21 October 2021
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2 min.
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High profits and user growth
Netflix (NFLX) has promised a lot of new content, with the possibility of adding 4.4 million new subscribers in Q3 and 8.5 million subscribers in Q4. "Squid Game" is the most popular series of Netflix.
Netflix's third quarter share increased by 83% to $3.19, well above the average analysts'.T otal revenues increased by 16% to 7.4 billion, almost in line with market forecasts.
Operating margin was 23.5%, up from 20.4% a year earlier, but down from 25.2% in the June quarter as the company increased spending on content production.
The company said free cash flow for the quarter was negative $106m.
Netflix bought back 200,000 shares during the third quarter for about $100 million, with the pace of buybacks slowing due to recent mergers and acquisitions. On 28 September, Netflix announced the acquisition of game developer Night School Studio.
Netflix's fourth-quarter revenue forecast calls for a 16% increase to $7.7bn, but the company is forecasting a sharp drop in earnings to $0.80 per share, with operating margins falling to 6.5% as it continues to ramp up spending on new content in the quarter. Netflix said it expects to break even on cash flow in 2021, but the cash flow balance will be positive in 2022 and beyond. The company expects operating margins for the full year 2022 to be 20% or slightly higher.
Features of Netflix's third quarter
The company reported a stronger resumption of content production in the third quarter compared to the first half of 2021, in which it faced delays due to the pandemic.
That said, Netflix expects its fourth quarter to be its strongest ever quarter in terms of new content.
Netflix plans to create more original content in 2022 compared to 2021, with a more balanced release schedule.
Netflix added 4.4 million new subscribers during Q3, raising its total to 213.6 million.
Most of the growth in subscribers came from the addition of 2.2 million in Asia Pacific (APAC) and 1.8 million in EMEA (Europe, Middle East and Africa), with Netflix adding only 70,000 in the US and Canada (UCAN).
Netflix gets the highest average revenue per user of $14.68 and $11.65 from the UCAN and EMEA regions.
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