LOS ANGELES – The actions of Netflix jumped in extended trading Tuesday after the company reported it added 13.1 million subscribers during the fourth quarter, stronger growth than Wall Street expected as the streamer builds its ad-supported service and cracks down against password sharing.
Netflix now has 260.8 million paid subscribers, a new record for the service.
Subscriber growth easily surpasses the 8.76 million added paid memberships Netflix reported in the third quarter. The company also beat Wall Street's expectations for the fourth quarter of $8 million to $9 million.
Here are the results:
- Profits: $2.11 per share versus $2.22 per share expected by LSEG, formerly known as Refinitiv
- Revenue: 8.83 billion dollars compared to the 8.72 billion dollars expected by LSEG
- Total Memberships: 260.8 million vs. 256 million are expected, according to Street Account
Netflix reported fourth-quarter net income of $937.8 million, or $2.11 per share, up from $55.3 million, or 12 cents per share, in the same period a year earlier.
The company posted revenue of $8.83 billion during the quarter, up from $7.85 billion in the year-ago quarter.
As Netflix focuses on improving profits, the company raised its full-year 2024 operating margin forecast to 24%, up from a range of 22% to 23%. It cited the weakening U.S. dollar and a better-than-expected fourth-quarter performance.
The company also projects earnings per share of $4.49 for the fiscal first quarter of 2024, higher than the $4.10 Wall Street was expecting.
While rivals in the streaming space have struggled to reach profitability and have been reducing spending on content, Netflix is prepared to invest in a larger portfolio. However, it will not do so through acquisitions of traditional entertainment companies or linear assets, the company said in a letter to shareholders on Tuesday.
“As our competitors adapt to these changes, it is logical to expect further consolidation, particularly among companies with large and declining linear networks,” the company said. “We are not interested in acquiring linear assets. We also do not believe that further mergers and acquisitions between traditional entertainment companies will materially change the competitive environment given all the consolidation that has already occurred over the last decade.”
But that won't stop the company from partnering with content creators who have traditionally worked in the linear space. Netflix took another step toward building subscribers when it announced Tuesday that it would stream the popular WWE Raw starting next year. The deal is the streaming platform's biggest step into live entertainment.
The company anticipates that competition will continue in the future.
“That's why it's so important to continue to improve our entertainment offering, and as many of our competitors reduce their spending on content, we continue to invest in our offering,” the company wrote to shareholders.
Netflix is still navigating its transformation from focusing on subscriber growth to focusing on profits, using price increases, crackdowns on passwords and ad-supported tiers to boost revenue.
Investors got a preview of the growth of Netflix's ad-based plan earlier this month, when the company's president of advertising, Amy Reinhard, told attendees at the Variety Entertainment Summit at CES that the company now has more than 23 million monthly active users worldwide. That's up from the 15 million the company reported in November.
