Netflix Inc (NASDAQ: NFLX) beat estimates with its third-quarter financial results as the company continued to shift to an ad-supported membership model to outperform its competitors, including Walt Disney Company’s (NYSE: DIS) Disney+ and Amazon’s Amazon Prime to keep check. com Inc (NASDAQ: AMZN).

Disney was already considered one of its biggest threats before officially entering the streaming scene and finally reached profitability with its streaming business in the third quarter. Additionally, Disney achieved a quarter higher profitability across its streaming business than previously forecast. But even the world’s largest entertainment company needed a side of Netflix when it comes to streaming, as Disney followed in Netflix’s footsteps and decided to crack down on password sharing and explore new opportunities with ad-supported plans. A year after previous price hikes, Disney is again raising prices for Disney Plus, Hulu and ESPN.

Netflix’s third quarter highlights

For the quarter ended September 30, the streaming giant reported a 15% increase in revenue to $9.83 billion.

The ad-supported membership tier experienced 35% quarter-over-quarter growth. While ads are not expected to become the primary growth driver until 2026, Netflix executives revealed that the ad tier accounted for over 50% of sign-ups during the quarter in the countries where it is available.

Netflix reported earnings per share of $5.40, beating LSEG’s consensus estimate of $5.12 per share, up 45% year-over-year.

An optimistic outlook for the December quarter.

Netflix expects fourth-quarter revenue to rise 14.7%. For 2025, Netflix expects revenue to be between $43 billion and $44 billion, representing revenue growth of 11% to 13% compared to forecast revenue of $38.9 billion in 2024.

Netflix retains its streaming crown

From imposing account sharing restrictions to building an advertising business, Netflix has managed to revitalize its business and retain its streaming crown. With its last quarter, the company exceeded earnings expectations and rose to new all-time highs over the weekend. Going forward, user engagement, which Netflix sees as the best indicator of member satisfaction, will be the main point in the streaming king’s narrative, alongside the development and growth of its advertising business. Netflix delivers on its promise, and despite the crowded streaming landscape, the path ahead appears to be clear for now.

DISCLAIMER: This content is for informational purposes only. It is not intended as investment advice.

The story continues

This article comes from an unpaid external contributor. They do not represent Benzinga’s reporting and have not been edited for content or accuracy.

Next up: Transform your trading with Benzinga Edge’s unique market trading ideas and tools. Click now to get unique insights This can give you an edge in today’s competitive market.

Get the latest stock analysis from Benzinga?

This article, “Netflix’s stellar quarter reflects a shift in priorities” originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.