Netflix jumps 11% as it easily clears Q3 forecast on subscribers, financials
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Netflix (NASDAQ:NFLX) has turned 11.3% higher after hours following third-quarter results where it returned to growth, beating expectations on subscribers, revenues and profits.
The company said it added 2.41M net new subscribers, topping consensus expectations for just 1M, and bringing its global subscribership to a new all-time high of 223.09M.
Revenues rose 6% to $7.93B, beating on the top line, and earnings per share at $3.10 easily topped consensus for $2.17.
The company is releasing its third-quarter earnings interview (moderated by J.P. Morgan's Doug Anmuth) at 6 p.m. ET.
"After a challenging first half, we believe weâre on a path to reaccelerate growth," the company says in reaction. "The key is pleasing members. Itâs why weâve always focused on winning the competition for viewing every day."
And Netflix (NFLX) is forecasting stronger subscriber growth in the fourth quarter - it sees net adds coming in at 4.5M, to bring total subscribers to a forecast 227.59M - but it will no longer predict paid membership as part of a "guidance evolution."
As discussed previously, "we are increasingly focused on revenue as our primary top line metric. 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 its Q4 report in January, the company will keep providing guidance for revenue, operating income, operating margin, net income, EPS and shares outstanding - but not paid membership.
Updated 4:14 p.m.: Revenue growth was driven mainly by the new memberships, aided slightly by a 1% increase in average revenue per membership. Excluding foreign-exchange impact, revenue grew 13% year-over-year and average revenue per membership grew 8%: "The sequential decline in revenue was entirely due to F/X."
On foreign exchange: "Over the medium term, we believe we can adjust our pricing and cost structure for a stronger U.S. dollar world. Our long-term goal remains unchanged - to sustain double-digit revenue growth, increase operating profit even faster (as we expand margins) and deliver growing positive free cash flow."