Netflix adds 5.1 million subscribers, tops subscriber targets as ad-tier signups grow

Netflix picked up 5.1 million streaming subscribers in third quarter, topping Wall Street estimates by more than 1 million, and said it expected higher customer growth around holidays when Korean drama "Squid Game" returns.

Shares of Netflix rose 4.8% in after-hours tring on Thursday following earnings report. shares have gained about 47% so far this year.

As pace of subscriber dition slows, Netflix has been trying to shift investor attention away from sign-ups to metrics including revenue growth and profit margins. It will stop reporting subscriber data from next year, and is touting growth in its -supported plans.

streaming giant said on Thursday its -supported service accounted for more than 50% of signups in third quarter in countries where it was available.

Wall Street h expected Netflix to bring in 4 million subscribers from July through September, according to analysts' estimates compiled by LSEG. New programming during period included murder mystery " Perfect Couple" and romantic comedy "Nobody Wants This."

Netflix earned $5.40 per share in quarter, above consensus forecast of $5.12. Operating margin hit 30% in quarter, compared with 22% a year earlier.

Revenue rose to $9.825 billion, just ahe of $9.769 billion consensus forecast.

"On surface, Netflix is trending in all right directions," said Forrester analyst Mike Proulx. "Financially, revenue and operating margins continue to increase and expenses are down."

But while customer ditions outpaced forecasts, y were below 8.76 million that Netflix picked up in year-ago quarter.

"A steep decline in net new subscribers is what’s concerning. While re’s room for net subscriber growth internationally, in U.S. things are getting tapped out," Proulx said.

Netflix projected its customer ditions for last three months of year - tritionally a strong period around holidays - would outpace September quarter, though it did not provide a number. second season of Korean drama "Squid Game" is scheduled for release in late December.

"We're feeling really good about business," Co-CEO Ted Sarandos said in a post-earnings video. "We h a plan to re-accelerate business, and we delivered on that plan."

'CRAWL, WALK, RUN'

company said its programming volume h picked up following disruptions from last year's Hollywood strikes. Engagement, time spent watching Netflix, averaged two hours per day per member.

While Netflix has reported subscriber gains in its -supported tier, it does not expect vertising to become a primary growth driver until 2026.

"y consistently remind us of crawl, walk, run and I think, yeah, it's still definitely beginning," said Magalie Grossheim, senior equity research analyst at M Science. "In our data, we continue to see that selection rate for -supported plan is accelerating in a lot of mature markets."

Part of plan centers around live events including sports, a big draw for vertisers. In November, Netflix will stream a fight between YouTube star Jake Paul and Mike Tyson, followed by two National Football League games on Christmas Day.

company also plans to increase prices in Spain and Italy on Friday. Earlier this month, it raised prices in a few European markets and in Japan.

Sarandos has rejected idea of ding Netflix to a discounted bundle with or streaming services such as Walt Disney and Warner Bros Discovery.

"What we're focused on is ding more and more value to this package," Sarandos said on Thursday, calling this a "comfortable model" for tritional media companies.