Netflix increases domestic subs to relief of shareholders

Netflix reported 517,000 new U.S. subs and 6.26 million new international subs. (Reed Hastings from Netflix screenshot)

Netflix shares were up more than 8% in after-hours trading today after it reported mixed results. The company beat on earnings, and although it missed analyst expectations on U.S. subscriber additions, it at least gained U.S. subscribers during its third quarter.

The company increased its total paid subscribers by 6.77 million subs during Q3. The 6.77 million subs compared to 6.07 million in the same quarter of 2018. However, analysts had hoped Netflix would add 7 million paid memberships in Q3 2019.

In terms of domestic versus international subscribers, Netflix reported 517,000 new U.S. subs and 6.26 million new international subs. This was a relief to investors who had been down on the company after it lost about 130,000 domestic subscribers in its second quarter. Its shares had dropped as much as 20% at times since Q2.

RELATED: Netflix’s Q3 international sub growth could be weaker than expected – analyst

The company also today reported $5.2 billion in revenue in its latest quarter, up 31% over the prior year and in line with analyst expectations. Netflix's net income rose to $665 million, or $1.47 per share, in the third quarter from $403 million, or 89 cents per share, a year earlier. Analyst were expecting about $1.04 per share, so the unexpected increase gave the stock a boost.

For the company’s fourth quarter guidance, it expects to pick up 7.6 million new subs (600,000 domestic and 7 million international) by the end of the year.

Of the Q3 subscriber numbers, Netflix CFO Spencer Neumann said on a live-streamed interview, “We did see some elevated churn in the quarter.” But he attributed this to price increases, which are “hugely revenue positive for us.”

Netflix CEO Reed Hastings said, “We’re incredibly low-priced compared to cable.” And he touted Netflix’s content slate for the next quarter and for 2020 as “way better than any slate we’ve had.”

Hastings also mentioned that Disney and Apple have both recently entered the streaming business.

RELATED: Apple TV+ could amass 100M subs in 3-4 years – analyst

Apple plans to unveil its streaming product Apple TV+ on November 1.  And later in November, the Walt Disney Company intends to start Disney+.

“Disney’s going to be a great competitor,” said Hastings. “Apple’s just beginning, but they’ll probably have some great shows too.”