Netflix shares rise after revealing how many new subscribers have signed up

Netflix NFLX.O picked up 5.1 million streaming subscribers in the third quarter, topping Wall Street estimates by more than 1 million users, and said it expected higher subscriber growth during the holidays when the Korean drama returns. Squid Game”.

Netflix shares rose 3.5% to $711.98 in after-hours trading. The stock closed the regular session down 2% at $687.65.

Investors had expected Netflix to bring in 4 million subscribers from July to September, according to analyst estimates compiled by LSEG. New programs during this period included the murder mystery The Perfect Couple and the romantic comedy Nobody Wants This.

Diluted earnings per share fell to $5.40, above the consensus estimate of $5.12. Revenue came in at $9.825 billion, just ahead of the consensus estimate of $9.769 billion.

The company predicted that its customer additions for the last three months of the year, traditionally a strong period around the Christmas holiday, would exceed the September quarter, although it did not provide a number.

Netflix has tried to shift investors’ attention from subscriber sign-ups to other metrics, including revenue growth and profit margins. The company said its operating margin reached 30% in the quarter, compared with 22% a year ago.

“We have implemented our plan to re-accelerate our business and are excited to finish the year strong with an excellent fourth quarter plan,” the company said in a letter to shareholders. The new lineup will include the second season of Korean drama Squid Game.

The company said its programming volume had increased following disruptions from last year’s Hollywood strikes. Engagement, the time spent watching Netflix, averaged two hours per day for each member.

Nearly two years into its ad business, Netflix is ​​working to boost revenue from its new ad-supported plans, but has said it doesn’t expect advertising to become a major driver of growth until 2026.

In the September quarter, Netflix’s ad-supported service accounted for more than 50% of subscriptions in countries where it was available.

Part of the plan centers around live events, including sports, a big draw for advertisers. In November, Netflix will broadcast a fight between YouTube star Jake Paul and Mike Tyson, followed by his first NFL games in December.

“Advertisers want to be part of big cultural moments. Compelling live programming will always gather and bring people together for a snapshot in time,” said Forrester Research Director Mike Proulx. “For brands, this is a captive audience that is primed for advertising messages.”