Looking back on consumer subscription stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Netflix (NASDAQ:NFLX) and its peers.
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
The 8 consumer subscription stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 2.2% below.
In light of this news, share prices of the companies have held steady as they are up 3.5% on average since the latest earnings results.
Netflix (NASDAQ:NFLX)
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Netflix reported revenues of $9.82 billion, up 15% year on year. This print exceeded analysts’ expectations by 0.6%. Overall, it was a very strong quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
Interestingly, the stock is up 36.3% since reporting and currently trades at $936.91.
We think Netflix is a good business, but is it a buy today? Read our full report here, it’s free.
Best Q3: Duolingo (NASDAQ:DUOL)
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.
Duolingo reported revenues of $192.6 million, up 39.9% year on year, outperforming analysts’ expectations by 1.8%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
Duolingo pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The company reported 113.1 million users, up 36.1% year on year. The market seems happy with the results as the stock is up 6.6% since reporting. It currently trades at $340.
Is now the time to buy Duolingo? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Chegg (NYSE:CHGG)
Started as a physical textbook rental service, Chegg (NYSE:CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.
Chegg reported revenues of $136.6 million, down 13.5% year on year, exceeding analysts’ expectations by 1.9%. Still, it was a slower quarter as it posted a decline in its users.
Chegg delivered the slowest revenue growth in the group. The company reported 3.83 million users, down 12.9% year on year. As expected, the stock is down 9.5% since the results and currently trades at $1.61.
Read our full analysis of Chegg’s results here.
Udemy (NASDAQ:UDMY)
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Udemy reported revenues of $195.4 million, up 5.8% year on year. This number topped analysts’ expectations by 1.4%. More broadly, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but number of monthly active buyers in line with analysts’ estimates.
The company reported 16,848 active buyers, up 9.6% year on year. The stock is down 5.7% since reporting and currently trades at $7.98.
Read our full, actionable report on Udemy here, it’s free.
Match Group (NASDAQ:MTCH)
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ:MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Match Group reported revenues of $895.5 million, up 1.6% year on year. This print came in 0.6% below analysts' expectations. It was a slower quarter as it also logged revenue guidance for next quarter missing analysts’ expectations significantly and a decline in its users.
Match Group had the weakest performance against analyst estimates among its peers. The company reported 15.21 million users, down 3.2% year on year. The stock is down 12% since reporting and currently trades at $33.27.
Read our full, actionable report on Match Group here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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