Netflix Inc (NASDAQ:NFLX) stock rose 10.49% (As on October 18, 11:32:24 AM UTC-4, Source: Google Finance) after the company added more than 5 million customers in the third quarter and eclipsed Wall Street’s expectations on every major financial metric despite a new programming slate constrained by last year’s strikes in Hollywood. Analysts were predicting Netflix would add 4.52 million subscribers. Two regions — Europe, the Middle East and Africa, and the Asia-Pacific — accounted for almost all of the company’s new customers. Netflix lost customers in Latin America for the first time since early 2023. New subscribers in the current, fourth quarter will exceed the third-quarter total, the company also said, citing upcoming releases like “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day. The company had added 8.8 million paying users in Q3 2023.
Moreover, while Netflix acknowledges its advertising business is progressing slowly, management said that it has grand ambitions for the next couple of years. The company is building its own advertising technology and has struck several deals to sell its advertising-supported service alongside other streaming services. Advertising sales will double next year. Netflix has started to invest in live programming as one way to increase the amount of inventory it has to sell advertisers. It will offer a live boxing match next month, followed by two National Football League games on Christmas Day. Starting next year, Netflix will offer customers three hours of live wrestling every week.
NFLX in the third quarter of FY 24 has reported the adjusted earnings per share of $5.40, beating the analysts’ estimates for the adjusted earnings per share of $5.16. The company had reported the adjusted revenue growth of 15 percent to $9.83 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $9.78 billion.
The company predicted sales next year will increase between 11% to 13%, to as much as $44 billion, through a mix of new members and price increases, compared to consensus estimates of $43.4 billion. Netflix will increase prices in Spain and Italy, and said it will phase out one of its cheaper-priced plans in Brazil later this quarter. It expects full-year operating margins to hit 27%, an increase from the previous 26%, after the metric hit nearly 30% in the third quarter. Netflix guided to fourth quarter EPS of $4.23, ahead of consensus calls for $3.90.