Investing.com -- Netflix (NASDAQ:NFLX) has reported better-than-anticipated quarterly income, in a sign of the streaming giant's push to emphasize profits over rapid subscriber growth.
The company added 5.07 million subscribers during its third quarter versus 8.76 million net new subscribers in the year-ago period, reflecting a waning impact from a crackdown on password sharing between customers that kicked off in 2023. Even still, the figure topped Wall Street estimates, helping send shares higher in premarket US trading.
Revenue from advertising, a major focus for investors, is tipped to double in 2025, the company said. Netflix has lined up a string of streaming live events in the comming months, including two National Football League games on Christmas Day, as part of a bid to entice advertisers.
Meanwhile, over half of the third quarter's new subscribers in markets where Netflix's ad-supported tier is offered selected the option, signaling some resilience in this crucial segment of the business.
The trend helped offset a slate of new releases in 2024 that Netflix previously said would be "patchier than normal" due to strikes by Hollywood writers and actors last year. But the group said its offerings are starting to normalize, noting that the latest season of "Emily in Paris", the limited series "The Perfect Couple" and the film "Beverly Hills Cop: Axel F" fueled quarterly returns.
Earnings per share in the quarter ended on Sept. 30 came in at $5.40 and revenue rose to $9.83 billion, above projections of $5.12 and $9.77 million, respectively.
Net income is forecast to dip in the current quarter, although Netflix plans to roll out price increases in Italy and Spain to help drive revenue. It recently also hiked prices in other parts of the world.
"[O]ur core theory is that we got to work really, really hard to make sure that we are delivering more value to members every quarter," Netflix Co-Chief Executive Officer Gregory Peters told analysts in a post-earnings call.
"And when we do, then we occasionally ask members to pay a bit more so we can invest that forward and keep that whole process going. So, you've seen us do that this past quarter in a couple of countries."
However, analysts at Evercore ISI said markets had been anticipating that Netflix would have raised prices in other markets as well, including the US.
For the fourth quarter, per-share income was forecast at $4.23 and revenue was estimated at $10.13B, beating expectations of $3.89 and $10.04 billion.
(Yasin Ebrahim contributed reporting.)