After two straight quarters of losing subscribers, Netflix announced it added 2.41 million accounts.
The company, which now has 223.1 million subscribers, was only expected to add 1.09 million subscribers in the latest quarter, according to a Street Account estimate.  Shares  soared more than 14 percent in after-hours trading on Tuesday.
"After a challenging first half, we believe we're on a path to reaccelerate growth," the company wrote in a letter to shareholders. "The key is pleasing members. It's why we've always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us."
The streaming giant touted the strength of shows and movies like Monster: The Jeffrey Dahmer Story, Stranger Things Season 4, and The Gray Man as part of its success. The Gray Man in particular was viewed for 254 millon hours by 118 million households, many of which had multiple people. The latest season of Stranger Things clocked in at 1.35 billion hours viewed, making it the most watched English language series to date.

Netflix reported earnings per share of $3.10, crushing the Refinitiv estimate of $2.13 and revenue of $7.93 billion for the quarter, ahead of the $7.8 billion estimate. The company also touted that it accounts for 7.6 percent of TV time, 2.6 times more than Amazon and 1.4 times more than Disney+. Hulu, and Hulu with Live TV combined.

The positive earnings report comes as the company is set to make a change to its subscription model by adding ads. Netflix plans to include the ad-supported tier starting in November in 12 countries. The offering will be available on Nov. 3 in the U.S. for $7 a month. For those opting in, 15-second or 30-second ads will appear before and during TV shows and programming. Newly-released movies will only have ads before the programming, and around 5 to 10 percent of offerings will not have them due to licensing agreements.
With the advertising option, U.S. customers will have four price plans to chose from, including basic ($9.99 monthly), standard ($15.49), and premium ($19.99).
The streaming giant is joining others who have added or will add advertising in order to create a cheaper alternative for customers, and the 12 starting countries at launch account for 75 percent of total global advertising budgets per Netflix, or about $140 billion in spend. Disney+ also announced it will add an ad-tier, starting on Dec. 8.
"In absence of price increases or significant subscriber additions, revenue growth will come from retaining price-sensitive consumers with its new advertising product," Ross Benes, Insider Intelligence senior analyst, said in an email. "In directly acknowledging competition and using advertising, Netflix is adapting to the streaming landscape's new normal."
Still, Netflix remained optimistic that the ad-supported version would draw in new subscribers, projecting $7.8 billion in revenue and 4.5 million new paid accounts in the fourth quarter, representing a 9 percent and 6 percent year-over-year growth rate, respectively. It is also adding an option in 2023 for people who share accounts, who it called "borrowers," to easily transfer their watch history into their own profiles — as long as they start paying. It will also let holders quietly create separate accounts under their own account that will require the other person to pay Netflix for access.