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All key comments from Netflix Q3 earnings conference call

Netflix (NFLX) on Tuesday posted yet another blowout quarterly figures, sending its stock up 10% during aftermarket trading. The streaming giant tripled its third-quarter earnings to 89 cents per share, whereas analysts had expected just 68 cents. Total streaming revenue jumped 36% to $3.91 billion, as it added 6.96 million subscribers.

Key comments from Netflix Q3 earnings conference call:

# Going forward, Netflix will continue to focus on bundle strategy – partnering with a mobile operator, internet service provider or Pay-TV operator – to reach out to markets that are less technology driven.

# When asked how the company manages growth in saturated markets like the United States, Chief Product Officer Greg Peters said they are making the product easier to access for new users through an application or Pay-TV partnership. By removing the friction that stops some users from signing up for the service directly, small pockets of subscriber growth opens up.

# In India, Netflix saw a significant increase in customer base following the launch of regional language content. These shows enabled Netflix to achieve better media coverage, as well as establish a connection with the audience who were hitherto unaware of the service.

Netflix’s road to profitability runs through India. Here’s why.

# CFO David Wells expressed confidence in achieving the target of 100 million subscriber additions in India in the long term. To achieve the same, the company hopes to expand into other Indian regional languages, establish more pricing options and explore service partnerships.

# CEO Reed Hastings said the company is aware of the rising competition from Disney (DIS), AT&T (T) and YouTube. However, the company’s core focus lies on providing great quality content to beat competitors.

# Netflix said the partnership with radio company Sirius XM was more of a marketing experiment, rather than a monetization effort, at least in the short term.

# Netflix will use pricing to offset negative dollar appreciation or forex headwinds in the mid-to-long term.

Netflix third quarter 2018 Earnings Infographic

# David Wells said he expects the company to post breakeven free cash flow in a few years as Netflix is approaching a point where operating profit will grow faster than the content spend.

# Netflix has added renowned directors including Alfonso Cuaron, Susanne Bier, the Coen Brothers and Tamara Jenkins to make content for them.

# Reed Hastings said diversifying into other areas is a long-term plan as the company continues to see growth potential in streaming services for a few more years. “And someday, many, many years from now, we may need to diversify, but for now, let’s focus on the core of those amazing title brands,” he said.

NFLX shares were trading up 6.5% at 11:10 AM ET on Wednesday.


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