Netflix has delivered a strong third quarter for 2024, beating Wall Street’s subscriber growth expectations. The streaming giant added 5.1 million new members, driven by a popular content slate and a successful ad-supported plan. This positive news sent the company’s stock higher as it prepares for an even bigger holiday season with the highly anticipated return of its hit show, Squid Game.
Subscriber Growth Outpaces Wall Street Predictions
In its latest earnings report, Netflix revealed a significant beat on subscriber additions for the July to September period. The company welcomed 5.1 million new subscribers, easily surpassing the 4 million that analysts had predicted.
This impressive performance led to a 4.8% jump in Netflix’s shares during after-hours trading on Thursday, signaling strong investor confidence. The growth was supported by the release of popular shows like The Perfect Couple and Nobody Wants This.
However, the growth shows a slowdown compared to last year, when Netflix added 8.76 million subscribers in the same quarter. Despite this, Co-CEO Ted Sarandos remains positive about the company’s direction. “We had a plan to re-accelerate the business, and we delivered on that plan,” Sarandos stated, adding that the company expects to see even stronger gains in the final quarter of 2024.
Ad-Supported Plan Becomes a Key Driver
A major highlight from the quarterly report was the booming success of Netflix’s ad-supported subscription tier. This lower-cost option is quickly becoming a central part of the company’s strategy for future growth.
The ad-supported plan accounted for more than 50% of all new signups in markets where it is available. This shows that the strategy to attract new audiences in competitive and saturated markets, especially the U.S., is working effectively. It provides an affordable entry point for consumers while opening up a new revenue stream for the company.
While financials like revenue and operating margins are improving, some analysts remain cautious. Forrester analyst Mike Proulx noted, “A steep decline in net new subscribers is what’s concerning.” He pointed out that while international growth is possible, the U.S. market is “getting tapped out.”
Netflix has indicated that it doesn’t expect advertising to be a primary source of revenue until 2026, but the current momentum is a promising sign for its long-term goals.
A Closer Look at the Q3 2024 Financials
Beyond subscriber numbers, Netflix posted strong financial results across the board, beating forecasts for revenue and earnings per share. The company’s focus on profitability is clearly paying off, as shown by its significant increase in operating margin.
| Metric | Result | Forecast |
|---|---|---|
| New Subscribers | 5.1 million | 4 million |
| Revenue | $9.825 billion | $9.769 billion |
| Earnings per Share (EPS) | $5.40 | $5.12 |
One of the most impressive figures was the company’s operating margin, which reached 30% in the third quarter. This is a substantial improvement from the 22% operating margin reported in the same quarter of 2023, highlighting Netflix’s successful efforts to manage expenses and improve efficiency.
New Content and Pricing Strategy Fuel Future Hopes
Netflix is banking on a strong content lineup to keep its momentum going into the holiday season. The much-awaited second season of the global phenomenon Squid Game is scheduled for a December release, which is expected to drive a major surge in viewership and new signups.
The company is also expanding its offerings to attract a wider audience and more advertisers. This includes a push into live events, which will feature:
- A highly publicized boxing match between YouTube star Jake Paul and legend Mike Tyson.
- Two live National Football League (NFL) games on Christmas Day.
Alongside content expansion, Netflix is adjusting its pricing. The company has started to roll out price hikes in countries like Spain and Italy, testing how much consumers are willing to pay. So far, it has seen little resistance, suggesting that customers continue to see value in its service.
Despite industry trends, Netflix has confirmed it will not bundle its service with competitors like Disney or Warner Bros Discovery. The company believes its unique and expansive content library is its biggest selling point.
What is Next for the Streaming Giant
The Q3 2024 results confirm Netflix’s successful pivot from chasing subscriber counts to focusing on sustainable revenue growth and profitability. This strategic shift is reshaping how the company measures its own success.
Starting in 2025, Netflix will no longer report its quarterly subscriber numbers. Instead, it will emphasize key financial metrics like revenue, profit margins, and free cash flow as the primary indicators of its health.
While challenges like market saturation in the U.S. remain, Netflix is confident in its strategic direction. With a hit show returning and new live events on the horizon, the streaming leader is well-positioned for a strong finish to 2024 and continued success in the years to come.
Frequently Asked Questions about Netflix’s Q3 2024 Performance
How many subscribers did Netflix add in Q3 2024?
Netflix added 5.1 million new subscribers globally during the third quarter of 2024, which was more than one million above what Wall Street analysts had forecast.
What is driving Netflix’s recent growth?
The growth is being driven by a combination of a strong content slate, the increasing popularity of its lower-cost ad-supported plan, and strategic price adjustments in various international markets.
Is Squid Game season two coming out soon?
Yes, Netflix has confirmed that the second season of its Korean drama sensation, Squid Game, is set to be released in December 2024, just in time for the holiday season.
Why is Netflix stopping its reporting of subscriber numbers?
Starting in 2025, Netflix will stop reporting subscriber numbers to shift focus towards what it considers more important indicators of its business health, such as revenue, operating margin, and overall profitability.
