Netflix Shares closed up 11% on Friday after the media streaming giant reported third-quarter earnings and revenue that beat expectations.
The company on Thursday reported earnings per share of $5.40 for the three months ended Sept. 30, beating the LSEG consensus estimate of $5.12. Revenue also beat expectations, coming in at $9.83 billion, ahead of analysts' expectations of $9.77 billion.
Crucially, Netflix saw momentum in its ad-supported membership tier, increasing 35% quarter-over-quarter. While Netflix doesn't expect promoting to change into its primary growth driver until 2026, the corporate said the ad tier accounted for over 50% of sign-ups within the third quarter within the countries where it is out there.
Netflix also gave an upbeat outlook for the December quarter, saying it expects fourth-quarter revenue to rise 14.7% to $10.13 billion. Revenue is forecast to be $43 billion to $44 billion in 2025, which might represent growth of 11% to 13% over expected 2024 revenue of $38.9 billion.
Analysts at Citi said in a note following Netflix's earnings report that the corporate's fourth-quarter outlook was “above the Street,” while its 2025 forecast was “relatively in line with consensus estimates.”
Richard Broughton, chief executive of Ampere Analysis, told CNBC's “Squawk Box Europe” on Friday that Netflix has benefited from continued investment in content despite a bleak environment for the broader media landscape.
“It is indicator that a few of the growth that disappeared from the market in 2022 is returning. If you consider the last 24 months, we've had content spending cuts, hiring freezes, layoffs at a few of the key studios, etc. “And through that, Netflix has looked to continue to invest in content over the next few years,” Broughton said.
“If we take into consideration scripted television, dramas, romance and science fiction, Netflix will probably be liable for almost one in ten global series next yr. “The company is in a very, very different position compared to some of its competitors alone.”
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