Streaming video pioneer Netflix added 5.1 million subscribers in the third quarter, more than 1 million more users than Wall Street expected, the company announced in its earnings call Thursday.
Netflix stock rose more than 4% to $718.10 in after-hours trading. The stock closed 2% lower at $687.65.
Investors had expected Netflix to gain 4 million subscribers between July and September, according to analyst estimates compiled by LSEG. New shows during the period included the murder mystery “The Perfect Couple'' and the romantic comedy “Nobody Wants This.''
Diluted earnings per share came to $5.40, beating the consensus estimate of $5.12. Revenue reached $9.825 billion, slightly exceeding the consensus estimate of $9.769 billion.
Netflix is trying to shift investors' attention from subscriber numbers to other metrics like revenue growth and profit margins. The company announced that its operating margin for the quarter reached 30%, up from 22% a year earlier.
“We are excited to finish the year with a strong fourth quarter and achieved our plan to re-accelerate our business,” the company said in a letter to shareholders.
Netflix is working to increase revenue with new ad-supported plans, but said it does not expect advertising to be its main growth driver until 2026.
In the September quarter, Netflix accounted for more than 50% of its subscriptions in countries where its ad-supported service is available.
Part of the plan centers around live events, including sports, which are a big draw for advertisers. Netflix will broadcast the fight between YouTube stars Jake Paul and Mike Tyson in November, and its first NFL match in December.
“Advertisers want to be part of big cultural moments, and engaging live programming always brings people together and unites them to take a snapshot in time,” said Mike Proulx, research director at Forrester. says. “For brands, it’s a captive audience ripe for receiving advertising messages.”
