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Netflix reported a 15 percent rise in third-quarter revenue to $9.8 billion, slightly above expectations, while subscriber numbers grew despite global hits being reduced by strikes from Hollywood last year.
The U.S. streaming service added 5.1 million subscribers in the three months, beating estimates and belying fears that it had not produced much new “must-see” programming to attract new customers. Shares rose 5 percent in after-hours trading.
Although increased password usage has spurred subscriber growth, analysts wonder when that effect will fade. Subscriber growth in the quarter exceeded expectations, but was significantly lower than the same quarter last year.
Hits of the quarter included new series such as The perfect couple, Nobody wants that And The crooks of Tokyo, he said.
Ted Sarandos, co-chief executive officer, said on a call with analysts that he “feels really good” about the company going into next year.
Netflix invests heavily in live sporting events such as WWE Monday Night Raw and NFL American football holiday games, with this live-streamed content seen as providing a “date to watch” for subscribers and differentiating it from competing streamers in seeking new viewers.
In a letter to shareholders, Netflix said: “We have executed our plan to re-accelerate our business and are excited to finish the year strong with a great Q4 slate, including Squid game (series two), the Jake Paul/Mike Tyson fight and two NFL games on Christmas Day.
Mike Proulx, director of Forrester Research, said: “Every quarter, Netflix is becoming more and more like linear TV. The company is currently going all out on live programming, which has everything to do with seeking advertising dollars to diversify its revenue streams.
For full year 2024, Netflix said it expects revenue growth of 15 percent – the high end of its forecast range – and an operating margin of 27 percent. The operating margin was 30 percent in the third quarter, higher than the 22 percent achieved a year earlier.
Netflix will stop reporting subscriber numbers next year as the company seeks to refocus investors’ attention on revenue and profits.
The crackdown on password sharing increased revenue and the company introduced cheaper subscription tiers where programming is accompanied by advertising. Netflix said ad-supported members increased by more than a third quarter from the previous quarter, but that it had “much more work to do to improve our offering to advertisers, which will be a priority over the coming years.
“We are pleased to have re-accelerated our growth and, as we approach 2025, we plan to deliver solid revenue and profit growth by enhancing both our core series and film offerings while investing in new growth initiatives such as advertising and gaming. » says the letter from Netflix.
For 2025, the company forecasts revenue between $43 billion and $44 billion, which would represent 11 percent to 13 percent growth over expected revenue for 2024. Operating margin is expected to be 28 percent, up from 27 percent. percent expected for 2024, but “having achieved outsized margin improvement in 2024, we want to balance near-term margin growth by investing appropriately in our business.”