Netflix shares skyrocketed more than 14% after the bell Tuesday as the company posted better-than-expected results on the top and bottom lines. The streamer also reported the addition of 2.41 million net global subscribers, more than doubling the adds the company had projected a quarter ago.
Additionally, Netflix will begin to crack down on password sharing next year, opting to allow people who have been borrowing accounts to create their own. The company will also allow people sharing their accounts to create sub-accounts to pay for friends or family to use theirs.
Here are the results:
- EPS: $3.10 vs. $2.13 per share, according to Refinitiv.
- Revenue: $7.93 billion vs. $7.837 billion, according to Refinitiv survey.
- Expected global paid net subscribers: Addition of 2.41 million subscribers vs. an addition of 1.09 million subscribers, according to StreetAccount estimates.
The majority of Netflix’s net subscriber growth during the quarter came from the Asia-Pacific region, which accounted for 1.43 million subscribers. The U.S.-Canada region had the smallest growth of Netflix’s regions, contributing just 100,000 net subscribers.
“We’re still not growing as fast as we’d like,” Spencer Neumann, Netflix’s chief financial officer, said during the company’s earnings call. “We are building momentum, we are pleased with our progress, but we know we still have a lot more work to do.”
Starting next quarter, Netflix will no longer provide guidance for its paid memberships but will continue to report those numbers during its quarterly earnings release.
Netflix forecast it would add 4.5 million subscribers during its fiscal first quarter and said it expects revenue of $7.8 billion, largely due to currency pressures overseas.
The company touted shows and movies such as “Stranger Things” season four, “The Gray Man” and “Purple Hearts” as hits that helped move the needle during the third quarter.
It also teased the addition of its new lower-priced ad-supported plan, which launches in 12 countries in November.
The streamer said it was “very optimistic” about its new advertising business. While it doesn’t expect the new tier will add a material contribution to its fourth-quarter results, it foresees membership growing gradually over time. Its current forecast for subscriber growth is based on its upcoming content slate and the typical seasonality that comes during the last three months of the year.
“After a challenging first half, we believe we’re on a path to reaccelerate growth,” the company said in a statement Tuesday. “The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us.”
Read Netflix’s earnings release here.