Revenue was $8.5 billion in the quarter, up 8% from the same period of time last year, which was in line with analyst estimates. Net income was $1.68 billion, compared to $1.4 billion a year ago. Netflix’s profit and subscriber numbers beat Wall Street’s expectations, according to FactSet.
Like other entertainment companies, the streamer has faced long labor strikes by screenwriters and film and TV actors that have roiled the industry. The Writers Guild of America strike ended in late September, but SAG-AFTRA’s strike, which began in mid-July, is still ongoing. Talks broke down last week between the SAG-AFTRA and the major studios when the alliance of entertainment companies decided to walk away from negotiations.
But Netflix has so far been able to weather the production stoppages because of its large library of original content and the popularity of licensed titles such as the legal drama “Suits.”
During the third quarter, Netflix launched programs including Season 5 of reality dating series “Love Is Blind,” which ranks fifth in last week’s Netflix’s top 10; the second season of legal drama “The Lincoln Lawyer”; and a live-action version of popular manga “One Piece.”
The company has expanded into new areas, including hosting its first live sports event, “The Netflix Cup,” where drivers from sports documentary series “Formula 1: Drive to Survive” and golfers from “Full Swing” will compete in a match play golf tournament in Las Vegas on Nov. 14.
The company on Wednesday announced a deal for David Ellison’s Skydance Media to produce animated content for Netflix. Skydance Animation, run by ex-Pixar leader John Lasseter, previously had a deal with Apple.
Additionally, Netflix has moved to increase its revenue by pressuring nonpaying users sharing passwords to buy a subscription and by offering a cheaper ad-supported plan.
The company continued to boost revenue by cracking down on nonpaying Netflix users who have been using shared passwords with friends and family. Nonpaying Netflix users can sign up for their own subscriptions or ad-free subscribers can pay an extra $7.99 a month in the U.S. to add people to their account who do not live in their household.
“They’re really smart about how they’re doing it because it’s inoffensive,” said Michael Pachter, a managing director of equity research for Wedbush Securities.
“The cancel reaction continues to be low, exceeding our expectations, and borrower households converting into full paying memberships are demonstrating healthy retention,” Netflix said in its shareholder letter.
Netflix says it’s continuing to invest in its cheaper, ad-supported plan, which launched last year, but has made changes to its leadership, with executives acknowledging its fledgling advertising business still has a long way to go. The ad-based plan costs users $6.99 a month, compared to $15.49 a month for the standard ad-free tier.
Netflix co-Chief Executive Ted Sarandos said at the Bloomberg Screentime conference, “We’re definitely in our infancy and it’s definitely not at the scale that we want it to be at yet.”
Earlier this month, Netflix announced the exit of Jeremi Gorman, who was credited with building the streamer’s ads business, and said Amy Reinhard, Netflix’s former vice president of studio operations, would be president of advertising.
The company said on Wednesday that its customers on the cheaper ad-supported plan continue to grow, with membership up almost 70% quarter over quarter, but has not said how many people subscribe to that verison.
Netflix stock closed on Wednesday at $346.19 a share, down about 3%. The shares rose 12% in after-hours trading.