Netflix beats with Q3 revenue up 5.9% YoY to $7.93B, $1.4B net income, down from $1.45B YoY, 2.4M net global subscribers added, vs. 1.09M est.; stock is up 10%+

- Netflix beat third-quarter expectations on the top and bottom lines Tuesday. — The company said it added 2.41 million …

CNBC 2022-10-19 Sarah Whitten

Context & Ripple Effects

Netflix’s Q3 subscriber beat follows a markedly faster growth period: the company reported 16% year-over-year revenue growth and 4.4 million additions in the prior year’s third-quarter results, after earlier quarters included a North American subscriber decline. The latest quarter restores net-add momentum, but at a 5.9% revenue-growth rate and with lower net income than a year earlier.

The market’s more-than-10% share-price response shows that beating subscriber expectations had become a key near-term test for Netflix, not simply a reporting detail.

First-order effects

Netflix gains an immediate investor reprieve as 2.4 million net global additions exceed the 1.09 million estimate, driving its shares up more than 10%.
Netflix’s lower year-over-year net income alongside higher revenue puts pressure on the company to convert renewed subscriber additions into stronger earnings growth.

Second-order effects

Streaming rivals face a tougher investor benchmark: Netflix’s subscriber beat reinforces that quarterly net additions can still move valuations even as its revenue growth has slowed from the previous year’s pace.
Netflix’s management is likely to be judged more closely on the gap between membership growth and profit growth, rather than on subscriber additions alone.

Third-order effects

If the pattern persists, streaming will be valued less as a pure subscriber-land-grab market and more on whether platforms can sustain paid-member growth while protecting profitability.
The widening contrast between Netflix’s earlier high-growth quarters and this quarter’s slower revenue expansion points toward a more mature subscription market, where forecast execution carries outsized weight.

The trend: Streaming is entering a subscription-accountability phase in which investor confidence depends on beating membership expectations while translating growth into durable earnings.

Discussion

@loudmouthjulia Julia Alexander on x
Um....... “We also continue to invest heavily in marketing.” ......do they? Every story, layoff, and lack of consistent leadership at the marketing level in part due to consistently changing strategies top down would suggest otherwise.
@hedgemind @hedgemind on x
$NFLX up 15%+ to ~$278 in a.h., a high not seen since 4/20/22, after its earnings results beat the expectations. Revs up 5.9% y/y to $7.926B Global Streaming Net Additions 2.41M Total paid membership up 4.5% y/y to 223.09M Letter to shareholders: https://s22.q4cdn.com/... https:/…
@pkafka Peter Kafka on x
Netflix had very good earnings. By old streaming standards, at least. Added 2.4 million subs vs 1 million forecast. Stock is up 10%. Good thing they listened to everyone's advice! https://twitter.com/...
@lucas_shaw Lucas Shaw on x
For all the criticism of Netflix's programming on the internet, it still releases a lot of things people want to watch. Dahmer, Stranger Things, Gray Man, Purple Heats, Extraordinary Attorney Woo. That is in one quarter.
@vivekgramaswamy Vivek Ramaswamy on x
When Netflix bent the knee to political orthodoxy, it flailed badly. But they answered the wake-up call by adding “excellence” to their cultural principles and told close-minded employees to leave instead of whining. Now the results speak for themselves. https://www.wsj.com/...
@sherman4949 Alex Sherman on x
Hmmmm. Netflix says it's going to stop giving guidance for subscribers moving forward to try to convince investors to instead focus on revenue as the metric that matters. I wonder if that will work ...
@bcheungz Brian Cheung on x
“they are all losing money” - netflix, on its streaming competitors https://s22.q4cdn.com/... https://twitter.com/...
@pkafka Peter Kafka on x
Big takeaway from the Netflix earnings letter is that Netflix has heard all of the things you want it to change and it's not going to do most of them.
@michael_khouw Michael C. Khouw on x
Streaming giant Netflix added more than twice as many new subscribers than expected during the third quarter, reversing back-to-back quarters of defections https://www.wsj.com/... via @WSJ
@geronimo_73_ @geronimo_73_ on x
According to its Q3 FY2022 report, @Netflix has 55 games in development by third party studios for a “multi-year journey” to add to current 35 available for its subscribers “we're seeing some encouraging signs of gameplay leading to higher retention” > https://ir.netflix.net/... …
@carnage4life Dare Obasanjo on x
Introducing an ad tier has definitively fixed Netflix's growth problem. Advertising business models continue to win online regardless of what naysayers think.
@kevin_m_martin Kevin Michael Martin on x
Great to see this in current environment. Don't discount great earnings from tech companies this quarter just because the markets have been rough. Could bode well for what's coming from others this earnings season. Let's see. $NFLX https://twitter.com/...
@pkafka Peter Kafka on x
Netflix has a big advertising event in NYC tonight so it would be awkward if they have lousy earnings.
@sarahwhit10 Sarah Whitten on x
Netflix will begin cracking down on password sharing next year. People who have been borrowing accounts will be able to create their own OR people sharing their accounts can create sub-accounts to pay for friends or family to use theirs. https://www.cnbc.com/...
@lucas_shaw Lucas Shaw on x
Netflix estimates that its streaming competition loses more than $10 billion a year. (I've had people tell me $15B.) It also uses this to argue Dahmer is a bigger hit than new Game of Thrones or Lord of the Rings. https://twitter.com/...
@dz David Zhou on x
lots of really neat gaming stuff under way! https://techcrunch.com/...
@joshlu Josh Lu on x
Nice get for Netflix which is creating a sort of utopia for game devs who don't want to have to focus on monetization systems... I suspect they will be working with more @Blizzard_Ent devs going forward https://techcrunch.com/...
@itsthebrandi @itsthebrandi on x
The Sega Channel was so far ahead of its time. Anyway, has Netflix considered just marketing the shit they have? https://twitter.com/...
@batman_beware @batman_beware on x
If Netflix was smart they'd partner up with Xbox and you get XCloud if you're subscribed to Netflix https://twitter.com/...
@jank0 Janko Roettgers on x
Netflix's new SoCal gaming studio will be led by former Overwatch executive producer Chacko Sonny. Updated my story: https://www.protocol.com/...
@rhysmorgan Rhys Morgan on x
If Google couldn't make cloud gaming work (OK, partly because they get bored, but still) then Netflix can't either, likely even with their data centre locality advantages. https://twitter.com/...
@wario64 @wario64 on x
Netflix is “seriously exploring a cloud gaming offering.” “It's a value add. We're not asking you to subscribe as a console replacement... The hope is over time that it just becomes this very natural way to play games where wherever you are” https://techcrunch.com/... https://twi…

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