After losing users for two consecutive quarters, Netflix added 2.41 million new users in the third quarter.
On October 18th local time, streaming giant Netflix (Nasdaq:NFLX) released its third quarter financial report for 2022, with revenue increasing by 5.9% year-on-year to US$7.926 billion, higher than analysts' expectations of US$7.837 billion, and 2.41 million new subscribers, reversing the situation of losing users for two consecutive quarters.
As of October 18, US stock closed, Netflix fell 1.73% to US$240.86 per share, and US stocks rose more than 14% after the market closed.
New users in the third quarter exceeded expectations and expected to continue to grow in the fourth quarter
According to Netflix's third-quarter financial report, the company's total revenue was US$7.926 billion, higher than analysts' expectations, and net profit fell 3.5% to US$1.398 billion, and diluted earnings per share (EPS) was US$3.10, lower than analysts' expectations of US$2.13; operating profit fell 12.6% to US$1.533 billion, and operating profit margin fell from 23.5% last year to 19.3%, Netflix blamed it on the appreciation of the US dollar.
Source: Netflix Financial Report
"After experiencing a challenging first half of the year, I believe we are re-accelerating our revenue growth." Netflix said in a letter to shareholders.
In the past three months, Netflix has finally broken the "curse" of losing users continuously, with net increase of 2.41 million subscribers in the third quarter, which is more than twice the expected increase in the second quarter, although it is still lower than the 4.38 million in the same period last year.
During the reporting period, Netflix achieved a growth in the number of users in each region, with 1.43 million new subscribers in the Asia-Pacific region, the strongest growth, while the United States and Canada only added 100,000 new users, the smallest growth rate. The number of new users in Europe, Middle East and Africa was 570,000, and Latin America was 310,000 new users.
Source: Netflix official website
Currently, the company has a total of 223.09 million subscribers, and it is expected that it will continue to add 4.5 million in the last quarter of this year. In the fourth quarter of 2021, Netflix net added 8.28 million subscribers.
In this performance outlook, Netflix expects revenue in the fourth quarter to be US$7.776 billion, to increase 0.9% year-on-year, and diluted earnings per share is US$0.36. As for subscribers, Netflix said it will not provide expectations and guidance for subscribers starting from the fourth quarter.
launches an advertising package, continuing to limit shared passwords
In order to maintain the growth of the number of subscribers, Netflix is still continuing to promote the "restricted shared passwords" plan.
In March and July this year, Netflix successively launched the "add extra member" function and the "add a home" function, allowing subscribers to add "subaccounts".
Just the day before the financial report was released, Netflix added the "Profile Transfer" function again, allowing users to transfer the information of their original account, including personalized recommendations, viewing history, my list and other settings, to the new account. This feature helps encourage users who use other people's accounts to create their own accounts.
In addition, Netflix's low-priced advertising package is also officially launched. The advertising package is priced at US$6.99 per month and will be launched in 12 countries including the United States, the United Kingdom, Canada, Germany, and Japan in stages from November 1 to 10.
"Wall Street Journal " said that in the long run, the above plan may help boost Netflix's revenue, but in the short term, on the one hand, the economic situation continues to deteriorate, and consumers will still save money. On the other hand, the series aired between July and September have been completed one after another, and users may unsubscribe as a result.
analysis agency said that unsubscribers are still increasing
Various signs indicate that the user churn rate is still a "big concern" for Netflix.
The Wall Street Journal said that compared with other streaming platforms, Netflix has the lowest user churn, but the number of unsubscribed users is still increasing. According to data from streaming service data company Antenna, in the United States, Netflix's average monthly unsubscribed volume increased from 1.4 million in the second quarter to 1.5 million in the third quarter, while the average monthly unsubscribed volume in 2021 was only 835,000.
Goldman Sachs analysts quoted data from data analysis company Sensor Tower, saying that in the third quarter, Netflix software downloads in Apple and Android app stores declined year-on-year, while software downloads can show users' subscription trends.
Netflix announced in January this year that it would increase subscription prices in the U.S. market, which has increased its user churn rate. The monthly fee for the basic package rose $1 to $9.99, the standard package rose from $13.99 to $15.49, and the premium package rose from $17.99 to $19.99.
However, the company's second-quarter financial report released in July stated that although the number of unsubscribed orders still increased slightly during the period, it has basically returned to the level before the price change, and customer retention rate has increased.
