Netflix’s growth in the third quarter cooled considerably after its blockbuster COVID-fueled bump in the first half of 2020.
The company netted 2.2 million Q3 subscribers in 2020 – below Wall Street’s expectations and under Netflix’s own previous forecast.
The streaming giant also posted net earnings below analyst consensus estimates.
Shares were down 6 per cent in after-hours trading.
The company had previously forecast adding 2.5 million paid streaming customers in the third quarter, after record net adds of 10.1 million in Q2 and 15.8 million in Q1 this year – a massive lift Netflix attributed to stay-at-home orders amid the coronavirus crisis.
That subscriber “pull forward” in the first half of 2020 led the company to forecast lower net adds in the back half of the year.
Netflix reiterated that point in its Q3 letter to shareholders, saying it missed the subscriber forecast for the September quarter “primarily due to our record first half results and the pull-forward effect we described in our April and July letters.”
Netflix posted revenue of $US6.44 billion ($A9.12 billion), up 22.7 per cent, and earnings of $1.74 per share (versus $1.47 in the year-ago period).
Wall Street analysts on average expected third-quarter sales of $US6.38 billion and EPS of $2.13.
As of September 30, Netflix reported 195.15 million paid streaming customers worldwide, up 23.3 per cent year over year.
Subscriber growth was notably down in Latin America, where Netflix added 260,000 subscribers in the most recent quarter (versus 1.49 million in the year-prior period).
For Q4, Netflix forecast 6 million paid net adds versus 8.8 million in the year prior.
That number would put the company at a record 34 million paid net adds for 2020 and well above its prior annual high-water mark of 28.6 million in 2018.