Netflix reports Q3 revenue of $5.25B, up 31% YoY, 158M paid subs globally, up 21% YoY, as net adds increase to 6.8M, up 12% YoY but below 7M company forecast
Shares of Netflix surged 8% in premarket trading after the company late Wednesday released its earnings report for the third quarter.
Context & Ripple Effects
This quarter is a rebound off a trough: in Q2 2019 Netflix added just 2.7M subscribers and the stock fell more than 10%, so the 6.8M net adds here — even with a miss against the company's own 7M forecast — reads to the market as recovery, which is why shares jumped 8% premarket. The 8% premarket surge grades the quarter against the Q2 stumble, not against the forecast.
The surrounding coverage shows this quarter sits at the knee of a deceleration curve: streaming revenue growth was 36% YoY in Q3 2018, 31% here, then 22.7% in Q3 2020 when net adds fell to 2.2M and 5.9% by Q3 2022. Q3 2019 is the moment the net-adds story still works, but its shelf life is visible.
First-order effects
- Netflix shareholders get relief: the 8% premarket gain reverses the double-digit drop that followed the Q2 miss, and the base grows to 158M paid subs, up 21% YoY.
- Management's forecasting credibility takes a hit — missing its own 7M net-adds forecast in a strong quarter means the guidance number, not just the result, becomes part of the story investors price.
Second-order effects
- Netflix's 6.8M net adds becomes the benchmark every rival's quarterly subscriber number is measured against, raising the stakes on competitors' own reported growth figures.
- With net adds missing forecast even on a beat, investor attention shifts toward revenue and profitability — a shift the later coverage confirms with Q3 2021 operating income up 33% and Q3 2022 net income down YoY.
Third-order effects
- As the subscriber base scales, percentage net-add math compresses on its own; the structural endpoint visible in the coverage is streaming valued on per-subscriber monetization and operating income rather than raw membership counts.
The trend: Subscriber net adds are ceding ground as the market's yardstick for streaming, with revenue growth and per-member profitability taking over as the base matures.
Related: Netflix · Subscription growth gap · Netflix Q2 2019: 2.7M net adds, stock down 10%+ · Netflix Q3 2020: 2.2M net adds
Related Coverage
- Netflix Releases Third-Quarter 2019 Financial Results Netflix Investor Relations
- Netflix Says Mobile Plan Did Better Than Expected in India, Might Bring It to Other Markets NDTV Gadgets 360 · Akhil Arora
- ‘We feel worse about subscriber growth’: Here's why Wall Street is striking a more cautious tone … Business Insider · Daniel Strauss
- Netflix Acknowledges For The First Time That Disney Is A Competitive Threat AdExchanger · Allison Schiff
- Netflix says Apple TV+, others to accelerate transition away from traditional TV AppleInsider · Mikey Campbell
- Netflix won't ‘shy away from taking bold swings’ as streaming competition heats up The Verge · Julia Alexander
- Netflix might expand mobile-only plan to more markets outside of India Android Police · Manuel Vonau
- View article Vox
- Netflix turns decline upside down with help from Stranger Things Silicon Republic · Colm Gorey
- Netflix grows to 158 million subscribers as Disney+ looms Engadget · Richard Lawler
- Why Netflix Isn't Scared of Disney Plus Tom's Guide · Henry T. Casey
- Netflix stock spikes after Q3 earnings beat expectations Yahoo Finance · Emily McCormick
- Netflix misses its subscriber growth target—again. Welcome to the chaos era of streaming Fast Company · David Lidsky
- Netflix might introduce its ‘Mobile-only plan’ to more markets MSPoweruser · Raka
- Netflix Stock Price Shoots Northwards as Q3 Earnings Beat Estimates Coinspeaker · Bhushan Akolkar
- Netflix says new competition from Apple and Disney might actually help its business 9to5Mac · Chance Miller
- Netflix rises 5% on international and earnings growth, despite missing subscriber targets … Business Insider · Ashley Rodriguez
- Netflix warns that new services from Disney and Apple will hit growth Telegraph · James Titcomb
- Netflix Approaches Critical Test of Its Viability Bloomberg · Shira Ovide
- Netflix shares surge despite missing subscriber forecast for the 2nd quarter in a row Silicon Valley Business …
- Netflix warns investors of ‘headwinds’ caused by Apple TV+ and Disney+ Cult of Mac · Buster Hein
- Netflix Confident With Original Content Ahead of the Streaming Wars Thurrott · Mehedi Hassan
- Netflix: Disney+ & HBO Max Will Be “Noisy” But Not Competition Android Headlines · John Anon
- Netflix misses subscriber forecast for second straight quarter Financial Times · Anna Nicolaou
- Netflix Subscribers Fall Slightly Short of Expectations Wall Street Journal
- Netflix spikes 11% after global subscriber growth blows away forecasts Business Insider · Daniel Strauss
- Netflix adds more-than-expected subscribers in third quarter Reuters
- Netflix Undershoots U.S. Subscriber Adds for Q3, Beats Profit Forecast Variety · Todd Spangler
- Netflix Revs Up Growth As Streaming TV War Looms International Business Times · Glenn Chapman
- Netflix Original Content Continues Driving Huge Numbers, with ‘Unbelievable’ and ‘Stranger Things’ Leading The Way The Streamable · Jason Gurwin
- Netflix stock spikes after earnings beat Axios · Sara Fischer
- Stranger Things helps rescue Netflix from its worst subscriber-growth nightmares CNET · Joan E. Solsman
- Netflix: Hulu Didn't Hurt Us, Disney and Apple Streaming Services Will Create ‘Modest Headwind’ Variety · Janko Roettgers
- Netflix finally admitted two things we already knew about the streaming wars CNBC · Steve Kovach
- Netflix believes competition from Apple TV+ will grow its business iMore · Joe Wituschek
- Netflix remains unfazed about incoming launch of Apple TV+ and Disney+ iDownloadBlog.com · Evan Selleck
- Netflix Reaches 158 Million Subscribers in Final Quarter Before Launch of Disney+ and Apple+ The Streamable · Jason Gurwin
Discussion
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Vox
Peter Kafka
on x
Netflix missed its subscriber numbers, again
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@pkafka
Peter Kafka
on x
Netflix missed its streaming numbers again, said that its 2019 numbers will be below 2018. Wall Street says hooray! Stock is up 6%. https://www.vox.com/...
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@ldignan
Larry Dignan
on x
Analyst note headline of the day from Bernstein and Todd Juenger: NFLX Q3'19: More ‘Happy Valley’, less 'Schitt's Creek' . Bernstein does cut target price to $422 from $450. Q4 will be way closely watched. Oh the angst. https://www.techmeme.com/...
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@lamonicabuzz
Paul R. La Monica
on x
Netflix earnings out. Finished Q3 with 158.3M subs, Guides to 165.9M for Q4. Good enough to allay competition concerns? $NFLX up 4% after hours so far. https://www.netflixinvestor.com/ ...
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@engadget
@engadget
on x
Netflix grows to 158 million subscribers as Disney+ looms https://www.engadget.com/... https://twitter.com/...
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@zeitchikwapo
Steven Zeitchik
on x
Netflix basically hits its subscriber targets this quarter —6.8m worldwide adds vs analysts' expectations of 7m. No reason for panic — yet.
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@jank0
Janko Roettgers
on x
Netflix: Hulu Didn't Hurt Us, Disney and Apple Streaming Services Will Create ‘Modest Headwind’ https://variety.com/... via @variety
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@psmith
Patrick Smith
on x
my take is 3/5 is pretty good. Netflix is full of 2/5 and 1/5
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@jank0
Janko Roettgers
on x
Netflix's quarterly letter to investors is always a good indicator for what's front and center for the company. This time, it devoted 1.5 pages to competitors like Disney Plus and Apple Plus. https://variety.com/...
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@stevekovach
Steve Kovach
on x
Netflix admits it has competition coming. Blames it in part for the low guidance on subs in Q4 https://www.cnbc.com/...
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@zeitchikwapo
Steven Zeitchik
on x
Netflix says that 32 million households watched Unbelievable in its first month of availability. If accurate*, it's an incredibly high number — bigger than nearly all network and cable scripted series in the past few years
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@matthewkeyslive
Matthew Keys
on x
One thing few people understand about Netflix: It usually doesn't produce its own programing. “Netflix Originals” are shows acquired by Netflix but produced by third parties like Lionsgate. https://twitter.com/...
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@stevekovach
Steve Kovach
on x
Netflix warns of “modest headwinds” as streaming services from rivals Apple and Disney launch this fall https://www.cnbc.com/...
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@lucas_shaw
Lucas Shaw
on x
Sign of the times: Netflix is going to post its weakest growth in the US in years, adding just 2.7 million customers. (The company blamed its latest price increase.) But it's going to add 23.2 million overseas — its biggest year yet.
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@jank0
Janko Roettgers
on x
Netflix's argument for why Disney and Apple Plus aren't a threat to its biz basically goes like this: Each service has a distinct catalog, and additional services will just get more ppl to abandon traditional TV. https://variety.com/...
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@jboorstin
Julia Boorstin
on x
.@netflix adds more international, fewer domestic subscribers than expected. Q4 Guidance lighter than analysts projections, @reedhastings:"launch of these new services will be noisy.. some modest headwinds to our near-term growth...tried to factor that into our guidance." https:/…
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@chriskeall
Chris Keall
on x
Unexpectedly strong quarter for Netflix, which has taken on a lot of debt as it builds a library of original content - necessary since content creators are now relewasing their own direct-to-consumer streaming servics to cut out middlemen old (like Sky) and new (like Netflix) htt…
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@cnbc
@cnbc
on x
Netflix stock ticks up after earnings beat but light guidance https://www.cnbc.com/...
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@mrodofficial
Michelle Rodriguez
on x
Netflix Claims It's Not Worried About Disney, Apple Streaming Services - Variety Oooh the data of Netflix I mean imagine knowing the likes & viewing habits of all those humans. I mean they could make a fortune just advising movie advertisers 💸🎞📽 https://variety.com/...