Netflix Q3 earnings and results: Streaming service adds 3.62m members in third quarter but misses expectations on revenue, profit and users

 
James Nickerson
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Netflix said it expects to end the year with 74m members (Source: Getty)

Netflix missed expectations on third quarter revenue, profit and domestic membership growth, causing its share price to fall over 10 per cent after the bell, before recovering slightly.

The video streaming company reported net income of $29m (£19m), or 7 cents per share, in the three months to the end of September, down from $59m, or 14 cents per share, for the same period a year ago. Analysts expected a net income per share of 8 cents.

Revenue, meanwhile, rose 23.3 per cent from $1.4bn in the third quarter of 2014 to $1.74bn this year, but failed to meet analysts' expectations of $1.75bn.

Read more: Netflix share price jumps after reports that the company is hiking its prices

Global membership grew by 3.62m to 69.17m members, compared to the prior year, comfortably beating forecasts of 3.55m.

International user growth was 2.74m, compared to 2.04m a year and against forecasts of 2.46m. However, domestic growth increased by just 881,000 compared to expectations of 1.19m. The company blamed this on "slightly higher-than-expected involuntary churn, which we believe was driven in part by the ongoing transition to chip-based credit and debit cards".

However, slower-than-expected domestic growth disappointed investors. Barton Crockett, an analyst at FBR Capital Markets said: "The slowdown in US subscriber growth was particularly disappointing because one would expect that since Netflix just raised rates last week, this number would have been strong."

Read more: Why traders love Netflix despite a likely earnings miss

Netflix said it expects to end the year with 74m members, with current quarter net domestic user growth of 1.65m and international net user growth of 3.5m.

Last week the company increased prices in several countries including the US, to improve its ability to acquire and offer high quality content, "which is the number one member request".

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