Netflix added 5.1 million subscribers in Q3, surpassing Wall Street forecasts by over 1 million. The platform anticipates further growth during the holiday season with the release of The Squid Game Season 2. Following the positive quarterly report, Netflix shares increased by 4.8%, adding to a 47% rise since the start of the year.
However, the pace of subscriber growth is slowing, prompting Netflix to shift focus from subscriber numbers to metrics like revenue growth and profit margins. Beginning next year, the company will stop disclosing subscriber data. Notably, 50% of new users in countries where it is available opted for the ad-supported plan during Q3.
Strong Financial Performance
Netflix reported earnings of $5.40 per share, exceeding analysts’ expectations of $5.12. The operating margin improved to 30%, up from 22% a year earlier. Revenue reached $9.825 billion, beating Wall Street projections of $9.769 billion. Although the 5.1 million new subscribers exceeded Netflix’s estimate of 4 million, it was lower than the 8.76 million added in the same quarter last year. The company expects to surpass these Q3 numbers in the typically robust fourth quarter.
Strategic Changes and Future Growth
Netflix has resumed original programming after delays caused by last year’s Hollywood strikes, with engagement levels averaging two hours of daily watch time. While ad-supported plans are attracting more users, the company doesn’t expect these plans to significantly drive growth until 2026.
The platform has also ventured into live streaming, including sports, as part of its growth strategy, reminds NIXsolutions. In October, Netflix increased prices in Japan and several European countries, with Spain and Italy seeing price hikes today. However, the company has no plans to bundle its service with other streaming platforms, such as Disney or Warner Bros. Discovery, according to CEO Ted Sarandos.
We’ll keep you updated as Netflix continues to adjust its strategies for sustained growth in the evolving streaming landscape.