On Thursday, Netflix reported better-than-expected 3Q24 earnings which surpassed market estimates, attributed to ongoing growth in its advertising sector.
Netflix’s ad-tier subscriptions surged by 35% on a quarterly basis, while the company is scheduled to launch the service in Canada in 4Q, followed by a wider rollout in 2025.
Although the streamer anticipates advertising to not play a significant role in driving growth until 2026, it emphasized that the ad-tier attracted over 50% of new sign-ups in regions where it is offered during the third quarter.
Following the announcement of its earnings report, the share price of Netflix in the aftermarket trading increased by approximately 5%.
During the third quarter, Netflix’s paid subscribers was at 282.7 million, beating StreetAccount’s estimation of 282.15 million users.
Revenue was recorded at $9.83 billion, surpassing the $9.77 billion forecasted by LSEG, with a net income of $2.36 billion or an earnings per share of $5.40. The figure soared by 15% from $8.54 billion recorded in the same quarter last year.
Meanwhile, the company’s prospect for the fourth quarter is to reach $10.13 billion in revenue with earnings per share of $4.23.
Netflix expects 2025 full-year revenue to be between $43 billion and $44 billion as it improves its main series and film library while also investing in new avenues like ads and gaming. The majority of that revenue growth is anticipated to come from a constant stream of new paid memberships.
Netflix acquired 5.1 million new members for its streaming service during the third quarter, more than Wall Street’s projection of 4.5 million according to StreetAccount. In total, the company now has 282.7 million memberships across all pricing tiers.
Commencing in 2025, Netflix will no longer provide investors with updates on its subscriber numbers, opting instead to focus on revenue and other financial metrics as key performance indicators.
