Netflix Sees Surprise Subscriber Surge... Stock Soars Over 12% (Update)

The world's largest online video streaming service (OTT), Netflix, recorded strong earnings that exceeded market expectations in the third quarter as a result of expanding the ban on subscriber account sharing. The number of new subscribers also increased significantly.

According to the earnings report released by Netflix on the 18th (local time), Netflix added 8.76 million subscribers worldwide in the third quarter of this year, far surpassing Wall Street's estimate of 5.49 million. The total number of subscribers worldwide reached 247.15 million, an increase of nearly 11% compared to one year ago.

[Image source=Reuters Yonhap News]

The earnings also showed a surprising growth trend. The third-quarter net profit was $1.677 billion (approximately 2.3 trillion KRW), a 20% increase compared to $1.398 billion in the same period last year, exceeding market expectations. Adjusted earnings per share were $3.73.

During the same period, revenue recorded $8.542 billion (approximately 11.6 trillion KRW), up 7.8% from the same period last year, meeting market expectations of $8.52 billion. Operating profit increased by 25% to $1.916 billion (approximately 2.6 trillion KRW).

Netflix explained, "The price increase of the basic subscription plan in some countries such as the United States, the United Kingdom, and France in the third quarter contributed to the improvement in profitability."

The outlook for the fourth quarter is also positive. Netflix set a revenue target of $8.7 billion for the fourth quarter of this year, which is about an 11% increase compared to the same period last year.

In a shareholder letter, Netflix stated, "Due to the strike by the Hollywood Writers Guild and Actors Guild, production was halted, reducing this year's content investment from the original $17 billion to $13 billion," and added, "Reflecting the reduced spending, we are raising this year's free cash flow forecast from the original $5 billion to $6.5 billion."

Netflix's stock, listed on the U.S. Nasdaq stock exchange, closed the regular session down 2.68% at $346.19. After the earnings announcement following market close, buying momentum surged, and in after-hours trading, as of 5:36 a.m. Korean time, the stock was up 12.27%.