Netflix Shares Soar On Robust Fourth-Quarter Earnings
Netflix delivered fourth-quarter growth that met expectations and set the stage for it to surpass 60 million members in the next few months.
The streaming-video giant added more than 4.3 million new subscribers in the fourth quarter and now has 47.4 million globally.
With another 4 million additions expected by the end of March, Netflix would hit 61.4 million members globally. “Progress has been so strong that we now believe we can complete our global expansion over the next two years,” CEO Reed Hastings said in a statement.
“Stronger-than-expected international gains,” especially in Europe, drove its traction, S&P Capital IQ analyst Tuna Amobi said in a note.
Already in 50 countries, Netflix expects to be in 200 total within the next two years, and to begin to generate global profits in 2017.
Shares of Netflix skyrocketed 16%, to $404 in after-hours trading, on its earnings, beating analysts’ estimates and matching revenue expectations. Netflix stock closed Tuesday at $348.64; shares have plunged over the last three months from its Oct. 15, 2014, closing price of $448.59.
The company reported in-line revenue of $1.48 billion and earnings of 72 cents, compared to expectations of 45 cents. Net income rose to $45.5 million surpassing internal forecasts of $27 million, due to lower-than-expected international losses. A $39 million R&D tax resolution pushed net income total to $85 million.
Internationally, Netflix added 2.4 million streaming subscribers in the fourth quarter, compared to 1.74 in the same period last year. U.S. subscriber gains were 1.9 million, compared to 2.3 million last year, but about as expected by the company and Wall Street.
Among programming notes, Netflix will offer Sony Pictures’ controversial film The Interview starting Saturday, as part of an exclusive arrangement with the studio.
Its film Crouching Tiger, Hidden Dragon II: The Green Destiny sequel debuts on Aug. 26.
With CBS already offering its own streaming service, HBO and Showtime having projects in the works, and Sling TV’s subscription service set to launch later this month, “everyone sees Internet TV is becoming really substantial,” Hastings said in a post-earnings conference call with investors.