Netflix posts solid beats on earnings and new subscribers
- Netflix shares were down slightly after the bell Tuesday after the company posted third quarter results.
- The quarter's subscriber growth of 4.4 million was a solid beat over the expected 3.84 million.
- Netflix also beat on earnings and came in line with revenue.
Netflix shares dipped about 1% after-the-bell Tuesday after the company posted third quarter results, showing investors the streamer can continue to attract new subscribers.
- Earnings per share (EPS): $3.19 vs $2.56 according to Refinitiv survey of analysts
- Revenue: $7.48 billion vs $7.48 billion, according to Refinitiv
- Global paid net subscriber additions: 4.4 million vs 3.84 million, according to StreetAccount
The quarter's subscriber growth of 4.4 million was a solid beat over the expected 3.84 million. Analysts had expected users to flock to the streamer as it began to roll out a slew of content that was delayed to the back half of the year due to the pandemic.
The company said it expects to add 8.5 million subscribers in the fourth quarter.
"We're in uncharted territory," Netflix co-CEO Reed Hastings said on the company's post-earnings video interview. "We have so much content coming in Q4 like we've never had, so we'll have to feel our way through and it rolls into a great next year also."
Netflix said in its letter to investors it plans to have a more normal release schedule over the course of 2022, barring any Covid-related delays.
Netflix also announced it will use new metrics for reporting viewership. The company will start reporting hours viewed rather than the number of accounts that watched.
For example, the company's current top film is "Extraction," with 99 million accounts having watched at least two minutes of the title in its first 28 days on Netflix. Future reporting would put "Bird Box" as the top film, with 282 million total hours viewed in its first 28 days.
The company said in a letter to investors that the new metrics "matches how outside services measure TV viewing and gives proper credit to rewatching."
Netflix will also release title metrics more regularly outside of its earnings report, it added.
The company also gave a nod to the top show of the quarter, "Squid Game." Netflix said the South Korean dystopian series has become its "biggest TV show ever." The company said 142 million member households globally watched the show in its first four weeks.
The company also pointed to the cultural relevance of the show.
"Like some of our other big hits, Squid Game has also pierced the cultural zeitgeist, spawning a Saturday Night Live skit and memes/clips on TikTok with more than 42 billion views," the company said. Demand for consumer products related to the show is high, it added.
Even Hastings wore the green tracksuit that was popularized by the show during the company's earnings interview.
Netflix also updated investors on its push into gaming. The company said it's begun testing its games in select countries, but "it remains very early days for this initiative."
The games will be a part of Netflix subscriptions and will not include advertisements or in-app purchases.
Netflix still wants to grab more users' attention, competing against activities like watching TikTok, playing Fortnite or reading. It shared some insight into that dynamic, saying that when Facebook experienced a global outage earlier this month, Netflix saw engagement increase 14% during that same time period.
Getting into gaming could bring Netflix users to spend more time on the platform, outside of watching traditional shows or films.