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Netflix
Inc.
NFLX 3.98%
exceeded expectations for adding new subscribers in the third quarter, signaling strong growth in the number of users in international markets, while the company continues to invest heavily in its programming offerings world.
Netflix shares rose more than 13% after closing the market, after closing at $ 346.40, up 4% in the context of a broader market rally on Tuesday.
Maintaining a fast number of subscriber additions is key to Netflix's ability to cover its rapidly growing content costs. Netflix has announced plans to spend up to $ 8 billion on content this year. Analysts estimate that it will spend up to $ 4 billion more on programming and films that will be aired in the future, bringing its total content expenditure to some $ 12 billion of content, such as rivals like Amazon.com Inc. and HBO.
For the third quarter, Netflix added 6.96 million new subscribers worldwide, exceeding the 5 million that the company had forecast for the period in July and the 5.18 million analysts surveyed by FactSet. The additions bring to 137 million the total number of subscribers in the world.
User growth, better than expected, comes after Netflix earned one million fewer subscribers than expected in the second quarter. This performance disappointed investors, who sold the company's shares as a result of this report.
Netflix reported earnings of $ 403 million in the third quarter, or 89 cents per share, up from $ 129.6 million, or 29 cents a share, a year earlier. Analysts have predicted 68 cents per share of profit, according to FactSet.
Sales for the quarter increased 34% over last year to $ 4 billion, according to analysts' estimates. International streaming revenue jumped 49% to $ 1.97 billion, while domestic sales increased 25% to $ 1.94 billion.
During the quarter, Netflix gained 5.9 million new subscribers abroad and 1.1 million in the United States. The company planned to gain 4.35 million international subscribers and 650,000 national subscribers over the period.
The company announced plans to add 9.4 million additional subscribers in the fourth quarter, up 13 percent from 8.3 million last year. Analysts had predicted 8.25 million additional subscribers, according to FactSet.
Corrections & Amplifications
Netflix sales for the third quarter reached $ 4 billion, up 34% from the previous year, according to analysts' estimates. An earlier version of this article incorrectly stated the company's sales figures.
Write to Micah Maidenberg at [email protected] and Shalini Ramachandran at [email protected]
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