Netflix co-founder Reed Hastings attends a red carpet for the Netflix launch at Palazzo Del Ghiaccio on October 22, 2015 in Milan, Italy.
Jacopo Raule | Getty Images
Netflix shares closed up 11% on Friday after the media streaming giant reported third-quarter earnings and revenue that beat expectations.
The corporate on Thursday reported earnings per share of $5.40 for the three-month period ended Sept. 30, surpassing the $5.12 LSEG consensus estimate. Revenue also beat expectations, coming in at $9.83 billion, above the $9.77 billion anticipated by analysts.
Crucially, Netflix saw momentum in its ad-supported membership tier, which jumped 35% quarter over quarter. While Netflix doesn’t expect ads to turn out to be its primary growth drive until 2026, it said the ad-tier accounted for over 50% of sign-ups within the third-quarter in countries where it’s available.
Netflix also gave an upbeat outlook for the December quarter, saying it expects fourth-quarter revenue to rise 14.7% to $10.13 billion. It’s forecasting revenue of $43 billion to $44 billion for 2025, which might mean growth of 11% to 13% from its expected 2024 revenue of $38.9 billion.
Analysts at Citi said in a note following Netflix’s earnings report that the firm’s fourth-quarter outlook “exceeded the Street” while its 2025 forecast “was relatively in step with consensus estimates.”
Richard Broughton, executive director of Ampere Evaluation, told CNBC’s “Squawk Box Europe” on Friday that Netflix has benefited from continued investments in content, despite a grim environment for the broader media landscape.
“It’s indicator that a number of the growth that dropped out of the market in 2022 is returning. Should you think in regards to the last 24 months, we have had cutbacks in content expenditure, hiring freezes, redundancies in a few of the main studios and streamers. And all through this, Netflix has tried to maintain investing in content. That sets it up extremely well over the subsequent couple of years,” Broughton said.
“If we take into consideration scripted TV, dramas, romance and science fiction, Netflix goes to be answerable for not far off 1 in 10 global series next 12 months. It’s in a really, very different position in comparison with a few of its competitors just by way of scale,” he added.
Correction: Netflix expects fourth-quarter revenue to rise 14.7% to $10.13 billion. An earlier version misstated a figure.
