Netflix
shares are trading sharply higher in late trading Tuesday after the company posted better-than- expected revenue and a substantial subscriber beat for the fourth quarter.
The company added 13.1 million net new subscribers in the quarter, bringing its worldwide total to 260.3 million. That was well ahead of the company’s forecast for 8.7 million net additions. Netflix noted that this was the company’s best-ever fourth quarter for subscriber adds.
The stock was up as much as 8.5% in after-hours trading following the earnings report.
Netflix saw subscriber growth in all regions, adding 2.81 million households in the U.S. and Canada; 5.05 million in the Europe, Middle East and Africa region; 2.35 million in Latin America; and 2.91 million in the Asia Pacific region.
For the December quarter, Netflix posted revenue of $8.8 billion, up 12.5% from a year ago, and slightly ahead of the company’s forecast of $8.7 billion. Profits were $1.976 billion, or $2.11 a share, four cents below the company’s forecast. Earnings included $239 million non-cash charge related to the impact of foreign exchange fluctuations on the company’s Euro denominated debt.
For the March quarter, Netflix sees revenue of $9.24 billion, which would be up 13.2%, and roughly in line with Street consensus estimates of $9.27 billion. The company said revenue on a currency-adjusted basis should increase 16% in the quarter.
Netflix sees first-quarter profits of $4.49 a share, above the Wall Street consensus as measured by FactSet of $4.10 a share. The company has stopped providing specific subscriber guidance, but said in its earnings press release that it expects the number to be down from the fourth quarter, though above the 1.8 million net adds in the year-ago period.
Netflix said that for 2024 as a whole it expects “healthy double-digit revenue growth” adjusted for currency. The company added that while it will “continue to invest and build out ads business,” it will not yet be a primary driver of overall revenue growth. Netflix said that advertising-based subscription plans now account for 40% of new sign-ups in markets where it has launched an ad-supported tier.
The company said it now sees operating margins for 2024 of 24%, up from a previous forecast of 22% to 23%, reflecting weakening of the dollar against most other currencies.
The company posted operating income in the quarter of $1.5 billion, up from $500 million a year earlier, and ahead of its own forecast of $1.2 billion, with an operating margin of 17%, topping its forecast of 13%. The company said that the better performance reflects revenue upside in the quarter as well as lower-than-planed spending.
Stock in Netflix has rallied more than 50% over the past 12 months as the streaming-video company shows progress in both cracking down on password sharing and expanding consumer interest in lower-priced, ad-supported subscriptions.
Netflix said it repurchased $2.5 billion of stock in the quarter, leaving $8.4 billion remaining on its current buyback authorization. The company also said it has $400 million in senior notes maturing this quarter that it expects to pay down with cash on hand.
Earlier Tuesday, Netflix announced a 10-year, $5 billion deal to be the new home of the weekly wrestling program Raw starting in January 2025. Netflix will also become the home for all WWE shows and specials outside the U.S.
On the company’s earnings conference call, the company said that the spending on the WWE deal falls under the company’s previously announced target of $17 billion in annual content spending. And while the company did not provide details on the financial terms of the WWE deal, Co-CEO Ted Sarandos said on the call that the agreement has “economics we are supper happy with.”
Write to Eric J. Savitz at [email protected]
Read the full article here
