Netflix beats earnings targets with 5 million new customers

Netflix exceeded subscriber expectations, with strong earnings and revenue growth, focusing on new programming and ad-supported plans for future growth.

Netflix picked up 5.1 million streaming subscribers in the third quarter, topping Wall Street estimates by more than 1 million users, and said it expected higher customer growth around the holidays when Korean drama "Squid Game" returns.

Shares of Netflix rose 3.5% to $711.98 in after-hours trading following the earnings report on Thursday.

Investors had expected Netflix to bring in 4 million subscribers from July through September, according to analysts' estimates compiled by LSEG. New programming during the period included murder mystery "The Perfect Couple" and romantic comedy "Nobody Wants This."

Diluted earnings per share landed at $5.40, above the consensus forecast of $5.12. Revenue hit $9.825 billion, just ahead of the $9.769 billion consensus forecast.

The company projected its customer additions for the last three months of the year, traditionally a strong period around the Christmas holiday, would outpace the September quarter, though it did not provide a number.

Netflix has been trying to shift investor attention away from subscriber sign-ups to other metrics, including revenue growth and profit margins. The company said its operating margin hit 30% in the quarter, compared with 22% a year earlier.

"We've delivered on our plan to reaccelerate our business, and we're excited to finish the year strong with a great Q4 slate," the company said in a letter to shareholders. New programming will include the second season of Korean drama "Squid Game."