Netflix reverses its subscriber slump; delivers $12.5bn revenue in Q3 2022
Netflix, Inc. (NASDAQ: NFLX) has today released its third-quarter 2022 financial results, which showed an increase of 2.4 million new subscribers worldwide – some good news for the streaming giant after its loss of paid subscribers in Q1 and Q2.
The company posted total revenue of US$7.92 billion (A$12.55 billion), slightly exceeding forecasts, up 6% year-on-year, and was driven by a 5% increase in average paid memberships, plus a 1% rise in ARM (Average Revenue per Membership).
In APAC, revenue grew 19% year-on-year, with an additional 1.4 million paid memberships added into the region versus 2.2 million in Q3.
During the streamer’s Q3 earnings interview, Netflix co-chief executive, Reed Hastings said: “Well, thank God we’re done with shrinking quarters. The guidance is reasonable, and we have to pick up the momentum. Everything lines us up for a good next year. We still have (foreign-exchange headwinds), and that’s a huge hit. That’s not going to go away. Other than that, the stars are lining up really well.”
The company said: “Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard – we estimate they are all losing money, with combined 2022 operating losses well over $10 billion, versus Netflix’s US$5 to $6 billion annual operating profit.”
The company continued: “After a challenging first half, we believe we’re on a path to reaccelerate growth. The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us.”
Q3 2022 Netflix results. [click to enlarge]
Cumulatively, these 12 markets account for US$140 billion of brand advertising spend across TV and streaming, or over 75% of the global market.
The company added: “The reaction from advertisers so far has been extremely positive and we believe that more choice, especially for more price-conscious consumers, will translate into meaningful incremental revenue and operating profit over time.
“That said, it’s still very early days and, since we’re keeping our existing plans ad-free, it will take us time to build up our membership base and the associated ad revenue.”
The streamer said its bingeable release model helps drive substantial engagement, especially for newer titles. “In English-scripted TV, we kicked off the quarter with Stranger Things S4, which generated 1.35 billion hours viewed – our biggest season of an English language series ever.
“This was followed in August by The Sandman (351 million hours viewed), which was loved by fans and critics alike. Near the end of the quarter, we launched season five of fan-favourite Cobra Kai (270 million hours viewed) and limited series Monster: The Jeffrey Dahmer Story (824 million hours viewed) from Ryan Murphy, which is now the streamer’s second-largest English series.”
Netflix’s share price surged 14 per cent in after-hours trading off the back of its Q3 results.
Netflix currently trades at US$240.86 (A$240.86) and has a market capitalisation of US$107.11 billion (A$169.72 billion) as of 19 October 2022.
Netflix said its bingeable release model helps drive substantial engagement, especially for newer titles.
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