Netflix’s earnings and subscriber growth are top estimates as investors eye potential price increases

Netflix (NFLX) reported third-quarter results on Thursday, sending shares up 4% in after-hours trading after the streaming giant beat profit and revenue estimates, while its revenue outlook also beat Wall Street’s expectations for the current quarter.

Revenue beat Bloomberg consensus estimates of $9.78 billion and reached $9.83 billion in the third quarter, up 15% from the same period last year, as the streamer continued to push for revenue initiatives such as its crackdown on password sharing and the ad-supported tier continued in addition to last year’s price increases on certain subscription plans.

Netflix forecast fourth-quarter revenue of $10.13 billion, above consensus estimates of $10.01 billion.

For full-year 2025, the company expects revenue between $43 billion and $44 billion, compared to a consensus estimate of $43.4 billion. This would represent growth of 11% to 13% over the company’s expected 2024 revenue guidance of $38.9 billion.

Diluted earnings per share (EPS) also beat estimates this quarter: the company reported earnings per share of $5.40, above consensus expectations of $5.16 and well above EPS from $3.73 it reported in the same period last year. Netflix forecast fourth-quarter earnings per share of $4.23, beating consensus estimates of $3.90.

The number of subscribers also rose sharply: after groundbreaking programs such as “The Perfect Couple” and “Nobody Wants This”, over 5 million more were added.

The subscriber gain of 5.07 million beat expectations of 4.5 million and follows the 8.05 million net additions the streamer added in the second quarter. The company added 8.8 million paying users in the third quarter of 2023.

Investors have praised the company’s move into sports and live events. Meanwhile, ad tier continues to gain importance. Ahead of the earnings release, Netflix stock has been on a tear, with the stock up about 45% year-to-date and trading near all-time highs.

Analysts expect the share price to rise further by the end of the year, which will likely serve as another catalyst for the stock. But the stock’s recent rise has caused some concern on Wall Street.

The company recently revealed as part of its latest semi-annual viewership report that subscribers watched over 94 billion hours on the platform from January to June, although engagement levels remained roughly flat year-over-year – a potential headwind when it comes to pricing power has become particularly important for streaming companies as consumers become increasingly choosy.

According to Deloitte’s latest Digital Media Trends report, U.S. consumers on average subscribe to four streaming services and spend about $61 per month. Retaining loyal subscribers over the long term is challenging as consumers churn or cancel their subscription plans.

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Netflix last increased the price of its Standard plan in January 2022, increasing the monthly cost from $13.99 to $15.49. At the same time, the price of the Premium tier was increased by $2 to $19.99 per month; The company increased the cost of this plan again last October to $22.99.

The company has not yet increased the price of its ad-supported offering, launched less than two years ago, which remains one of the cheapest advertising plans among all major streaming providers at $6.99 per month.

“Given Netflix’s low cost per hour viewed, we see room for the company to increase U.S. prices by 12% in 2025,” Citi analyst Jason Bazinet said ahead of the report.

Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and send her an email at [email protected].

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