Netflix bounced back in the third quarter, posting financial results ahead of Wall Street estimates, while falling slightly short of its internal subscriber forecasts.
Wall Street analysts had expected earnings of $1.04 a share, but Netflix delivered $1.47, nearly double the 89 cents a share in the year-earlier period. Total revenue came in at $5.245 billion, roughly even with analysts’ consensus forecast for $5.25 billion.
More from Deadline
- 'Stranger Things' Season 3 Series' Most Viewed Ever As Netflix Reveals More Data
- Netflix Shares Rise As Most Wall Street Analysts See Upside In Q3 Results
- Netflix Counters "Laughable" 'Laundromat' Lawsuit, Cites "Constitutionally Protected Speech"
The company’s global subscriber base increased by 6.8 million to 158.33 million, short of internal forecasts for 7 million new subscribers but slightly ahead of the consensus expectation of analysts. In the U.S., the shortfall was more significant, with a half-million new subscribers added compared with internal estimates of 800,000.
“Since our U.S. price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower U.S. membership growth,” the company said in its quarterly letter to shareholders. It also noted, “On a member base of more than 60 million, very small movements in churn can have a meaningful impact on paid net adds.”
The gain of 6.8 million subscribers was a third-quarter record, the company noted, and a 12% uptick from the same quarter in 2018. For the fourth quarter, the company is projecting 7.6 million global additions, compared with the actual influx of 8.8 million in the fourth quarter of 2018.
Netflix’s results have been anticipated for weeks and offered a measure of relief when they landed. Its stock has been trading at about 20% below its early-summer peak after the streaming giant released disappointing results in July. Shares closed Wednesday at $286.28, up a shade less than 1% for the day. Shares shot up more than 8% in after-hours trading.
Many investors have questioned the company’s debt obligations and strategy to continue spending aggressively on content with subscriber numbers flattening and several major streaming competitors arriving on the scene. Apple, Disney, WarnerMedia and NBCUniversal are all launching major direct-to-consumer plays in the next six months. For media companies, the shift to plotting their own course in streaming is a dramatic shift from the many years when they freely licensed out their programming to Netflix.
In the subscriber letter, Netflix offered its view of the increasing competition. The company said it has gone up against Amazon, YouTube, Hulu and linear TV for more than a decade. “The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compa red to linear TV,” the letter continued. “While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world.
“The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long-term, though, we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”