Netflix Is Adding Subscribers Again -- and Even More Than It Hoped

Netflix added 2.41 million subscribers last quarter, rebounding more strongly than expected from a first half of unprecedented membership declines.

It also confirmed that it will be widening its crackdown on password sharing in early 2023 beyond the handful of countries where it's currently testing fees for sharing accounts. 

The world's dominant streaming-video subscription service, Netflix said that members grew to 223.09 million total between July and September, according to its report of third-quarter results Tuesday. 

That beats Netflix's July guidance that it expected to add 1 million new members. Analysts' average expectation was slightly more optimistic, predicting Netflix would add 1.07 million members, according to Refinitiv. And Netflix's guidance for the fourth quarter exceeded analysts' expectations, too, with Netflix predicting 4.5 million new members versus the 4.2 million consensus analyst estimate.

The company's share price surged 14% to $274.37 after hours. Through the close, the stock had lost more than half of its value so far this year, as Netflix's shrinking membership undermined its status as a Wall Street darling. 

Before this year, Netflix's unflagging subscriber growth pushed nearly all of Hollywood's major media companies to embrace streaming as the future of TV. As they poured billions of dollars into their own streaming operations, the so-called streaming wars brought about a wave of new services, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus. 

The flood of streaming options complicates how many services you must use (and, often, pay for) to watch your favorite shows and movies online. It also ratcheted up the competition that Netflix faces to hold onto your attention and your subscription account.

Now, feeling the heat of intensifying competition, Netflix is pursuing strategies it had dismissed for years. It is testing password-sharing fees, aiming to get more than 100 million households that are already watching Netflix but not paying for it directly. And next month it will starting putting commercials on the service for the first time, adding a cheaper membership supported by ads in 12 countries. 

Netflix also has a new No. 1 region. In the US and Canada, which has always been its biggest market by subscribers, Netflix added just 100,000 streaming customers for a total of 73.39 million. But Europe, the Middle East and Africa eked out 570,000 new members to hit 73.53 million, becoming Netflix's new biggest region. 

In Latin America. membership rose by 310,000 to 39.94 million, and in the Asia Pacific region, subscriptions grew by 1.43 million to 36.23 million total.

Looking ahead to the fourth quarter, Netflix predicted 36 cents per share in earnings. On average, Wall Street analysts who track Netflix expected $1.17.

Overall, Netflix reported a profit of $1.4 billion, or $3.10 a share, compared with $1.45 billion, or $3.19 a share, a year earlier. Revenue rose 5.9% to $7.93 billion.

Analysts on average expected per-share profit of $2.14 -- matching Netflix's guidance -- and $7.837 billion in revenue.