The world’s largest streaming service reported a net profit of nearly $1.7 billion in the three months to the end of September. It was up 13 per cent from the second quarter of this year.
The company earned revenue of more than $8.5 billion during the quarter, up nearly 7.7 per cent on an annual basis, meeting analysts' estimates.
Earnings for each share rose 20.3 per cent on a yearly basis to $3.73, exceeding an estimate of $3.49.
“The last six months have been challenging for our industry given the combined writers and actors strikes in the US,” Netflix said.
“While we have reached an agreement … we are committed to resolving the remaining issues as quickly as possible so everyone can return to work, making movies and TV shows that audiences will love."
The company’s stock surged 12 per cent to $388.02 a share in after-market trading. The company’s shares have surged more than 17 per cent since the start of this year.
The number of paid subscribers jumped 10.8 per cent year on year to nearly 247.15 million in the three months to September 30, beating the 243.88 million estimate, according to StreetAccount.
Netflix said it added 8.76 million new streaming subscribers during the July-September period.
It attributed the increase in paid membership to factors including the introduction “of paid sharing, strong, steady programming and the continuing expansion of streaming globally”.
The Californian company’s operating income surged 25 per cent annually to $1.9 billion, slightly above its guidance forecast, mainly due to the revenue rise.
“Our goal is to accelerate revenue growth, expand operating margin and deliver growing free cash flow. Nine months through the year, we are well positioned to meet these objectives in 2023,” Netflix said.
The company bought back $2.5 billion worth of shares in the September quarter and increased its buyback authorisation by $10 billion.
Netflix “posted its strongest quarterly subscriber growth this year as well as the fastest revenue increase in five quarters”, Jesse Cohen, a senior analyst at Investing.com, told The National.
“Netflix’s quarterly results demonstrated that the company is benefiting from the launch of its lower-cost, ad-supported basic service tier. and intensifying efforts to crack down on illegal password-sharing.”
Netflix said it now expects revenue of $8.7 billion, up nearly 11 per cent on an annual basis, for the fourth quarter. It attributed the anticipated sales growth to an increasing number of paid memberships.
It predicted a free cashflow of nearly $6.5 billion in the current fiscal year, up from our its previous forecast of at least $5 billion.
In terms of profitability, Netflix updated the 2023 financial year’s operating margin guidance forecast to 20 per cent, the high end of its prior 18 per cent to 20 per cent prediction.
Netflix said the adoption of its advertisements plan continues to grow among its subscribers. The ads plan membership surged almost 70 per cent on a quarterly basis.
“While we have much work to do to build out this [ads] business, we are making good progress and laying the foundation for what we believe should be a multibillion-dollar revenue stream over time," Netflix said.
“Our immediate priority is building our ad membership so that Netflix becomes an essential buy for advertisers, which is key for advertising to become material to our business."
Some of the prominent English titles in the past quarter included One Piece, The Witcher and Top Boy, and other language hits included Dear Child (Germany), Sintonia (Brazil), Guns and Gulaabs (India) and Class Act (France).
The company’s net cash generated by operating activities in the past quarter stood at $2 billion, while its free cash flow reached $1.9 billion.
It finished the quarter with gross debt of $14 billion, largely unchanged from the prior quarter and within its targeted range of $10 billion to $15 billion. Cash and short-term investments totalled $8 billion.