Netflix adds 7M subscribers in Q3, beats earnings expectations, sends stock soaring

Dalvin Brown | USA TODAY

Show Caption Hide Caption We spend more time on Netflix than we do with family New data from the Streaming Observer says that people are spending about twice as much time binge-watching Netflix than they do spending time with family. Buzz60's Natasha Abellard has the story.

Netflix's most-watched stock metric is its subscriber growth and, in its latest earnings report, the video streaming service didn't disappoint.

Netflix (NFLX) released its quarterly earnings report on Tuesday after the market close, revealing that it added 7 million subscribers during the July-September time period, bringing its total monthly memberships worldwide up to 137 million. That's about 2 million more than it expected.

The subscription growth was made up mostly by overseas memberships. 1.96 million domestic users signed up for the service compared with 5.87 million international additions.

"Netflix’s strong quarter will at least temporarily put to rest questions over the long-term viability of its business and shift focus to the competition, which continues to significantly lag the streaming giant," said eMarketer media analyst Paul Verna. eMarketer is a market data and research company.

Netflix's strong Q3 serves as a comeback after it failed to meet its own performance predictions in the Q2 (falling short of its 1.2 million subscriber target) that sent its stock plunging.

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The world’s largest paid online TV network expects to add another 9.4 million subscribers in the last part of this year, 7.6 internationally.

"As internet entertainment grows, more companies see the large opportunity," said Reed Hastings, Chairman, President and CEO of the company, commenting on the increased competition. "Content companies such as WarnerMedia and Disney/Fox are moving to self-distribute their own content; tech firms like Apple, Amazon and others are investing in premium content to enhance their distribution platforms. Amid these massive competitors on both sides, plus traditional media firms, our job is to make Netflix stand out so that when consumers have free time, they choose to spend it with our service."

The company's revenue was at $4 billion, in-line with analyst estimates according to Bloomberg. In the third quarter last year, Netflix posted just under $3 billion in sales.

The Los Gatos, California-based company reported earnings of 89 cents per share, beating analyst estimates of 68 cents per share. In last year's third quarter, the company earned 29 cents a share.

Netflix's shares surged as much as 14 percent in after-hours trading.

"These positive results come as head-to-head competitors like Amazon and Hulu are ramping up their content investments," Verna said. "Given Netflix’s longtime leadership and extensive content library, competitors will be hard-pressed to build streaming businesses that can aspire to become market leaders."

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