Netflix pops 12% as profit beats expectations, ad-tier subscriptions rise

LOS ANGELES — Netflix shares popped more than 12% after the closing bell Wednesday as the company reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.

The streaming giant added 8.76 million global subscribers during the quarter, higher than 5.49 million Wall Street had expected, according to estimates from Street Account. It's the biggest quarterly net add total for the company since second-quarter 2020, when Netflix added 10.1 million.

Netflix said that its ad plan membership grew nearly 70% quarter-over-quarter, although it did not disclose what percentage of its base is subscribed to this tier.

The company is keeping its ad tier pricing at at $6.99 a month in the U.S. while it's basic and premium services will see a price hike starting today. Netflix's basic plan will now cost $11.99 (up from $9.99) and premium will be $22.99 a month (up from $19.99). Netflix's standard plan will remain at $15.49 a month.

Here are the results:

Earnings: $3.73 vs $3.49 per share expected, according to LSEG, formerly known as RefinitivRevenue: $8.54 billion vs $8.54 billion expected, according to LSEGTotal memberships expected: 247.15 million vs. 243.88 million expected, according to Street Account

The company forecast that revenue will jump 11% in the fourth quarter, reaching $8.7 billion, with expectations that net subscriber adds will be similar to the third quarter.

It warned that the strength of the U.S. dollar in recent months will result in a roughly $200 million drag on fourth-quarter revenue.

As for Netflix's profitability, the streamer now expects its full-year 2023 operating margin will be around 20%, the high end of its previous forecast range of 18% to 20%. It also said full-year 2024 should see operating margins of 22% to 23%.

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