Netflix, the prominent U.S.-based video streaming service provider, has released its financial report for the third quarter of the 2023 fiscal year. The report reveals that Netflix achieved a third-quarter revenue of $85.42 billion, marking a 7.8% increase from the previous year when it reported $79.26 billion in revenue. Net profit surged to $16.77 billion, a remarkable 20% rise from the $13.98 billion reported in the same period last year. The earnings per share also saw a boost, standing at $3.73, compared to $3.10 per share in the previous year.
Both Netflix's third-quarter revenue and earnings per share have surpassed expectations set by Wall Street analysts. Global streaming service subscriber numbers and new paid subscriber additions for the quarter have exceeded forecasts as well. These robust results have propelled Netflix's stock price to surge more than 12% in after-hours trading.
Notably, Netflix achieved its highest global increase in paid subscribers since the second quarter of 2020, with an impressive 10.1 million new paid subscribers. This surge in new subscribers could be attributed to the COVID-19 pandemic, which led to lockdown measures and increased demand for home entertainment options.
Key Financial Highlights:
In the fiscal quarter ending on September 30, Netflix reported a net profit of $16.77 billion, a 20% increase from the $13.98 billion in the same period last year. Earnings per share stood at $3.73, outperforming analysts' earlier expectations. Yahoo Finance data reveals that 34 analysts had, on average, projected earnings per share for Netflix's third quarter to be $3.49.
The third-quarter revenue, amounting to $85.42 billion, grew by 7.8% from the $79.26 billion reported for the same period in the prior year. It slightly exceeded the average analyst expectation of $85.4 billion, which was based on data from 31 analysts provided by Yahoo Finance.
Regarding revenue from different regions, Netflix reported that streaming service revenue from the United States and Canada amounted to $37.35 billion, up from $36.02 billion in the same period the previous year. European, Middle Eastern, and African regions contributed $26.93 billion, compared to $23.76 billion last year. Latin America's revenue reached $11.43 billion, up from $10.24 billion, and Asia-Pacific revenue stood at $9.48 billion, rising from $8.89 billion in the previous year.
In the third quarter, Netflix's operating income reached $19.16 billion, up from $15.33 billion in the same period last year, with an operating profit margin of 22.4%, an increase from 19.3% in the prior year.
Netflix's net cash generated from operating activities was $19.92 billion in the third quarter, a significant increase from $5.57 billion in the same period the previous year. The free cash flow reached $18.88 billion, up from $4.72 billion. Notably, Netflix now anticipates full-year 2023 free cash flow to reach approximately $6.5 billion, a significant increase from the previous expectation of at least $5 billion.
The costs and expenses for Netflix's third-quarter revenue were reported as follows: cost of revenues was $49.31 billion, marketing expenses were $5.59 billion, technology and development expenses were $6.57 billion, and general and administrative expenses reached $4.79 billion.
In the third quarter, Netflix initiated a stock buyback program worth $25 billion and expanded its authorized stock buyback program by $100 billion.
During the third quarter, Netflix's advertising-supported subscription plan witnessed a nearly 70% increase in members. The monthly cost for the plan in the U.S. market is $6.99, supporting growth in their advertising plan.
User Metrics:
Netflix reported a total of 2.4715 billion paid streaming service subscribers globally in the third quarter, marking a robust 10.8% increase from 2.2309 billion in the same period the previous year. These numbers exceeded the expectations of analysts. Market intelligence firm StreetAccount data revealed that Wall Street analysts, on average, had anticipated 2.4388 billion global paid streaming service subscribers for Netflix in the third quarter.
Netflix's third-quarter subscriber growth was regionally distributed as follows: in the United States and Canada, streaming service paid subscribers amounted to 77.32 million, up from 73.39 million in the same period last year. In the European, Middle Eastern, and African regions, there were 83.76 million paid subscribers, compared to 73.53 million in the previous year. Latin America had 43.65 million paid subscribers, increasing from 39.94 million, and the Asia-Pacific region had 42.43 million paid subscribers, up from 36.23 million.
The global number of new paid streaming service subscribers in the third quarter reached 8.76 million, outperforming the 2.41 million from the same period the previous year. These figures surpassed analyst predictions. Data from market intelligence firm StreetAccount suggested that Wall Street analysts, on average, had expected 5.49 million new global paid streaming service subscribers for Netflix in the third quarter.
In terms of average revenue per user, Netflix reported that the average revenue per user was $16.29 in the United States and Canada, slightly down from $16.37 in the same period the previous year, factoring out the impact of currency exchange rate fluctuations. In European, Middle Eastern, and African regions, it increased to $10.98, compared to $10.81, a 2% growth, and a 2% decrease factoring out currency fluctuations. Latin America's average revenue per user was $8.85, compared to $8.58, marking a 3% increase, and an 8% increase when considering currency impacts. In the Asia-Pacific region, the average revenue per user was $7.62, down from $8.34, which is a 9% decrease, or a 6% decrease when accounting for currency fluctuations.
Outlook:
Netflix's outlook for the fourth quarter of the 2023 fiscal year projects a revenue of $86.92 billion, indicating a 10.7% increase compared to the same period the previous year. This outlook aligns with analysts' predictions. Yahoo Finance data showed that 30 analysts, on average, had previously estimated Netflix's fourth-quarter revenue to reach $87.7 billion, with a projected earnings per share of $2.15 by 33 analysts.
Stock Performance:
On the day of the earnings report, Netflix's stock price saw a decrease of $9.53 in regular trading on the Nasdaq Stock Market, closing at $346.19, a decrease of 2.68%. In the subsequent after-hours trading session, which concluded at 6:08 PM Eastern Time (6:08 AM Beijing Time on the following day), Netflix's stock price significantly increased by $42.81, reaching $389.00, an increase of 12.37%. Over the past 52 weeks, Netflix's stock price ranged from a high of $485.00 to a low of $252.09.
In conclusion, Netflix's strong financial performance in the third quarter of 2023 exceeded expectations, driven by an impressive increase in global subscribers and new paid subscribers. The company's expanded content offerings and robust subscriber growth bode well for its future growth prospects.
Please note that all financial figures are presented in USD, and percentage changes are rounded to the nearest tenth.
Both Netflix's third-quarter revenue and earnings per share have surpassed expectations set by Wall Street analysts. Global streaming service subscriber numbers and new paid subscriber additions for the quarter have exceeded forecasts as well. These robust results have propelled Netflix's stock price to surge more than 12% in after-hours trading.
Notably, Netflix achieved its highest global increase in paid subscribers since the second quarter of 2020, with an impressive 10.1 million new paid subscribers. This surge in new subscribers could be attributed to the COVID-19 pandemic, which led to lockdown measures and increased demand for home entertainment options.
Key Financial Highlights:
In the fiscal quarter ending on September 30, Netflix reported a net profit of $16.77 billion, a 20% increase from the $13.98 billion in the same period last year. Earnings per share stood at $3.73, outperforming analysts' earlier expectations. Yahoo Finance data reveals that 34 analysts had, on average, projected earnings per share for Netflix's third quarter to be $3.49.
The third-quarter revenue, amounting to $85.42 billion, grew by 7.8% from the $79.26 billion reported for the same period in the prior year. It slightly exceeded the average analyst expectation of $85.4 billion, which was based on data from 31 analysts provided by Yahoo Finance.
Regarding revenue from different regions, Netflix reported that streaming service revenue from the United States and Canada amounted to $37.35 billion, up from $36.02 billion in the same period the previous year. European, Middle Eastern, and African regions contributed $26.93 billion, compared to $23.76 billion last year. Latin America's revenue reached $11.43 billion, up from $10.24 billion, and Asia-Pacific revenue stood at $9.48 billion, rising from $8.89 billion in the previous year.
In the third quarter, Netflix's operating income reached $19.16 billion, up from $15.33 billion in the same period last year, with an operating profit margin of 22.4%, an increase from 19.3% in the prior year.
Netflix's net cash generated from operating activities was $19.92 billion in the third quarter, a significant increase from $5.57 billion in the same period the previous year. The free cash flow reached $18.88 billion, up from $4.72 billion. Notably, Netflix now anticipates full-year 2023 free cash flow to reach approximately $6.5 billion, a significant increase from the previous expectation of at least $5 billion.
The costs and expenses for Netflix's third-quarter revenue were reported as follows: cost of revenues was $49.31 billion, marketing expenses were $5.59 billion, technology and development expenses were $6.57 billion, and general and administrative expenses reached $4.79 billion.
In the third quarter, Netflix initiated a stock buyback program worth $25 billion and expanded its authorized stock buyback program by $100 billion.
During the third quarter, Netflix's advertising-supported subscription plan witnessed a nearly 70% increase in members. The monthly cost for the plan in the U.S. market is $6.99, supporting growth in their advertising plan.
User Metrics:
Netflix reported a total of 2.4715 billion paid streaming service subscribers globally in the third quarter, marking a robust 10.8% increase from 2.2309 billion in the same period the previous year. These numbers exceeded the expectations of analysts. Market intelligence firm StreetAccount data revealed that Wall Street analysts, on average, had anticipated 2.4388 billion global paid streaming service subscribers for Netflix in the third quarter.
Netflix's third-quarter subscriber growth was regionally distributed as follows: in the United States and Canada, streaming service paid subscribers amounted to 77.32 million, up from 73.39 million in the same period last year. In the European, Middle Eastern, and African regions, there were 83.76 million paid subscribers, compared to 73.53 million in the previous year. Latin America had 43.65 million paid subscribers, increasing from 39.94 million, and the Asia-Pacific region had 42.43 million paid subscribers, up from 36.23 million.
The global number of new paid streaming service subscribers in the third quarter reached 8.76 million, outperforming the 2.41 million from the same period the previous year. These figures surpassed analyst predictions. Data from market intelligence firm StreetAccount suggested that Wall Street analysts, on average, had expected 5.49 million new global paid streaming service subscribers for Netflix in the third quarter.
In terms of average revenue per user, Netflix reported that the average revenue per user was $16.29 in the United States and Canada, slightly down from $16.37 in the same period the previous year, factoring out the impact of currency exchange rate fluctuations. In European, Middle Eastern, and African regions, it increased to $10.98, compared to $10.81, a 2% growth, and a 2% decrease factoring out currency fluctuations. Latin America's average revenue per user was $8.85, compared to $8.58, marking a 3% increase, and an 8% increase when considering currency impacts. In the Asia-Pacific region, the average revenue per user was $7.62, down from $8.34, which is a 9% decrease, or a 6% decrease when accounting for currency fluctuations.
Outlook:
Netflix's outlook for the fourth quarter of the 2023 fiscal year projects a revenue of $86.92 billion, indicating a 10.7% increase compared to the same period the previous year. This outlook aligns with analysts' predictions. Yahoo Finance data showed that 30 analysts, on average, had previously estimated Netflix's fourth-quarter revenue to reach $87.7 billion, with a projected earnings per share of $2.15 by 33 analysts.
Stock Performance:
On the day of the earnings report, Netflix's stock price saw a decrease of $9.53 in regular trading on the Nasdaq Stock Market, closing at $346.19, a decrease of 2.68%. In the subsequent after-hours trading session, which concluded at 6:08 PM Eastern Time (6:08 AM Beijing Time on the following day), Netflix's stock price significantly increased by $42.81, reaching $389.00, an increase of 12.37%. Over the past 52 weeks, Netflix's stock price ranged from a high of $485.00 to a low of $252.09.
In conclusion, Netflix's strong financial performance in the third quarter of 2023 exceeded expectations, driven by an impressive increase in global subscribers and new paid subscribers. The company's expanded content offerings and robust subscriber growth bode well for its future growth prospects.
Please note that all financial figures are presented in USD, and percentage changes are rounded to the nearest tenth.
