NEW YORK (CelebrityAccess) — Netflix’s strategy of spending enormous amounts of money on original content appears to be paying off as the streaming video service posted third-quarter results on Tuesday.
Netflix posted third-quarter revenue of $4.2 billion, which was in line with projections for the quarter and an improvement over the same period in 2017 of 36%.
However, the company continued to burn cash at an astonishing rate, and the company posted a free cash -$859 million vs. -$465 million in the year-ago quarter.
Netflix also warned that its per-share earnings in the fourth quarter would be just 23 cents a share — less than half of what Wall Street had predicted.
The financial statements also provided some insight into the trajectory of Netflix’s subscription model and they now report 130 million paid subscribers at the end of Q3. Netflix added 6.96 million new subscribers in Q3, a marked improvement over the 5.3 million new subscribers it added during the same quarter last year and the roughly 5 million expected by analysts.
Netflix also indicated that it plans to continue its deep-pocketed commitment to content, and is expected to spend more than $10bn on original content in the next year.
“It was just two years ago when we began building the third category: a film and TV studio within Netflix. Some of our notable owned-titles in addition to Stranger Things include Big Mouth, The Ranch, Bright, Godless, The Kissing Booth, 3%, Dark, Sacred Games and Nailed It.
“In addition to reducing our reliance on outside studios, this initiative provides us with greater control over the content we create (e.g., long-term global rights), the ability to strengthen title-brand-love and franchise value (like consumer products) and potentially lower costs (as we can avoid the markup 3rd party studios charge us). To do this, we’ve had to develop new capabilities to manage the entire production process from creative support, production planning, crew and vendor management to visual effects, to name a few,” the company said in a note to investors.
Despite the Netflix cash burn, investors loved the Q3 results, and the company’s stock was up sharply on the filing, closing at $364 on Wednesday, after opening at $337 on Tuesday.