4 million subscribers

Netflix (NFLX) reported its fiscal third-quarter profit on Tuesday after the bell broke, shattering expectations and its shares rose more than 14% in after-hours trading.

Here are Netflix’s third quarter results compared to Wall Street’s consensus estimates, as compiled by Bloomberg:

Revenue: $7.93 Billion vs $7.85 Billion Expected

Adj. earnings per share (EPS): $3.10 vs $2.22 expected

Net Subscriber Additions: +2.41 million vs +1 million estimated

In a note to shareholders, the company said: “After a challenging first half, we believe we are on track to accelerate growth again. The most important thing is to satisfy members. That is why we have always focused on winning the Everyday Watching Contest. When our series and movies get our members excited, they tell their friends, and then more people watch, join in and stay with us.”

The company, which said it is “on track to accelerate growth again” after a difficult first half of the year, attributed its success in the quarter to several TV and movie hits, including “Monster: The Jeffrey Dahmer Story.” , “Stranger Things S4”. ‘, ‘Extraordinary Lawyer Woo’, ‘The Gray Man’ and ‘Purple Hearts’.

In addition, Netflix noted its streaming capabilities relative to competitors, writing, “Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is difficult — we estimate they are all losing money, with combined operating losses for 2022 well over $10 billion, versus Netflix’s $5 to $6 billion annual operating profit.”

"Monster: The Jeffrey Dahmer Story" (Courtesy of: Netflix)

“Monster: The Jeffrey Dahmer Story” (Courtesy: Netflix)

Today’s earnings mark the first time this year the company has added subscribers. In the first and second quarters, the company lost 970,000 and 200,000 subscribers, respectively.

The company said it will stop advising on paid memberships in the future due to the introduction of new revenue streams. For now, however, it estimates an addition of 4.5 million subscribers next quarter (above previous forecasts of 3.9 million).

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To counter past subscriber losses, the company plans to launch an ad-supported subscription tier in November.

Most analysts have remained optimistic about the profitability aspects of the new ad tier.

UBS analyst John Hodulik recently raised his price target for the stock by $52 to $250 a share, and JPMorgan analyst Doug Anmuth said the lower ad tier price ($6.99 in the US) points to Netflix’s confidence. in advertising revenue.

Elsewhere on Wall Street, Citigroup analyst Jason Bazinet (who maintains a buy recommendation for the stock) said the impending ad tier “could indicate a material advantage” in free cash flow, and Evercore ISI’s Mark Mahaney predicted that ad-supported $1 up to $2 billion in incremental revenue by 2024.

During a phone call prior to the ad tier announcement, Netflix Worldwide Advertising President Jeremi Gorman said the platform is “almost all of its [ad] stock” worldwide before launch – against the trend of a global slowdown in ad spend.

“There’s been a slowdown in ad spend in your typical models, but this is all new to Netflix,” Jon Christian, EVP of digital media supply chain at Qvest, the largest media and entertainment-focused consulting firm, told Yahoo Finance.

The director added that ads are “bringing a new set of users who may not have even subscribed before”.

“I think there could be a lot of revenue in this game,” he continued, highlighting the abundance of user data that Netflix can use to its advantage to lure advertisers.

Despite the big blow, the company lowered its expectations.

“The US dollar has historically strengthened against most other currencies this year. Based on our YTD updates and Q4 guidance, we estimate that since January 1, 2022, this appreciation will negatively impact our revenue and operating income for the full year 2022 at ~$1 billion and $0.8 billion respectively,” the company noted in the release.

Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at

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