Netflix Inc. (NFLX) posted better-than-expected third quarter earnings Tuesday, while adding more than 2.4 million paid subscribers ahead of the launch of its highly-anticipated ad-supported service.
Netflix said profits for the three months ending in June were pegged at $3.10 per share, down around 3% from last year but firmly ahead of the Street consensus forecast of $2.13 per share.
Group revenues, Netflix said, came in at $7.925 billion, up 6% from last year and just ahead of analysts' estimates of a $7.84 billion tally.
Netflix added 2.41 million paid subscribers over the quarter, the company said, more than double the Street forecast and well ahead of the loss of around 1.2 million over the first six months of the year. Hits such as 'Stranger Things' and 'Dahmer - Monster: The Jeffrey Dahmer Story' drove north American gains, while 'Extraordinary Attorney Woo' was a bit factor in the solid figures from the Asia Pacific region.
Netflix said it will add around 4.5 million subs over the final three months of the year, essentially matching analysts' forecasts, with revenues of around $7.776 billion and a bottom line of 36 cents per share.
"After a challenging first half, we believe we’re on a path to reaccelerate growth," the company said in its letter to shareholders. "The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us."
"As discussed in previous letters, we are increasingly focused on revenue as our primary top line metric," the company said. "This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth."
"So, starting with our Q4’22 letter in January of 2023, we’ll continue to provide guidance for revenue, operating income, operating margin, net income, EPS and fully diluted shares outstanding for the following quarter, but not paid membership," the company added.
Netflix shares, which closed 1.73% lower on the Tuesday session, were marked 14.3% higher in after-hours trading immediately following the earnings release to indicate a Wednesday opening bell price of $275.40 each.
With the group's November launch of an ad-supported service, priced at $6.99 per month, unveiled last week, investors had been looking for signs that Netflix has been able to arrest the slide in global subscribers for its mainstream service amid a pullback in discretionary spending and the ongoing market share gains from rivals such as Amazon (AMZN), Disney and Comcast.
