(News Bulletin 247) – The specialist in video-on-demand services recorded 8.76 million new subscribers in the third quarter and its earnings per share far exceeded expectations.

Netflix seems to have found the right recipe. In a hyper-competitive streaming and video-on-demand services market, the Californian group manages to increase its subscribers, its prices, and its profitability.

The quarterly accounts delivered Wednesday evening by the company illustrate this very well. “Netflix’s third-quarter profits exceeded expectations, thanks to the success of its ad-supported subscription,” notes Tina Teng, market analyst at CMC Markets.

This brings Netflix shares up 12.5% ​​in post-closing trading on Wall Street on Wednesday evening.

Recent initiatives are paying off

Over the quarter from July to the end of September, Netflix recruited 8.76 million subscribers, significantly more than the 5.49 million expected by analysts, according to a Street Account consensus cited by CNBC. The American media highlights that these subscriber gains constitute a record since the 10.1 million recorded in the second quarter of 2020, when the whole world locked themselves at home and subscribed to the group’s services to forget their isolation forced by Covid .

The price increases, the introduction of subscription with advertising but at a reduced price as well as the efforts undertaken by the company to put an end to non-monetized account sharing are all initiatives which are apparently bearing fruit.

“Investors feared that Netflix would lose customers by forcing people who shared accounts to buy their own subscriptions. But the crackdown led to an increase in new customers, without leading to a significant increase in cancellations,” notes Bloomberg.

Netflix assured that the success of its measures to monetize account shares had exceeded its expectations. The company also reported that ad-supported subscriptions jumped 70% in the third quarter from the previous quarter and now accounted for about 30% of new subscriptions globally.

Even higher growth in the fourth quarter

It would also seem that the group clearly dominates its market. According to a study published by Nielsen, in the United States, streaming accounts for 37.5% of the time spent by Americans on screens. Netflix alone reached a percentage of 7.8% compared to 3.6% for Amazon Prime, 3.6% for Hulu and 1.9% for Disney+.

Concerning its recent successes, the company highlights in its communication the live series based on the One Piece manga (which has achieved the feat of not provoking the anger of fans of the original work, a feat for an adaptation). This series generated 62 million views and held first place in the top 10 on the platform for three weeks.

The group also emphasizes that the arrival of the Suits series in its catalog in July “broke audience records” even though it was also available on other video-on-demand services.

On the company’s income statement side, revenues came in line with expectations at $8.54 billion for the quarter, reflecting growth of 7.8%. Operating profit stood at $1.92 billion for a corresponding margin of 22.4% compared to 19.3% a year earlier.

Earnings per share reached $3.73 while analysts expected $3.49 according to a Refinitiv consensus cited by CNBC.

The company plans to accelerate the pace with revenue growth expected at 11% to $8.7 billion. Netflix also raised its operating margin target for the 2023 financial year, now expecting a rate of 20%, the top of the range of 18% to 20% previously indicated. As for 2024, Netflix expects profitability of between 22% and 23%.

The company also took the opportunity to announce price increases in France, the United Kingdom and the United States.