Netflix has announced its financial results for Q3 of 2019, revealing a significant increase in both revenue and subscriber numbers. The company reported revenue of $5.2 billion, marking a 31% increase over the previous year. This impressive growth underscores Netflix’s continued dominance in the streaming industry.
The company also announced that it now has 158 million paid subscribers, which is up 21% from the previous year. This growth in subscribers is a testament to Netflix’s ability to attract and retain viewers with its diverse and ever-expanding content library.
Financial Performance and Metrics
In Q3’19, average streaming paid memberships and ARPU grew 22% and 9% year over year, respectively. Excluding a -$137m year over year impact from F/X, consolidated revenue growth was 35%, while streaming ARPU growth was 12%. Operating margin of 18.7% (up 670 bps year over year) was above our guidance due to timing of content and marketing spend, which will be more weighted to Q4’19. EPS amounted to $1.47 vs. $0.89 and included a $171 million non-cash unrealized gain from F/X remeasurement on our Euro denominated debt. Our Euro bonds provide us with a small natural hedge for our growing European revenues.
The financial performance of Netflix in Q3 2019 highlights several key metrics that are crucial for understanding the company’s growth trajectory. The average streaming paid memberships grew by 22%, indicating a robust increase in the user base. Additionally, the Average Revenue Per User (ARPU) saw a 9% year-over-year growth, reflecting Netflix’s ability to generate more revenue per subscriber.
Excluding the -$137 million year-over-year impact from foreign exchange (F/X) fluctuations, Netflix’s consolidated revenue growth was an impressive 35%. This indicates that the company is not only growing its subscriber base but also effectively managing its international operations to mitigate currency risks.
The operating margin for the quarter was 18.7%, up 670 basis points from the previous year. This increase was above the company’s guidance, primarily due to the timing of content and marketing expenditures, which are expected to be more heavily weighted towards Q4 2019. This strategic allocation of spending suggests that Netflix is planning significant content releases and marketing campaigns in the upcoming quarter to sustain its growth momentum.
Strategic Insights and Future Outlook
Netflix’s earnings per share (EPS) for Q3 2019 amounted to $1.47, compared to $0.89 in the previous year. This increase in EPS included a $171 million non-cash unrealized gain from F/X remeasurement on the company’s Euro-denominated debt. The Euro bonds provide Netflix with a small natural hedge for its growing European revenues, which is a strategic move to manage financial risks associated with currency fluctuations.
The company’s focus on expanding its international footprint is evident from its financial strategies and content offerings. Netflix has been investing heavily in producing and acquiring content that appeals to a global audience. This includes original series and films in various languages, catering to diverse cultural preferences. For instance, popular shows like “Money Heist” from Spain and “Sacred Games” from India have garnered significant viewership worldwide, contributing to the company’s subscriber growth.
Moreover, Netflix’s strategy to release entire seasons of shows at once has resonated well with viewers who prefer binge-watching. This approach not only keeps subscribers engaged but also encourages them to maintain their subscriptions for longer periods.
You can find out more details about the company’s financial results for Q3 of 2019 over at their website at the link below.
Source Netflix (PDF)
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