Streaming leader Netflix Inc (NASDAQ:NFLX) reported third-quarter financial results after market close Tuesday. Here are the key highlights.
What Happened: Netflix reported third-quarter revenue of $7.93 billion, up 5.9% year-over-year. The total came in ahead of a Street estimate of $7.84 billion, according to data from Benzinga Pro.
The company posted third-quarter earnings per share of $3.10, beating a Street estimate of $2.13.
Revenue increased 19% for the APAC region, 19% for the LATAM region and 11% for the UCAN region. The company gained 1.4 million paid members in the APC region, 300,000 in the LATAM region and 100,000 in the UCAN region in the third quarter.
In the third quarter, Netflix said it gained 2.41 million net new subscribers.
Revenue and subscriber figures from Netflix came in ahead of company guidance. The company forecasted 1 million net new subscribers and revenue of $7.84 billion for the third quarter.
“We had big hits across TV and film in Q3 – launching some of our most watched series and films of all time,” the company said in a statement.
Related Link: How To Trade Netflix Stock Before And After Q3 Earnings
What’s Next: The streaming giant is guiding for fourth-quarter revenue to be $7.8 billion and earnings per share to be 36 cents. The company is guiding to add 4.5 million new paid subscribers in the fourth quarter.
The company highlighted the upcoming November launch of its ad-supported streaming platform.
“While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4’22 as we’re launching our Basic with Ads plan intra-quarter,” according to Netflix.
“Our aim is to give our prospective new members more choice - not switch members off their current plans.”
Netflix also addressed the highly competitive streaming market in the third-quarter shareholder letter.
“Netflix has higher engagement than any other streamer – with room for growth,” the company said. “Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard – we estimate they are all losing money.”
Netflix said it believes its competitors are losing a combined $10 billion in 2022 compared to Netflix's annual operating profit of $5 billion to $6 billion.
Netflix also took aim at the binge watching method it utilizes over a one-episode-per-week format from rivals like The Walt Disney Company (NYSE:DIS), Amazon.com Inc (NASDAQ:AMZN) and Warner Bros. Discovery (NASDAQ:WBD)-owned HBO Max.
“It’s hard to imagine, for example, how a Korean title like 'Squid Game' would have become a mega hit globally without the momentum that came from people being able to binge it," Netflix said.
“After a challenging first half, we believe we’re on a path to reaccelerate growth. The key is pleasing members.”
Netflix said it believes it has a “very large and growing” opportunity ahead and a “long runway for growth.”
NFLX Price Action: Netflix shares are up 15% to $275.74 Tuesday in after hours trading at the time of writing.
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