Netflix Inc (NASDAQ:NFLX) shares jumped 13% in early premarket, to $392.10, thanks to third quarter earnings that landed ahead of expectations and significant subscriber growth.
For the quarter, the company posted revenue of $8.54 billion, in line with the company’s forecast and the consensus Street estimate.
Earnings per share (EPS) came in at $3.73, ahead of Netflix’s guidance of $3.52 and the Street estimate of $3.47.
Paid net additions were 8.8 million, above Netflix’s expectation that this would be similar to the second quarter’s 5.9 million net additions. This represents 9% growth from net additions of 2.4 million in the year-ago quarter.
Subscriber growth was due to the rollout of paid sharing, strong programming, and international expansion, Netflix said.
Netflix said it now expects fiscal 2023 free cash flow of about $6.5 billion, up from its previous forecast of at least $5 billion.
It also noted that adoption of its ad-supported membership tier continues to grow, up almost 70% quarter-over-quarter.
Additionally, the company reiterated its commitment to ending the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strike.
"We’re 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," Netflix said in a letter to shareholders.
Price increases
Along with its 3Q results, Netflix announced it would be increasing its prices in some United States, the United Kingdom and France, effective Wednesday.
In the US, its ad-supported ($6.99) and Standard plans ($15.49) will stay the same, while Basic will increase to $11.99 and Premium to $22.99.
For the UK and France, pricing for ad-supported/Basic/Standard/Premium plans will be £4.99/£7.99/£10.99/£17.99 and 5.99€/10.99€/ 13.49€/19.99€, respectively. Like the US, the pricing Netflix's ad-supported and Standard plans in the UK and France remains unchanged.
"Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket," Netflix said.
Fourth quarter outlook
For the fourth quarter, Netflix forecast revenue of $8.69 billion, representing growth of 10.7% year-over-year, and EPS of $2.15.
This fell short of analysts' expectations of revenue of $8.77 billion and EPS of $2.21, per Zacks Investment Research.
The streamer expects paid net additions to be similar to the third quarter, plus or minus a few million.