Netflix Delivers Q3 Revenue Gains

Netflix’s third-quarter revenues were up 31 percent to $5.2 billion, even as the platform missed its subscriber forecast, adding 6.8 million customers in the period versus a projected 7 million.

Net profit at the platform was $665 million, up from the Q3 2018 profit of $403 million. Netflix has 158.3 million paid streaming customers globally and expects to hit 166 million in Q4.

In the U.S., there were 500,000 net additions in the period, under the 800,000 projected. “Since our U.S. price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower U.S. membership growth,” the company said in its letter to shareholders.

International net additions were 6.3 million, a 23-percent gain on the Q3 2018 additions and ahead of the 6.2 million forecast. “We’re making strides in our key markets and, while we have much more work to do in Asia in the coming years, we are seeing encouraging signs of progress.”

The shareholder letter continued, “With so many firms now looking to provide premium video content to consumers, it’s a great time to be a creator of content. Amazing content can be expensive. We don’t shy away from taking bold swings if we think the business impact will also be amazing. We don’t close every deal we chase and we don’t chase every deal on the table. And while not all projects that we do pursue will work out, our large and growing subscription base helps enable us to try many approaches, while the size of our content budget ($10 billion on P&L spend and $15 billion in cash content spend in 2019) insulates us from dependency on any single title. We’ll continue to learn as we go, while staying disciplined by assessing each opportunity individually, steadily marching up our operating margin and improving free cash flow.”