netflix In the fourth quarter, Wall Street added millions more subscribers than expected, helping the streamer’s stock rise after the bell despite a large revenue loss.
The company also announced that co-CEO Reed Hastings will step down and take over as chairman. Promoted to co-CEO with Ted Sarandos.
The results are as follows.
- EPS: Refinitiv says it’s 45 cents versus 12 cents per share.
- Earnings: $7.85 billion $7.85 billion, according to a Refinitiv study.
- Paid Internet Subscribers Worldwide: StreetAccount estimates that it added 7.66 million subscribers to an expected 4.57 million subscribers.
Netflix’s EPS underperformed, largely due to losses related to its euro-denominated debt, but its 7% margin still beat Wall Street expectations. The depreciation of the US dollar against the euro in the fourth quarter is not an operating loss.
This is the first quarter to include Netflix’s new ad-supported services in its earnings. The company launched this low-priced tier in November, but didn’t disclose the percentage of new subscriptions from users who opted for the service.
In the company’s pre-recorded earnings call, Netflix said it saw similar engagement from members of its new ad tier to regular consumers. He also pointed out that not many people switch plans. As such, people who subscribe to premium, more expensive services rarely switch to the cheaper ad-supported model.
Spencer Neumann, the company’s chief financial officer, said on a conference call. “We would not have gotten into a business like this if we hadn’t believed that revenues in 2022 could exceed $30 billion, almost $32 billion, and could exceed at least 10% of our revenues.
Last quarter, the streamer said he was “very optimistic” about the new ad business. Going forward, Netflix will no longer provide subscriber guidance, but will continue to report these numbers in future earnings reports. This is because the company focuses on revenue as its primary top-line metric rather than membership growth.
“2022 got off to a rocky start, but ended brightly,” the company said in a statement. “We believe there is a clear path to reaccelerate revenue growth. We will continue to do so, launch paid sharing, and build advertising services.As always, Polaris continues to please its members and build even greater profitability over time.”
Netflix touted new releases such as the TV series “Wednesdays,” the documentary series “Harry and Meghan,” and the Rian Johnson movie “Glass Onions,” as top content for the quarter.
The company expects revenue growth to rise 4% in the first quarter of 2023, beating Wall Street’s current forecast of 3.7%. Netflix said this growth will be driven by an increase in paid memberships and an increase in the amount of money per paid membership.
Additionally, the first quarter will mean Netflix will preliminarily roll out its paid sharing program. The program aims to make money from users who have previously shared passwords with people outside their home.
The company anticipates that some users who have rented accounts will stop watching shows on the platform because they will not be added as additional members to their existing accounts or converted into paying members. .
“However, we believe the pattern is similar to what we’ve seen in Latin America, continuing to offer a great slate of shows and growing engagement over time as renters sign up for their accounts. ‘ said the company.
