Tuesday, Netflix (NFLX) reported a significant increase in subscriber additions for the fourth quarter, surpassing its own projections and causing its stock to surge over 7% in after-hours trading.
The 13.12 million new subscribers surpassed Netflix’s initial estimate of approximately 9 million, with net additions for the entire year of 2023 estimated at around 30 million. As of Q4 2022, the organization had acquired 7.67 million paying customers.
The revenue for the quarter surpassed the $8.71 billion estimate of Wall Street, increasing by 12.5% to $8.83 billion, compared to the corresponding period last year. The revenue growth can be attributed to the streamer’s reliance on revenue-generating initiatives such as its crackdown on password sharing and ad-supported tier, as well as the recent price hikes on select subscription plans.
Consensus estimates for first-quarter revenue on Netflix were approximately met with $9.24 billion, while actual revenue was $9.24 billion.
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Netflix Announces The Departure Of Scott Stuber, Chairman Of Netflix Film, In March Netflix (NFLX) reported on Tuesday that subscriber growth for the fourth quarter surpassed its own projections and propelled the stock price in after-hours trading by over 7%.
The 13.12 million new subscribers surpassed Netflix’s initial estimate of approximately 9 million, with net additions for the entire year of 2023 estimated at around 30 million. As of Q4 2022, the organization had acquired 7.67 million paying customers.
The revenue for the quarter surpassed the $8.71 billion estimate of Wall Street, increasing by 12.5% to $8.83 billion, compared to the corresponding period last year. The revenue growth can be attributed to the streamer’s reliance on revenue-generating initiatives such as its crackdown on password sharing and ad-supported tier, as well as the recent price hikes on select subscription plans.
Consensus estimates for first-quarter revenue on Netflix were approximately met with $9.24 billion, while actual revenue was $9.24 billion.
Netflix nonetheless guided to EPS for the first quarter of $4.49, exceeding the consensus estimate of $4.09.
Additionally, profitability metrics performed admirably, as operating margins for the fourth quarter of 2023 stood at 16.9% and for the full year at 21%, exceeding the company’s objective of 20%.
In the quarter, free cash flow amounted to $1.58 billion, surpassing the $1.26 billion forecast by the consensus. As a result of the repercussions of the double Hollywood strikes of the previous year, the organization augmented its free cash flow for the entire year of 2023 to $6.9 billion, surpassing Netflix’s forecast of $6.5 billion.
Average revenue per member (ARM) increased by 1% annually, which was consistent with the organization’s forecast of “roughly flat year-over-year.” Later this year, Wall Street analysts anticipate an increase in ARM as the effects of the ad tier and price hikes become more pronounced.
The company reported in its earnings report that ad-tier memberships increased by approximately 70% from the previous quarter to the current one. The advertising strategy presently contributes to 40% of the total number of Netflix subscribers in the regions where it is available.
