Netflix Ad-Tier Memberships Growth and Earnings Beat Expectations
Netflix exceeded Wall Street expectations in its third-quarter earnings report, showcasing growth in both its subscriber base and revenue. The positive performance was partially driven by a 35% quarter-over-quarter surge in Netflix ad-tier memberships. Though Netflix doesn’t foresee advertising as a significant revenue contributor until 2026, the ad-supported tier accounted for over half of the new sign-ups in markets where it is available. The company is set to expand this service into Canada in the coming quarter and plans for a broader rollout in 2025.
Financially, Netflix delivered strong results, with shares climbing 5% in after-hours trading. The company posted earnings per share (EPS) of $5.40, beating the expected $5.12 according to LSEG estimates. Netflix’s revenue for the quarter also surpassed forecasts, coming in at $9.83 billion compared to the expected $9.77 billion.
Subscriber Growth and Future Projections
In terms of subscriber growth, Netflix added 5.1 million paid memberships in the quarter, exceeding the 4.5 million projected by analysts. This brings the total subscriber base to 282.7 million, slightly above expectations. Netflix reported a net income of $2.36 billion for the quarter, significantly up from the $1.68 billion reported in the same period last year. Revenue also jumped by 15%, reaching $9.83 billion compared to $8.54 billion a year ago. Looking ahead, Netflix anticipates fourth-quarter revenue to hit $10.13 billion, with earnings per share forecasted at $4.23.
Netflix’s long-term financial outlook remains optimistic. The company expects its 2025 full-year revenue to range between $43 billion and $44 billion, driven by a “healthy increase in paid memberships” and investments in its core content offerings, advertising, and gaming. However, Netflix plans to shift focus away from subscriber growth as a primary performance indicator starting in 2025, instead prioritizing revenue and other financial metrics.
Content Lineup and Upcoming Releases
Netflix’s strong quarter was supported by a diverse content lineup, including new shows like The Perfect Couple, Nobody Wants This, and Tokyo Swindlers. Returning fan favorites such as Emily in Paris and Cobra Kai also contributed to viewership. On the film front, the company touted the success of Beverly Hills Cops: Axel F, Rebel Ridge, and Officer Black Belt. As the year progresses, Netflix has several high-profile releases planned. These include the much-anticipated second season of Squid Game, set to debut in the fourth quarter, as well as live sports events, including a boxing match between Jake Paul and Mike Tyson and two NFL games scheduled for Christmas Day.
Overall, Netflix’s third-quarter results signal continued growth, supported by its expanding success of Netflix ad-tier memberships and successful content offerings. The company is poised to capitalize on these strengths as it moves toward a revenue-focused strategy in the coming years.
