(L-R) Reed Hastings and Ted Sarandos attend the “Marseille” Netflix TV Serie World Premiere At Palais Du Pharo In Marseille, on May 4, 2016 in Marseille, France.
Stephane Cardinale | Corbis | Getty Images
Netflix reported earnings for its third quarter of 2020 after the bell on Tuesday. The company fell short of analyst estimates on earnings per share and global paid net subscriber additions, but exceeded expectations on revenue.
Shares fell more than 5% during after hours trading.
Here are the key numbers:
- Earnings per share (EPS): $1.74 vs $2.14 expected, according to Refinitiv consensus estimate
- Revenue: $6.44 billion vs $6.38 billion expected, according to Refinitiv
- Global paid net subscriber additions: 2.20 million vs. 3.57 million expected, according to FactSet
Netflix said in its letter to shareholders that the slowed subscriber growth was largely expected. In the same quarter last year, Netflix added 6.8 million subscribers, though this time it’s dealing with the fallout of a global pandemic.
The company attributed to slowed growth to its “record first half results.” The stock was considered a good buy early in the pandemic as stay at home orders left consumers looking for ways to fill their time.
For the fourth quarter, Netflix forecast 6.0 million paid net adds, still well below the 8.8 million it added in the fourth quarter of 2019.
“The state of the pandemic and its impact continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID,” executives wrote in their letter to shareholders.
It’s the first report since longtime Chief Content Officer Ted Sarandos was promoted to co-CEO alongside long-time CEO Reed Hastings.
Netflix told shareholders last quarter that growth was beginning to slow again after an initial uptick when stay-at-home orders proliferated around the world. Executives expect to feel the impact of postponed filming more in 2021, but still said last quarter that the total number of original programs that year would exceed that for 2020.
Netflix has tightened up its subscription practices in recent months. In May, the company said it would proactively cancel customers’ subscriptions if they hadn’t watched anything in a year and didn’t respond to outreach messages. This month, several outlets reported that Netflix had phased out its 30-day free trial offer as it experiments with new marketing tactics, like letting prospective customers watch a sampling of shows on their platforms or YouTube.
This story is developing. Check back for updates.
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