Netflix Beats Revenue Projections on Strong Subscriber Growth
- By Mayank Marwah
Netflix Inc. (NASDAQ:NFLX) released its fourth-quarter results after the market closed on Jan. 19. The company's revenue beat projections as stay-at-home orders led to outpaced subscriber growth. Earnings, however, missed expectations.
The company's shares surged more than 12% in after-hours trading to $563.49 following the earnings release as it surpassed revenue and subscriber growth targets for the quarter.
Key metrics
The company posted diluted earnings per share of $1.19, which reflected a decline of 8.46% from the year-ago quarter. Revenue of $6.64 billion climbed 21.53% on a year-over-year basis. Wall Street was anticipating earnings of $1.39 per share on $6.62 billion in revenue.
Subscriber growth
On the global front, the company added 8.5 million paid subscribers during the quarter, which is more than its own guidance of 6 million paid subscriber additions.The company further broke down the numbers to 1.99 million subscriber additions in Asia Pacific, 1.21 million in Latin America, 4.46 million in Europe, the Middle East and Africa and 0.86 million in the U.S. and Canada. Currently, the company has more than 200 million subscribers globally. Throughout 2020, the company added a record 37 million paid subscribers. This is a 31% increase over subscriber additions of 28 million in 2019.
Road ahead
Netflix said that the pandemic did not have much of an impact on its slate of content for 2020. The current production slowdown on account of the outbreak, however, postponed its big titles toward the end of next year. Netflix projects that the total count of originals will be more in 2021 compared with 2020. It plans to include other movies and shows that it acquired in addition to its original content.
Netflix is facing stiff competition from other media companies like Disney's (NYSE:DIS) Disney+ and AT&T's (NYSE:T) HBO Max as they have started streaming movies, television shows and other content. The company, however, said it will not focus on its competitors and stick to its strategy of trying to improve its service and content every quarter faster than its peers.
For the first quarter of 2021, Netflix expects revenue of $7.129 billion, which is above analysts' estimate of $7.02 billion. Earnings for the same period are projected to be $2.97 per share versus $2.10 expected by outsiders. The net subscriber additions are anticipated to be 6 million in the first quarter, while analysts are projecting the figure to be 7.35 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.
