Although the announced subscriber numbers just exceeded expectations, they were lower than the 8.76 million subscribers Netflix received in the same period last year. In addition to the increase in the number of subscribers, Netflix drew attention to other indicators.
- The company's revenues rose to $9.8 billion, which exceeded analysts' expectations.
- Operating margin also improved significantly, reaching 30 percent in the quarter, compared to 22 percent in the previous year.
- Earnings per share were $5.4, compared to expectations of $5.12.
The streaming service has successfully launched its ad-supported subscription plan. According to the company, more than half of new subscribers chose this package in the countries where it was available. While Netflix doesn't expect advertising to become a major driver of growth until 2026, experts say the area is growing quickly.
On the surface, everything is moving in the right direction for Netflix. Financially, revenue and operating margin continue to rise, while expenses decline
– said Mike Proulx, Forrester analyst.
The company is optimistic about the future. Co-CEO Ted Sarandos stated the following findings:
We have a very good feeling about the business. We had a plan to get things up to speed again and we executed that plan.
Netflix expects further growth in the number of customers in the last quarter of the year, especially with the release of the second season of the popular Korean drama “Squid Game” in December. The company also continues to raise prices in some markets and expand into new areas such as live sports.
Part of the streaming giant's strategy is to not release subscriber numbers going forward, and instead focus on other metrics such as revenue growth and margins. The move indicates that the company is trying to focus investors' attention on long-term growth opportunities.
Netflix is up 46.8 percent this year.
Source: Reuters
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