Netflix earnings call: Hastings thankful subscriber 'shrinking' is over
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Netflix stock (NASDAQ:NFLX) built up a 14%-plus gain late Tuesday after it reversed two quarters of subscriber losses and suggested the worst was over for its growth, with a third-quarter beat on top and bottom lines.
The company added 2.41M net subscribers, topping a modest forecast for 1M adds, just a quarter after it shed 970,000 subs and two quarters after its posted its first decline, of 200,000 subs. The company expects additions of 4.5M subs in the fourth quarter, and co-CEO Reed Hastings suggested in his mind, the worst was over there.
"Thank God we're done with shrinking quarters," co-CEO Reed Hastings said; it's "a big deal to go back to the positivity." 
Fourth-quarter guidance is "reasonable, not fantastic," but "then we've got to pick up the momentum" in all areas. Foreign exchange is a "huge hit" that's not going to go away, but "other than that, all the stars are lining up very well for us."
In recapping momentum, Chief Financial Officer Spence Neumann said among initiatives is a solution rolling out in 2023 for paid password sharing, and "monetizing all those unpaid views."
Some of that confidence for momentum comes from the boost Netflix's (NFLX) content slate has received, most recently from a new season of Stranger Things and a giant hit in its crime series Monster: The Jeffrey Dahmer Story.
As for $17B in annual content spending, co-CEO Ted Sarandos says the company is now getting more bang for the buck. "Both the scope and scale as well as the range and the cadence of hits is improving," he said, "so that I feel better and better about that $17B of content spend, because what we have to do is get better and better at getting more impact per billion dollars spent than anybody else." Spending is "about the right level," he says, though as the company reaccelerates revenue, "we'll revisit that number, of course."
As for the ad experience, launching in a new service tier within a couple of weeks, Chief Business Officer/Chief Product Officer Greg Peters didn't offer many new details but stayed close to the company line that uptake for the offering was solid.
"I would say that the initial demand that we're seeing is very strong," Peters said. "So people are very excited about the proposition of bringing their brands and their ads to a bunch of consumers around the world that are watching our shows. They're excited about the positioning against the incredible content in the titles that we have. And so that demand has been very, very strong."
He didn't add any color to reports that Netflix is charging some high-end rates for its ads, though he backed up the chatter that Netflix has its eye on ad quality (with an ad load starting at just 4-5 minutes per hour, and with tight frequency capping to avoid heavy repeats).
"We want to start with a experience that's very pro consumer, consumer-centric, and so that's definitely informed both our ad load, and thinking about the frequency capping," Peters said. "The more we talk to brands and advertisers, there's actually a high degree of alignment between ... what their desires are and what we think is great for consumers."
Netflix's rising stream is lifting all the boats in the growing direct-to-consumer sector, with several streaming names seeing stock gains late Tuesday.