Investors are closely watching the latest developments at Netflix (NFLX) as the company’s earnings and subscriber growth have exceeded estimates. The streaming giant’s stock surged by over 8% on Friday, driven by its strong third-quarter performance and optimistic outlook for the current quarter.
Netflix reported a 15% increase in revenue compared to the same period last year, surpassing the $9.78 billion consensus estimate. The company’s revenue for the third quarter came in at $9.83 billion, fueled by price increases on certain subscription plans implemented last year. In addition to these price hikes, Netflix has been focusing on revenue-generating initiatives such as its crackdown on password sharing and the introduction of an ad-supported tier to drive further growth.
Looking ahead, Netflix anticipates revenue of $10.13 billion in the fourth quarter, surpassing the consensus estimate of $10.01 billion. For the full year of 2025, the company expects revenue to fall between $43 billion and $44 billion, a significant increase from the anticipated 2024 revenue of $38.9 billion.
Operating margins are also expected to improve, with the company forecasting a full-year figure of 27%, up from the previous year’s 26%. The impressive performance extended to earnings as well, with diluted earnings per share (EPS) coming in at $5.40 for the quarter, well above the consensus estimate of $5.16. Netflix also expects fourth-quarter earnings per share of $4.23, exceeding the consensus estimate of $3.90.
In terms of subscriber growth, Netflix added 5 million new subscribers, driven by hit shows like “The Perfect Couple” and “Nobody Wants This.” This follows the 8.05 million net additions in the second quarter, with the third-quarter subscriber additions of 5.07 million exceeding expectations. The company now boasts a total of 8.8 million paying subscribers in 2023.
Netflix is confident that its momentum will continue into the fourth quarter, based on a strong content lineup and typical seasonal trends. Upcoming releases like “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day are expected to attract more subscribers.
Investors have praised Netflix’s foray into live events and sports, as well as the expansion of its ad-supported tier, which accounted for over 50% of new sign-ups in certain markets during the third quarter. The company is committed to growing its advertising business and enhancing offerings for advertisers, with plans to launch its ad tech platform in Canada in the fourth quarter and expand it further in 2025.
Overall, Netflix’s strong performance in the third quarter has boosted investor confidence, with many analysts considering potential price increases for the stock. The company’s robust revenue growth, margin expansion, and subscriber additions indicate a positive outlook for the streaming giant in the coming quarters.
