Earnings report: Netflix releases fourth quarter numbers as stock price soars

CNN
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Netflix announced on Tuesday that it saw a significant increase in subscribers in the fourth quarter. The company added more than 13 million subscribers in the quarter, compared to Wall Street’s expectations of 8.7 million.

Netflix added 1.2 million paid subscribers in the U.S. in the fourth quarter, but much of the strongest subscriber growth was international from Europe and Asia.

Overall, Netflix now has a record number of subscribers at 260.3 million.

And investors appear to be celebrating, with Netflix stock up more than 7% in after-hours trading on Tuesday.

Password sharing and Netflix’s advertising expansion

Last year, the company launched several initiatives aimed at adding subscribers, including a crackdown on password sharing that forced password “borrowers” to create their own subscriptions, and the introduction of a $6.99 ad-supported subscription tier. was carried out.

This plan is significantly cheaper than Netflix’s ad-free service, which costs $6.99 per month in the US. Netflix announced in October that it had increased the price of its ad-free premium plan to $22.99 and its one-stream basic plan to $11.99.

Earlier this month, Netflix’s president of advertising, Amy Reinhardt, said that Netflix’s advertising tier had more than 23 million monthly members.

On Tuesday, Netflix spoke positively about its growing advertising business.

During Netflix’s fourth-quarter earnings call, Netflix co-CEO Greg Peters said he was excited about Netflix’s ability to steal advertising dollars from traditional TV competitors.

“We know that ad spend follows engagement. We have the most engaged audience, which puts us in a good position to capture a portion of the ad spend moving from linear to streaming.” “I believe there is,” he said.

Netflix also declared success in cracking down on password sharing in a letter to shareholders on Tuesday.

“We believe we have successfully addressed account sharing and ensured that when people enjoy Netflix, they also pay for the service,” the company said.

Netflix ended 2023 with a 12% increase in revenue, up from 6% in 2022. The company had revenue of $8.8 billion in the fourth quarter, but fell short of Wall Street’s expectations for earnings of $2.11 per share, according to FactSet estimates.

games, sports and entertainment

Last year was a tumultuous year for the entertainment industry, with writers and actors going on strike for months. But Netflix has recently made investments to diversify its business beyond scripted programming.

Looking ahead to 2024, Netflix said it sees “significant opportunities” to further improve its core TV and movie content, as well as expand into gaming, live entertainment and sports programming.

Earlier Tuesday, Netflix announced it had acquired exclusive rights to broadcast live “WWE Raw,” which is currently available on Comcast’s U.S. cable network. The 10-year deal is worth more than $5 billion, according to company filings.

During Netflix’s earnings call on Tuesday, co-CEO Ted Sarandos said the deal with WWE hits “right in the sweet spot of our sports business, which is the drama of sports.”

“Think of this as 52 weeks of live programming a year. That feeds into our desire to expand our live event program,” he said. “This should also add fuel to our new and growing advertising business.”

In November, Netflix aired its first-ever live sports event called the Netflix Cup, a crossover competition between Formula 1 drivers and professional golfers.

The company will also experiment with live awards show content, including an exclusive screening of the Screen Actors Guild Awards in late February.

But in a letter to shareholders on Tuesday, Netflix addressed speculation that it plans to enter the traditional cable TV space, which is in decline as more TV viewers cut the cord and switch to streaming. I kicked it.

“We are not interested in acquiring linear assets,” the company said in the letter.

Netflix also significantly expanded its video game offering in the fourth quarter. In December, Netflix launched three mobile friendly games of Grand Theft Auto, one of the best-selling video game series of all time.

“We’re excited about GTA’s performance,” Peters said Tuesday. “Highest downloads and engagement numbers we’ve ever seen. We’ve been number one in mobile game downloads for several weeks, and this was not only a big number for us. , which represents a huge number for mobile gaming as a whole.”