In This Article:
Netflix (NASDAQ: NFLX) stock gained 8.6% in Tuesday's after-hours trading session following the video streaming leader's release of its fourth-quarter 2023 report.
Investors' positive reactions are attributable to the quarter's revenue and net paid subscriber additions surpassing Wall Street's consensus estimates, along with bottom-line guidance for the first quarter of 2024, easily exceeding analyst expectations. Here is an overview of Netflix's fourth quarter, along with its outlook, centered on six key metric categories.
1. Revenue jumped 12.5%
Netflix's quarterly revenue grew 12.5% year over year (and 13% in constant currency) to $8.83 billion. This result exceeded the $8.72 billion Wall Street consensus estimate, as well as the company's guidance.
Revenue growth was primarily driven by the increase in average paid subscriptions, with a 1% rise in average revenue per subscription also contributing to growth. The company attributed the robust top-line growth to its paid-subscription-sharing offering (part of its password-sharing crackdown), its recent price changes, and the strength of its business in general.
2. Paid net subscriber count soared by 13.1 million
In Q4, paid net subscriber growth was 13.1 million, up from 7.7 million in the year-ago quarter and up from 8.8 million in the prior quarter. This result crushed the 8.7 million analysts were expecting. Netflix ended the quarter with 260.3 million global paid subscribers, up 13% year over year.
Netflix added paid subs in all four of its regions, including in its U.S./Canada region, which is more difficult to do because of the company's high penetration rate. It gained 2.8 million new paid subs in this region, bringing its total to 80.1 million.
3. Operating income surged 172%
In Q4, operating income increased 172% year over year to $1.50 billion, translating to the operating margin (operating income divided by revenue) rising from 7% to 16.9%. Operating results were notably better than management's guidance for an operating margin of 13%. The company attributed this beat to the stronger-than-expected revenue and its lower-than-planned spending.
4. EPS soared 1,658%
The quarter's net income was $938 million, or $2.11 per share, up 1,658% from the year-ago period. This result missed the earnings per share (EPS) of $2.22 that analysts had forecast. It also fell a bit short of the company's guidance of $2.15. That said, net income was reduced by $239 million from a non-cash unrealized loss from foreign-exchange remeasurement on the company's euro-denominated debt.