In a significant market development, Netflix (NFLX) witnessed a remarkable surge in its share price, soaring more than 10% during after-hours trading, fueled by impressive earnings that comfortably exceeded expectations, primarily attributed to a substantial increase in subscriber numbers.
The streaming titan reported an impressive earnings per share of $3.73 on a robust revenue of $8.54 billion for the third quarter. This exceeded analysts’ consensus expectations, which had projected an EPS of $3.49 alongside revenue of $8.54 billion. Importantly, these third-quarter results outperformed Netflix’s own guidance.
During the third quarter, Netflix experienced a surge in paid subscribers, with numbers surging to 8.76 million, significantly surpassing expectations, which had initially estimated slightly over 6 million new subscribers.
Netflix, in a shareholder letter, acknowledged the recent challenges faced by the entertainment industry in light of the simultaneous strikes by both writers and actors in the United States. While the writers’ strike has come to a conclusion, negotiations with actors’ unions continue. The company expressed its unwavering commitment to expeditiously resolve any remaining issues, with the ultimate aim of enabling everyone to return to producing captivating movies and television shows that will be adored by audiences worldwide.
Looking ahead to the fourth quarter, Netflix has projected earnings per share of $2.15 and anticipates generating approximately $8.69 billion in revenue. A healthy revenue growth rate of about 10.7% is anticipated, building upon the 7.8% growth observed in the third quarter.
Furthermore, Netflix reported an operating margin of 22.4% during the third quarter, slightly exceeding its own guidance. For the upcoming year, the company expects its operating margin to be situated at the upper end of its range, approximately 20%.
Investors and industry analysts continue to closely monitor Netflix’s performance, particularly in light of the company’s sustained subscriber growth and its ongoing commitment to resolving industry challenges.
