Netflix's Smashing Quarter Reflects A Shift In Priorities

Netflix Inc NFLX surpassed estimates with its third quarter financials as it continued to pivot towards an ad-supported membership model to keep its rivals at bay, including Disney+ from Walt Disney Company DIS and Amazon Prime from Amazon.com Inc AMZN.

Considered as one of its main threats even before it officially entered the streaming scene, Disney has finally reached the profitability shore with its streaming business during the third quarter. Moreover, Disney achieved profitability across its combined streaming business a quarter ahead of its previous guidnace But even the world’s biggest entertainment company needed a page from Netflix’s book when it comes to streaming, as Disney followed Netflix's footsteps in deciding to crack down on password sharing and pursue new opportunities with ad-supporting plans. A year after its prior hikes, Disney is again raising prices for Disney Plus, Hulu and ESPN.

Netflix’s Third Quarter Highlights

For the quarter ended on September 30th, the streaming giant reported revenue grew 15% to $9.83 billion.

The ad-supported membership tier reported 35% growth on a quarter-over-quarter basis. While ads are not expected to become a primary growth fuel until 2026, Netflix executives did reveal that the ad-tier accounted for over 50% of sign-ups during the quarter in the countries where it’s available.

Netflix reported earnings per share of $5.40, suprassing LSEG’s consensus estimate of $5.12 per share, surging 45% YoY.

An upbeat December quarter outlook.

Netflix expects fourth-quarter revenue to rise 14.7%. As for 2025, Netflix guided for a revenue range between $43 billion and $44 billion, which implies revenue growth of 11% to 13% from its guided 2024 revenue of $38.9 billion.

Netflix Gets To Keep Its Streaming Crown

From establishing restrictions on account sharing to building an advertising business, Netflix has managed to reinvigorate its business and keep its streaming crown. With its latest quarter, it crushed earnings expectations, soaring to fresh all-time highs to end the week. Moving forward, user engagement, what Netflix evaluates as the best proxy for member happiness, will be the main point of the streaming king’s narrative, along with the evolution and growth of its advertising business. Netflix is delivering on its promises and for now, the road ahead seems clear despite a crowded streaming landscape.

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