Netflix has once again defied gloomy analysts and investors by revealing a surge in subscriber numbers, thanks to the introduction of the ad-supported cheaper streaming option. The company also confirmed that price hikes are imminent.
The better-than-expected news sent shares soaring by more than 12% just before 8 am Sydney time on Thursday. This rebound followed a 2.68% dip in regular trading due to concerns about a drop in subscriber numbers.
However, Netflix reported a remarkable increase, boasting 247.15 million subscribers worldwide as of September 30, up by 8.76 million from the second quarter (2.4 million in the June quarter), and a staggering 24 million higher than the total for the third quarter of 2022. Analysts had predicted an increase of only 6 million subscribers, while the quarterly revenue of $US8.5 billion matched market forecasts.
Netflix anticipates another substantial rise in new subscribers for the current quarter, similar to the growth observed in the three months ending in September.
For the quarter, Netflix achieved a net income of more than $US1.677 billion, marking the second-highest on record (following the March 2021 figure of over $US1.7 billion, during the pandemic boom).
However, Netflix forecasts a significant drop in net income to just $US956 million for the fourth quarter, while revenue is expected to approach $US8.7 billion.
"Adoption of our ad-supported plan continues to grow, with membership up almost 70% quarter-over-quarter. Thirty percent of sign-ups in countries with our ad-supported plan opt for it, with more room for growth in this business," explained Netflix.
Netflix plans to enhance the quality and content of its basic ad-supported streaming offering and will launch this revamped service in several countries, including Australia, next week.
"While we temporarily halted price increases during the rollout of paid sharing, our overall approach remains the same, offering a range of prices and plans to meet diverse needs. As we deliver more value to our members, we occasionally adjust prices. Starting today, we're implementing price adjustments in the US, UK, and France," stated Netflix.
Netflix also noted that the stronger US dollar has reduced its fourth-quarter revenue forecast by approximately $US200 million, affecting average revenue per member figures.