Netflix (NFLX) experienced a 16% surge in its share price in the stock market on Thursday.
This is coming after the company reported a surge in subscriptions in Q3 2023.
On Wednesday, Netflix’s quarterly revenue report was released, and it was reported that the company had recorded a revenue of $8.54 billion in Q3 2023, a 7.8% increase year-on-year.
The revenue growth was tied to a surge in subscriptions which exceeded the expectations of Wall Street analysts.
The company recorded 8.76 million new subscriptions in Q3 2023 against the 5.49 million forecasted by Street Account.
The company noted that the surge in subscriptions was due to a jump in its ad-based membership, which increased by 70% from Q2 2023.
They noted that 30% of the new subscribers in countries with the ads plan are subscribing to the plan.
The ads plan is currently available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States.
Details of Netflix’s Q3 2023 Performance
- Revenue: $8.54 billion, +7.8% YoY
- Operating Margin: 22.4%, +3.1% YoY
- Net Income: $1.677 billion, +19.96%
- Earnings per Share: $3.73, +20.3% YoY
- Paid Subscribers Growth: 8.76 million, +263.5% YoY
- Global Paid Streaming Membership: 247.15 million, +10.78%
What you should know
After the release of the revenue report, Netflix’s (NFLX) share price on Thursday appreciated by 16.1% ($55.58) to close at $401.77 on Nasdaq.
For the fourth quarter of 2023, the company is forecasting a 10.7% YoY increase in revenue to $8.69 billion.
However, they are forecasting a drop in operating margin to 13.3%, hence for FY 2023, they are forecasting an operating margin of 20%.
They also note that they expect new subscriber additions in Q4 2023 to be similar to Q3 2023 figures.
It has also been observed that Netflix’s financial performance was not affected by the Hollywood actors and writers’ strike.
The strike which began in July has seen Netflix alongside other members of USA’s Alliance of Motion Picture and Television Producers sign higher wages for actors and writers.
However, it is noted that the agreements would lead to higher costs for content creation.
Netflix in Nigeria
In Nigeria, Netflix’s growth cannot be substantiated due to a paucity of data about the platform’s operation. However, one of its Nollywood originals, The Blackbook, made groundbreaking exploits this year, as it was the first Nigerian movie to hit the number-one spot on Netflix worldwide. Within a week of release, it accumulated 5.6 million views and 11.6 million watch hours.