Netflix subscribers surge as company announces price hikes in some regions

Netflix (NFLX) reported a surge in third quarter subscriber numbers of almost 9 million and introduced it is going to be elevating costs within the US, UK, and France, sending its inventory greater in after-hours buying and selling Wednesday.

Starting Wednesday, Netflix mentioned its Fundamental and Premium plans will now price $11.99 and $22.99, respectively, within the US. That is up from the prior $9.99 and $19.99 worth factors. Netflix’s $6.99 ad-supported plan and $15.49 Normal plan will keep the identical worth.

“Our beginning worth is extraordinarily aggressive with different streamers and at $6.99 per thirty days within the US, for instance, it’s a lot lower than the typical worth of a single film ticket,” the corporate mentioned in its quarterly launch. The final time Netflix raised costs was in March 2022.

The inventory surged in after-hours buying and selling because of this, up greater than as 12%.

Income barely beat the corporate’s steering of $8.52 billion to hit $8.54 billion within the quarter, a rise of almost 8% in comparison with the identical interval final yr, because the streamer leans on income initiatives like its crackdown on password sharing, which rolled out within the US in late Could, together with its ad-supported providing.

Netflix guided to fourth quarter income of $8.69 billion, barely beneath consensus expectations of $8.76 billion.

Earnings per share (EPS) additionally beat estimates within the quarter with the corporate reporting EPS of $3.73, forward of consensus expectations of $3.49. The corporate reported EPS of $3.10 within the year-ago interval.

On the promoting entrance, Netflix mentioned the adoption of its adverts plan continues to develop with membership up nearly 70% quarter over quarter with 30% of customers signing as much as the advert tier within the international locations the place it is out there. The corporate mentioned there’s nonetheless “extra work to do to scale this enterprise.”

Netflix added 8.8 million new subscribers within the quarter, handily beating expectations of 6.2 million. The corporate mentioned the higher-than-expected progress was “as a result of roll out of paid sharing, sturdy, regular programming and the continued enlargement of streaming globally.” The corporate had added simply 2.41 million paying customers in Q3 2022.

Netflix mentioned it expects fourth quarter subscriber web additions “to be comparable” to the third quarter’s outcomes.

Nonetheless, regardless of the surge in paying customers, the corporate was unable to spice up common income per membership, or ARM.

ARM decreased 1% yr over yr, in step with the corporate’s expectations. Netflix blamed the decline on a lot of elements, “together with a better proportion of membership progress from decrease ARM international locations, restricted worth will increase over the previous 18 months, and a few shift in plan combine.”

The Netflix logo is displayed at the entrance to Netflix Albuquerque Studios film and television production studio lot in Albuquerque, New Mexico on October 13, 2023. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)

The Netflix emblem is displayed on the entrance to Netflix Albuquerque Studios movie and tv manufacturing studio lot in Albuquerque, N.M., on Oct. 13, 2023. (PATRICK T. FALLON/AFP by way of Getty Photographs)

Profitability metrics like working margin and free money stream, nonetheless, steadily beat expectations.

Working margin hit 22.4% within the quarter, surpassing Netflix’s personal projection of twenty-two.2%. The corporate mentioned it expects full-year working margins to hit 20% — the excessive finish of its earlier forecast between 18% and 20%.

Free money stream impressed at $1.89 billion, above consensus calls of $1.27 billion. Netflix boosted its full-year free money stream steering to $6.5 billion, up from the prior $5 billion, citing the affect of the double Hollywood strikes.

“The final six months have been difficult for our business given the mixed writers and actors strikes within the US,” the corporate mentioned in its launch. “Whereas we’ve got reached an settlement with the WGA, negotiations with SAG-AFTRA are ongoing. We’re dedicated to resolving the remaining points as rapidly as doable so everybody can return to work making films and TV reveals that audiences will love.”

As Hollywood productions stay shut down amid the actors strike, the corporate mentioned it expects to spend round $13 billion on content material this yr earlier than boosting that quantity to $17 billion subsequent yr, assuming the SAG strike is resolved within the close to future.

Within the meantime, the platform will lean on new programming — reminiscent of stay occasions.

Earlier this week, the corporate confirmed the debut of “The Netflix Cup,” a star golf event that can characteristic athletes from “Formulation 1: Drive to Survive” and “Full Swing.” The occasion will stream stay from Wynn Gold Membership in Las Vegas on Nov.14.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Observe her on Twitter @allie_canal, LinkedIn, and electronic mail her at alexandra.canal@yahoofinance.com.

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