Netflix Delivers Stellar Subscriber Growth

Earlier this week, Netflix (Nasdaq: NFLX) reported its fourth-quarter performance that surpassed all market expectations. The significant increase in its subscriber base helped the stock soar. In the after-hours trading session, the stock climbed an impressive 12%.

Netflix’s Financials

Netflix’s Q4 revenues grew 31% to $6.64 billion, ahead of the Street’s forecast of $6.63 billion. The average revenue per subscriber grew 9%. EPS was $1.19, behind the market’s forecast of $1.36.

During the quarter, it added 20%, or 8.51 million subscribers, compared with 6.03 million paid subscribers that it had expected to add. The market was expecting it to add 6.5 million net new subscribers. Netflix now has over 203.7 million paid subscribers worldwide growing 37 million over the year.

For North America, Q4 revenue was $3 billion with paid memberships of 73.9 million. It added 860,000 new customers in the US and Canadian markets despite a price hike. Europe, Middle East, and Africa revenue was $2.1 billion driven by a net addition of 4.5 million subscribers to end the quarter with 66.7 million paying customers. Latin America revenue was $789 million from 37.5 million paid members, with net addition of 1.2 million subscribers. Asia-Pacific revenue was $685 million from 25.5 million subscribers, recording a growth of 2 million net subscribers.

Netflix ended the year with revenues growing to $25 billion compared with $20.16 billion a year ago. EPS increased to $6.08 for the year compared with $4.13 last year.

For the first quarter, Netflix forecast earnings of $2.97 per share on revenue of $4.1 billion. The market was looking for revenues of $7.02 billion for the quarter with an EPS of $2.10.

Netflix’s Offering Improvement

During the quarter, it continued to improve its parental controls, giving families more control over their experience. The enhancements include the ability to filter out content based on maturity level or title, the ability to create PIN to lock the profile, and the ability to customize autoplay. It also extended parental control support to downloads and provided parents with greater transparency into the themes, characters, and content of the programs watched by their children. Netflix now offers a Kids Activity Report, that is a dashboard that keeps parent informed of the content that is being watched.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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