It won’t be all rosy going forward. Netflix is still on pace for its slowest growth in years. The company lost 1.2 million customers during the first half of the year—a decline that led investors and peers to reconsider their streaming investments.
A big challenge on that front is the soaring dollar, which is taking a bite out of revenue and earnings. While Netflix said it can adjust content spending and pricing accordingly, its forecast for fourth-quarter sales and profit falls short of Wall Street estimates.
The company estimates sales of $7.78 billion this quarter, below the $7.98 billion forecast by analysts. Earnings are expected to come in at 36 cents a share, a fraction of the $1.20 estimated on Wall Street.
Nonetheless, Co-CEOs Reed Hastings and Ted Sarandos argue the company has plenty of room to grow.
The service accounts for about 8% of TV viewing in the U.S. and U.K., two of its largest markets, and is adding market share every year, the company said in its letter. Netflix is also profitable, unlike the streaming services operated by most of its rivals.
Management plans to increase sales by introducing an advertising-supported version of the streaming service in November and charging for password sharing next year. Customers willing to watch Netflix with five minutes of advertising per hour can pay $6.99 a month, less than half of the cost of the most popular plan.
While investors have long judged Netflix based on the number of customers it adds every quarter, the company is trying to get them to consider more traditional financial metrics like revenue and operating income. As a result, the company said it will no longer provide subscriber forecasts.