Netflix reported better-than-expected results for the third quarter, with 4.38 million new streaming subscribers added compared to a forecast for around 3.5 million. Revenues rose 16.3 percent to USD 7.48 billion, and operating profit was 23.5 percent higher than a year ago at USD 1.76 billion. Netflix attributed the growth to an improved content line-up compared to the slow first half of the year and said it expects a strong finish to 2021.
Netflix finished September with 213.56 million customers in total. Growth is expected to accelerate in Q4 to 8.5 million new subscribers, taking the group to over 222 million subscribers at year-end, an increase of 9 percent from 2020.
A big increase in new content planned for Q4 showed up as higher costs in the past quarter and will put pressure on margins, the company noted. Free cash flow was negative for a second consecutive quarter, at USD 106 million in Q3, and fourth-quarter net profit is expected to drop to USD 365 million from USD 1.45 billion in the past quarter and USD 542 million a year earlier. Netflix said the operating margin will halve to around 6.5 percent in Q4 from 14 percent a year ago, but it still expects a figure of around 20 percent for the full year.
Asia accounted for half the subscriber growth in the past quarter, while the EMEA region also strengthened to around 1.8 million net additions. Growth was much slower in the Americas, but Netflix said it still sees room for expansion there. Average revenue per subscriber was up 5 percent year-on-year excluding currency effects.
The company also confirmed that The Squid Game has become its biggest show ever, with 142 million viewers in the first four weeks of its global release. The show has been ranked number one in 94 countries, and Netflix is rolling out merchandise to further monetise the title.
Netflix said it will start releasing more viewing figures, including outside earnings reports and also the hours viewed per title. Under the latter measure, Bridgerton series 1 was its most watched show with 625 million hours, followed by Money Heist part 4 with 619 million and Stranger Things 3 with 582 million.
