Investing.com – Netflix (NASDAQ:NFLX) shares rallied after hours as investors breathed a sigh of relief that its quarterly numbers weren't as dire as many in the market predicted.
The company issued guidance that fell short of expectations after the bell, but said margin growth would be sustained, allaying worries that rising competition would force the streaming giant to slash prices.
The company is projecting it will add 7.6 million net subscribers during the fourth quarter, below the 9.5 million net ads expected by analysts, but still showing growth from the most recent period.
Total paid net adds of 6.8 million increased 12% year over year and was an all-time third-quarter record, with International paid net additions rising 23% year on year to 6.3 million in the quarter, above estimates of 6.2 million. In the U.S., paid net adds rose by 500,000 in the quarter, below estimates of 800,000.
The stock rose 8% in after-hours trading.
Netflix reported earnings of $1.47 a share, beating estimates from Investing.com for earnings of $1.03 per share, while revenue of $5.25 billion was in line with estimates.
Faced with the threat of nearing peak subscriber growth in the U.S., the streaming giant has been stepping up efforts to scoop up more international subscribers.
Despite weaker-than-expected guidance on subscriber growth and an expected ramp-up in competition, Netflix continued to tout margin expansion, allaying fears that it would be forced to consider price cuts, with rivals Apple (NASDAQ:AAPL) and Disney (NYSE:DIS) set to launch less-expensive streaming services next month.
"We’re on track to achieve our full year 2019 operating margin goal of 13%. In 2020, we’ll be targeting another 300 basis points in operating margin expansion, consistent with the annual margin improvement we’ve delivered each year since 2017," the company said.