Since entertainment platform Netflix had been clamouring for success and subscribers in the previous quarter, the analysts thought the company would be struck with a similar dilemma this quarter as well. But, Netflix was playing a bluff hand and surprised everyone with skyrocketing numbers in the third quarter.
Netflix today released its third quarterly earnings that easily surpassed Wall Street analyst expectations. It delivered a revenue figure of $2.29 billion — its first time above $2 billion — as compared to $2.28 predicted by analysts. The company also posted earnings per share of 12 cents — double the market estimate of 6 cents — and much higher than 7 cents a share in the corresponding quarter previous year.
But, the shining star of the quarterly results would definitely have to be the subscriber count, which unexpectedly blew past any and all expectations. Last quarter, the company has seen only a small rise in subscriber count, and had thus undermined their position and dropped their outlook for Q3. This move by the company cause a lot of hubbub among investors and made them future of the video streaming platform. But today, Netflix had shut their faces with a humongous spike in subscribers.
In the third quarter, Netflix managed to rope in about 3.2 million subscribers internationally as compared to the forecast of a meager 2 million. The company also added 370,000 subscribers — more than the expected 304,000 — in their home United States, but it is still slow as compared to their global reach. These numbers now bump the total number of subscribers on the platform to 86.7 million.
But, how did Netflix achieve these over-the-top numbers, when it didn’t even expect to hit close? Well, the company has attributed the growth to the demand and positive air around their original content.
Our over-performance against forecast (86.7m total streaming members vs. forecast of 85.5m) was driven primarily by stronger than expected acquisition due to excitement around Netflix original content,
reads the official quarterly result statement.
Riding on the back of a huge — oh, so very huge — surge in total number of global subscribers, Netflix gives the investors a glimpse into the fruitful future of the company. Ever since the release of the Q3 earnings call, Netflix shares have jumped 20 per cent in after hour trading. The stock price is currently stuck at $119.42, and has already added abotu $10 billion to its market cap.
Netflix didn’t expect their sci-fi thriller Stranger Things and second season of Narcos, depicting the biopic of drug lord Pablo Escobar to receive critical acclaim. These series left users all around the globe finally craving for a Netflix subscription.
The company is on a trajectory to release a good 600 hours of premium original programming, with the upcoming release of Marvel’s original series Luke Cage, Iron Fist and The Defenders. It is currently also producing fresh regional content for Indian masses, and is working with Anurag Kashyap and Vir Das to develop original series ‘Sacred Games’ and a comedy special respectively.
The Internet allows us to reach audiences all over the world and, with a growing base of over 86 million members, there’s a large appetite for entertainment and a diversity of tastes to satisfy,
reads the official statement.
In addition, the entertainment company has also released its projections for the next quarter, and they seem to be on the higher side when compared to this quarter. Netflix expects to add a total of 5.2 million users globally, with 1.45 million net adds in the US and 3.75 million new members internationally. It also adds that they expect to complete the un-grandfathering process by the end of December and release over 1,000 hours of premium original content on their platform.