California-based SVOD giant Netflix saw its revenue grow 34% to US$3.99 billion in Q3 2018. Seven million new members joined the streamer in the same period, a record for the company in the third quarter and an increase of 31% compared to Q3 2017.
Total streaming revenue grew 36% to US$3.91 billion. In the US, streaming revenue was US$1.93 billion (up 25%) while international streaming revenue in the third quarter reached US$1.97 billion (up 48%).
Free cash flow in the third quarter was –US$859 million (compared to –US$465 million in the same period in 2017). According to the company, this decline is due to its growing mix of self-produced content, which requires it to fund content during the production phase prior to its release on Netflix. The company expects free cash flow will be close to –US$3 billion for fiscal 2018.
Adjusted EBITDA for Q3 2018 was US$272 million (down from US$584 million in Q3 2017).
Looking forward to Q4 2018, Netflix anticipates a reclassification of certain personnel costs from general and administrative expenses to content and marketing, as well as from technology and development to “other cost” revenues. According to the company, these changes reflect its ongoing focus on self-produced content, like Trollhunters (pictured).
In other Netflix news, Viacom has filed a suit that accuses the streaming giant of poaching a TV production exec. Netflix announced last week that it had tapped Momita Sengupta as its new VP of physical production for original series. Sengupta previously served as EVP of production management and operations in Viacom’s global entertainment group and, in a suit filed on October 5, Viacom alleges Sengupta was induced by Netflix to breach her contract with them (set to expire in 2020).
In the suit, Viacom argues that Sengupta was employed pursuant to a valid, fully enforceable term employment agreement and alleges that Netflix promised Sengupta that it would defend her and pay for her legal representation should Viacom seek to enforce that employment agreement. Viacom is seeking damages and injunctive relief as a result of the alleged interference in Viacom’s contract with Sengupta.
In 2016, 20th Century Fox filed a suit against Netflix alleging the streamer poached two of its executives still under contract. The studio and the SVOD giant are scheduled to go to trial in June 2019.