Netflix’s third-quarter earnings report just came out, with the company beating analyst expectations on higher-than-expected subscriber numbers. For the third quarter, Netflix reported earnings of 52 cents per share on revenues of $1.1 billion. That compared to earnings of 13 cents per share on sales of $905 million in the year-ago quarter. Earnings were above analyst expectations of 49 cents a share, while revenues were in-line with the $1.1 billion forecast for the quarter.
As always, the most-watched number for Netflix’s earnings report is the company’s domestic subscriber growth. It added 1.3 million domestic subscribers in the quarter, compared to its forecast of 0.7 to 1.5 million US customers during the three months ending in September. Analysts were expecting it to add about 1.1 million subscribers at home and another and 950,000 overseas.
In the second quarter, Netflix added 630,000 domestic subscribers, which was a bit lower analyst expectations. That drove the stock down about 8 percent in after-hours trading, but shares had rebounded since then to over $350. Overall, shares are up more than 200 percent over the past year.
Investors were also looking to see how Netflix’s international growth fared. The company added 1.4 million subscribers overseas, which contributed revenues of $183 million.
Netflix’s growth comes as the company has been adding more high-value original content to its subscription streaming service. Earlier this year, it launched political thriller House of Cards and the third season of cult comedy favorite Arrested Development to rave reviews. In the third quarter it added prison dramedy Orange Is The New Black from Weeds creator Jenji Kohan.
While gaining it subscribers, Netflix’s content push is also winning it some awards. The streaming service became the first of its kind to win three Emmy awards, including one for Best Director of a Drama Series, given to David Fincher for House of Cards. Those wins showed that the company could compete against cable and broadcast networks in playing the original content game.
On the product side, Netflix has also been refining its service to become more personalized. Over the summer it added individualized profiles to support multiple viewers in a household, and followed that up with a new personalized instant queue called “My List,” which is designed to provide new ways to search and discover content available in its library. All of which is meant to keep users coming back for more, and ultimately keep them subscribed to the $8 a month service longer.
The company is also reportedly in talks with cable companies to get the service embedded on their set-top boxes. If that happens, you can expect subscriber growth to probably tick up even faster.
For the fourth quarter, Netflix expects between 32.7 and 33.5 million domestic subscribers, or an increase of between 1.6 million and 2.4 million subscribers. Domestic revenue is expected to come in between $731 million and $741 million, while international sales are pegged at between $210 and $224 million. The company expects total earnings of between $29 million and $49 million, or $0.47 to $0.73 per share.
Netflix investors reacted pretty enthusiastically to the earnings report, driving shares up 10 percent to a record high in after-hours trading.