Streaming media giant Netflix, Inc. (NASDAQ:NFLX) late today posted solid Q3 earnings reults, but the real story was its better-than-expected user growth forecasts in both the U.S. and abroad that spurred a massive rally in its shares.
The Los Gatos-based company reported third quarter earnings per share (EPS) of $0.12, easily beating out analyst estimates of $0.05. Revenue rose 31.7% from last year, narrowly eclipsing Wall Street’s view of $2.28 billion.
Looking ahead, Netflix also forecast Q4 EPS of $0.13, above analysts’ view of $0.08.
As far as the all-important user growth, both reported figures and forecast numbers were better than expected. Netflix said its U.S. net subscriber additions in Q3 were 0.370 million, higher than its own 0.30 million guidance. Even better, the company said it expects Q4 U.S. user growth to surge to 1.45 million, versus expectations of just 1 million.
Internationally, the company’s user growth was even better. Netflix added 3.2 million non-U.S. members in the period, blowing away its estimate of 2.0 million.
Through the first nine months of 2016, NFLX has now added 12 million global members — the exact same growth rate at this time last year.
For Q4, the company forecast 5.2 million total global net subscriber adds, 3.75 million (72%) of those international users.
From the press release:
In Q3, quarterly global streaming revenue exceeded $2 billion for the first time (up 36% year over year), helped by our strong content slate including Stranger Things and the second season of Narcos. On a constant currency basis, this represents 39% year-over-year revenue growth, a 400 basis point acceleration from the last two quarters.
Investors greeted today’s report with a flurry of buying in Netflix shares, which rose $19.10 (+19.14%) in after-hours trading Monday to $118.90. Prior to today’s report, NFLX had fallen 12.75% year-to-date.