Netflix added slightly more paying subscribers than Wall Street expected in the third quarter but issued a soft forecast on Wednesday as it faces new competition from Disney and other big companies in the streaming video wars.
The results for July through September represented a rebound from the previous quarter when Netflix lost U.S. streaming customers for the first time in eight years and missed targets for new subscribers overseas. Shares of Netflix rose 8.7 percent in after-hours trading on Wednesday.
That performance, combined with concerns about new competitors, had weighed on Netflix shares, which had fallen 21 percent from the last earnings report through regular trading on Wednesday.
From July to August, Netflix was boosted by new seasons of shows such as "Stranger Things" and "13 Reasons Why." The company added 6.77 million paid customers around the globe, topping the nearly 6.7 million average expectation of analysts, according to IBES data from Refinitiv.
Looking ahead, the company projected it would pick up 7.6 million customers in the last three months of the year. Analysts had expected a forecast of 9.4 million. The company will release a new installment of "The Crown" and Martin Scorsese film "The Irishman" during that time.
But it will face new competition starting in November from Disney+, a streaming service stocked with movies and TV shows from Disney's beloved Marvel, "Star Wars," animation and other properties.
Apple Inc also will debut a much smaller streaming video service with original programming in November. AT&T Inc's HBO Max, and a new offering from Comcast Corp, are expected to enter the market next year.
Netflix argued that the new services would increase interest in the streaming video market broadly.
"In our view, the likely outcome from the launch of these new services will be to accelerate the shift from linear TV to on demand consumption of entertainment," the company wrote in a letter to investors.
For the third quarter, Netflix's net income rose to $665 million, or $1.47 per share, in the reported quarter from $403 million, or 89 cents per share, a year earlier.
Total revenue rose to $5.25 billion from about $4 billion. Analysts on average had expected $5.52 billion.