Netflix is performing beyond expectations. The company recently posted its latest quarterly report and showed that its earnings, stock prices, and the number of subscribers are at phenomenal levels. The company has beaten its own earnings estimates.
In its third-quarter earnings report, Netflix revealed that it had earned USD 4 Billion, as estimated. However, it has achieved earnings per share of 89 cents as opposed to just 68 cents as it has predicted. New subscribers reached as high as 6.96 million. Per FactSet, it has attracted 1.09 million new domestic subscribers and another 5.87 million international subscribers. Both numbers are significantly higher than what the company estimated or expected. Netflix only expected that there would be 673, 8000 domestic subscribers and 4.46 million international subscribers but their numbers far exceeded these expectations.
Netflix is not immune to the currency movements of late, however. While it showed accelerated growth while it expanded and posted an increase of 36% in earnings in the third quarter compared to a year earlier, its international revenue decreased by $90 million because of a year-over-year impact from the currency movements.
Given these positive developments, CEO Reed Hastings did not hesitate to make more optimistic projects for the fourth quarter. The company is projecting that it will garner 9.4 million new net subscribers on the next quarter. The CEO added that he believes they are getting better at forecasting. "I think by focusing going forward on paid [net adds] we'll be able to be a little more accurate and focus on the fundamentals," he said.
With this strong performance, Netflix is also reported to strive to rely more on its original content offerings to drive higher growth. Last year, it can be felt that shows created by Netflix studios have done well, including "Stranger Things," "The Kissing Booth," "Dark," and more others. It will also continue to strive for first-window rights to quality shows such as "Orange is the New Black" and "13 Reasons Why."
Netflix is also reported to no longer include free trial memberships when measuring total net additions data for 2019 as this is deemed to just "add noise" to their forecasts. Since the numbers of those who signed for a month trial and then cancel the service will no longer be added, a lower subscriber-outlook number can be expected. Still, doing this will allow the company to more reliably predict revenue growth.
Netflix cannot stay complacent as it faces heightened competition from traditional media giants investing in having online original content to offer viewers, such as Amazon.
