LOS ANGELES — Shares of Netflix jumped in prolonged trading Tuesday after the corporate reported adding 13.1 million subscribers through the fourth quarter, stronger growth than Wall Street expected because the streamer builds its ad-supported service and cracks down on password sharing.
Netflix now has 260.8 million paid subscribers, a recent record for the service.
The subscriber growth easily tops the 8.76 million paid membership adds Netflix reported within the third quarter. The corporate also blew past Wall Street’s fourth-quarter expectations of 8 million to 9 million.
Listed here are the outcomes:
- Earnings: $2.11 per share vs. $2.22 per share expected by LSEG, formerly often called Refinitiv
- Revenue: $8.83 billion vs. $8.72 billion expected by LSEG
- Total memberships: 260.8 million vs. 256 million expected, based on Street Account
Netflix reported fourth-quarter net income of $937.8 million, or $2.11 per share, versus $55.3 million, or 12 cents per share, within the prior-year period.
The corporate posted revenue of $8.83 billion for the quarter, up from $7.85 billion within the year-ago quarter.
As Netflix focuses on improving profits, the corporate increased its 2024 full-year operating margin forecast to 24%, up from a spread of twenty-two% to 23%. It cited the weakening of the U.S. dollar and a stronger-than-forecast fourth-quarter performance.
The corporate also projects earnings per share of $4.49 for the fiscal first quarter of 2024, higher than the $4.10 Wall Street had expected.
While rivals within the streaming space have struggled to succeed in profitability, and have been cutting down on content spend, Netflix is ready to take a position in a bigger slate. Nevertheless, it won’t be doing that through acquisitions of traditional entertainment corporations or linear assets, the corporate said in a letter to shareholders Tuesday.
“As our competitors adjust to those changes, it’s logical to expect further consolidation, particularly amongst corporations with large and declining linear networks,” the corporate said. “We’re not all in favour of acquiring linear assets. Nor will we imagine that further M&A amongst traditional entertainment corporations will materially change the competitive environment given all of the consolidation that has already happened during the last decade.”
But that will not stop the corporate from partnering with content makers who’ve traditionally worked within the linear space. Netflix took one other step toward constructing subscribers when it announced earlier Tuesday that it could stream the favored WWE Raw starting next 12 months. The deal is the streaming platform’s biggest step yet into live entertainment.
The corporate foresees continued competition going forward.
“It’s why continuing to enhance our entertainment offering is so vital, and as lots of our competitors in the reduction of on their content spend, we proceed to take a position in our slate,” the corporate wrote to shareholders.
Netflix remains to be navigating its transformation from targeting subscriber growth to specializing in profit, using price hikes, password crackdowns and ad-supported tiers to spice up revenue.
Investors got a sneak preview of growth in Netflix’s advertising-based plan earlier this month, when the corporate’s president of promoting, Amy Reinhard, told attendees on the Variety Entertainment Summit at CES that the corporate now has greater than 23 million global monthly energetic users. That is up from 15 million that the corporate reported in November.
While Netflix doesn’t see ads as its primary revenue driver in 2024, it’s still trying to scale that a part of its business.
“We’re focused on the extra work that we are able to do in that space,” said Greg Peters, co-CEO of Netflix, through the company’s earnings call. “Meaning making the ads plan more attractive. We have added streams, higher resolution, downloads, it means engaging partner channels. You will see us do greater than that.”
Netflix can be making its ad tier more attractive to advertisers, including by bolstering its sales teams and ad operations to “meet brands where they need us and the way they need us.”
“We’re focused on the long-term revenue potential here,” said Peters. “We’re very optimistic about it. It’s an enormous opportunity.”