The Netflix logo is displayed on the mobile phone for illustration. Krakow, Poland, October 17, 2024.
Beata Zorzel | norphoto | Getty Images
Netflix Shares jumped on Friday after the streaming media giant reported third-quarter earnings and revenue that beat expectations.
Netflix shares were up 5.4% in U.S. premarket trading as of 4:39 a.m. ET.
Netflix reported earnings per share of $5.40 for the three-month period ended September 30, beating LSEG estimates of $5.12. Revenue also exceeded expectations, reaching $9.83 billion, higher than the $9.77 billion that analysts had expected.
More importantly, Netflix saw momentum in the ad-supported membership category, which jumped 35% QoQ. While Netflix doesn't expect ads to become a primary growth driver until 2026, it said the ad level accounted for more than 50% of subscriptions in the third quarter in countries where these ads are available.
Netflix also gave an upbeat outlook for the December quarter, saying it expects fourth-quarter revenue to rise 14.7% to $10,128. It expects revenue of $43 billion to $44 billion for 2025, which would mean growth of 11% to 13% from its expected 2024 revenue of $38.9 billion.
Analysts at Citi said in a note following Netflix's earnings report that the company's fourth-quarter forecasts “beat the Street” while its 2025 outlook was “relatively in line with consensus estimates.”
“All in all, we expect to see stocks trading higher” on Friday on the back of earnings, Citi analysts noted.
Richard Bruton, CEO of Ampere Analysis, told CNBC's Squawk Box Europe on Friday that Netflix has benefited from continued investments in content, despite the bleak environment of the broader media landscape.
“It's a good indicator that some of the growth that came out of the market is coming back in 2022. If you think about the last 24 months, we've seen cuts in content spending, hiring freezes, layoffs at some of the major studios and through all of this,” Broughton said. Netflix has tried to continue investing in content.
“If we think about scripted TV, drama, romance and sci-fi, Netflix will be responsible for at least one in 10 global series next year. It's in a very, very different position compared to some of its competitors just in terms of scale,” he added.
