LOS ANGELES :Netflix picked up 5.1 million streaming subscribers in the third quarter, topping Wall Street estimates by more than 1 million, and said it expected higher customer growth around the holidays when Korean drama “Squid Game” returns.
Shares of Netflix rose 4.8 per cent in after-hours trading on Thursday following the earnings report. The shares have gained about 47 per cent so far this year.
As the pace of subscriber addition slows, Netflix has been trying to shift investor attention away from sign-ups to metrics including revenue growth and profit margins. It will stop reporting subscriber data from next year, and is touting growth in its ad-supported plans.
The streaming giant said on Thursday its ad-supported service accounted for more than 50 per cent of signups in the third quarter in countries where it was available.
Wall Street had expected Netflix to bring in 4 million subscribers from July through September, according to analysts’ estimates compiled by LSEG. New programming during the period included murder mystery “The Perfect Couple” and romantic comedy “Nobody Wants This.”
Netflix earned $5.40 per share in the quarter, above the consensus forecast of $5.12. Operating margin hit 30 per cent in the quarter, compared with 22 per cent a year earlier.
Revenue rose to $9.825 billion, just ahead of the $9.769 billion consensus forecast.
“On the surface, Netflix is trending in all the right directions,” said Forrester analyst Mike Proulx. “Financially, revenue and operating margins continue to increase and expenses are down.”
But while the customer additions outpaced forecasts, they were below the 8.76 million that Netflix picked up in the year-ago quarter.
“A steep decline in net new subscribers is what’s concerning. While there’s room for net subscriber growth internationally, in the U.S. things are getting tapped out,” Proulx said.
Netflix projected its customer additions for the last three months of the year
