In a Quarter 3 shareholders letter, Netflix reports that they grew to $5.2 billion in revenue, up 31% over the prior year. Operating income has doubled to $1 billion.
Netflix reports that subscriber numbers have grown as well with average streaming paid memberships and ARPU up 22% and 9% year over year, respectively.
As revenue has increased, the streaming platform will be able to continue investing in additional content. “We strive to program Netflix with the best variety of high quality content across many genres (scripted series, films, docs, comedy specials, unscripted TV, kids & family, anime, etc.). Our ambitious approach reflects our goal to satisfy the entertainment desires of our 158m-plus members and to attract as many of the hundreds of millions of non-members as we can. To accomplish this, we need great breadth of quality content because people have very diverse tastes,” the letter says, going on to say that original content will continue to be a focus.
“Netflix’s miss on subscribers in the US spells trouble for the company ahead of heightened competition. The fourth quarter represents a completely new ballgame for Netflix as Disney+ and Apple TV+ will compete not just for subscribers, but for hit shows as well. The fact that Netflix has shown disappointing growth without the new competition present, is a negative omen for Netflix in 2020 and beyond.” Said eMarketer’s forecasting analyst Eric Haggstrom.
The report also shows that Netflix is well aware of the competition and has a plan to stay on top. “Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade. The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV.”
“Amazing content can be expensive. We don’t shy away from taking bold swings if we think the business impact will also be amazing. We don’t close every deal we chase and we don’t chase every deal on the table,” Netflix says. “We’ll continue to learn as we go, while staying disciplined by assessing each opportunity individually, steadily marching up our operating margin and improving free cash flow.”
As for international growth, paid subscriptions internationally grew by 6.3 million, a 23% increase from last year.
Along with sharing data from quarter 3, Netflix also shared projections for quarter 4. According to the letter, Netflix is “expecting consolidated revenue to increase 30% year over year with 9% streaming ARPU growth.” Beginning with the quarter 4 report in January 2020, Netflix will disclose revenue and membership numbers based on region.
We’ll share more updates when Netflix begins their Quarter 3 Earnings Call later this afternoon.
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