Netflix recently reported an impressive increase in subscriber numbers, surpassing Wall Street expectations. In the third quarter, the company added 5.1 million streaming subscribers, exceeding forecasts by over a million. Looking ahead, Netflix anticipates even stronger growth with the return of the popular Korean drama “Squid Game” ahead of the holiday season.
Analyst estimates from LSEG had projected that Netflix would attract 4 million new subscribers between July and September. This quarter saw the launch of new titles, including the mystery thriller “A Model Family” and the romantic comedy “Romantic Red Flags.”
Earnings per share came in at $5.40, exceeding the consensus estimate of $5.12, while revenue reached $9.825 billion, slightly above the expected $9.769 billion.
Netflix is optimistic about the final quarter of the year, traditionally a strong period around the Christmas holidays, predicting that subscriber growth will surpass that of the September quarter, though no specific numbers were provided.
The company has been shifting investor focus from subscriber counts to other metrics, including revenue growth and profitability. This quarter, Netflix reported an operating margin of 30%, up from 22% in the same period last year.
In their earnings statement, Netflix expressed satisfaction with the acceleration of business growth, stating, “We are excited to finish the year strong with a stellar fourth quarter.” Upcoming programming will feature the second season of “Squid Game.”
After last year’s Hollywood labor strikes disrupted production, the company has seen a rebound in its content pipeline. Viewer engagement remains high, with members averaging two hours of Netflix viewing per day.
As Netflix continues to develop its advertising business, which has been operational for nearly two years, the company projects that ad revenue will become a significant growth driver by 2026. In the September quarter, over 50% of registered users in its supported countries subscribed to the ad-supported service.
This service focuses on live broadcasts, including sports events, which are particularly appealing to advertisers. In November, Netflix will air a fight between YouTube star Jake Paul and boxing legend Mike Tyson, followed by its first NFL game in December.
Mike Proulx, a research director at Forrester, noted, “Advertisers want to be part of significant cultural moments. Engaging live programming always has the power to gather people and bring them together. For brands, this is an audience ready to receive advertising messages.”
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