By Dawn Chmielewski
Netflix on Tuesday blew past Wall Street subscriber estimates in the fourth quarter, driven by a strong slate of shows that included the final season of the long-running royal drama “The Crown” and David Fincher’s original film, “The Killer.”
The company reported it added 13.1 million subscribers in the December quarter, its largest-ever fourth-quarter subscriber growth, handily exceeding projected gains of 8.97 million. That brings the total number of subscribers to 260 million.
Netflix shares were up 8.3% in after-hours trading. The stock gained 65% during 2023.
“It is becoming increasingly clear that Netflix has won the ‘streaming wars,'” wrote Bank of America media analyst Jessica Reif Ehrlich.
The company reported per-share earnings of $2.11, falling short of consensus estimates of $2.22 per share. Netflix said the per-share earnings were impacted by a $239 million noncash loss related to currency exchange rates.
Revenue rose to $8.8 billion, topping forecasts and the company’s own guidance of $8.7 billion in the quarter.
The streaming giant said it expects healthy double-digit revenue growth for full-year 2024, as it continues to add members and invest in its advertising business. Netflix said advertising is not yet a primary driver of revenue growth, but it aims for that to change by 2025.
The company credited gains to the strength of its intellectual property, including “Squid Game: The Challenge,” a reality show based on its most-watched TV series, new original series such as “All the Light We Cannot See,” feature films like Zack Snyder’s “Rebel Moon: A Child of Fire,” and non-English-language programming, including the third season of “Lupin” from France.
It also cited strong demand for licensed titles such as “Young Sheldon.” Co-CEO Ted Sarandos said Netflix has a “rich history” of breaking some of television’s biggest hits, including “Breaking Bad,” “The Walking Dead,” “Schitt’s Creek,” and more recently, “Suits.”
“I am thrilled that the studios are more open to licensing again, and I’m thrilled to tell them that we are open for business,” Sarandos said during Netflix’s investor livestream.
Bank of America’s Ehrlich wrote that Netflix is a beneficiary of changing market dynamics, which are forcing media companies to re-evaluate their strategy of retaining movies and television series exclusively for their own streaming services. She called this a “win-win” proposition, which allows Netflix to reduce its investment in higher-risk original production, even as these licensing deals provide other media companies with much-needed revenue.
