Netflix, Inc. (NFLX) Surges as Q4 Earnings Beat Estimates

Netflix CEO Reed Hastings


Netflix, Inc. (NASDAQ:MFLX) reported earnings for the fourth quarter that beat the expectations of Wall Street analysts. Investors reacted positively on the company’s financial performance, sending its stock price higher during the extended trading on Tuesday.

The stock price of the world’s largest online video streaming company closed3.70% top $107.80 per share. The stock surged further by 7.54% to $116.02 per share after-hours.

Netflix financial results

Netflix said its fourth-quarter adjusted earnings declined from $44.76 million or $0.10 per share to $29.74 million or $0.7 per share, which was higher than the $0.2 per share expected by analysts.

The company’s revenue increased 23% from $1.48 billion to $1.82 billion. Slightly lower than the $1.83 billion consensus estimate.

During the quarter, Netflix added 5.59 million total net subscribers, up from its 4.33 million net additions in the same period a year ago. The company added 4.04 million international net subscribers, higher than its 2.43 million net additions last year and above the 3.51 million expected by analysts.

Earlier this month, Netflix expanded its service in 130 countries around the world. The company is now present in 190 countries worldwide, but it is not yet available in China, the world’s second largest economy. The expansion contributed to the decline in the company’s earnings due to increased spending.

Ted Sarandos, head of content acquisition said the company’s spending on original programming as a percentage of costs increased during the quarter.

Netflix CEO Reed Hastings said, “In terms of outperformance, it was pretty broad-based.”

Business outlook

For the first quarter of 2016, Netflix expected to deliver earnings of $11 million or $0.03 per share on $1.81 billion in revenue.

The company estimated to achieve a total of 6.1 million additional subscribers for the current quarter including 1.75 million in the United States and 4.35 million outside the country.

Netflix plans to launch more than 600 hours of original programming this year, up from approximately 450 hours last year. The company has current plans for new seasons of approximately 30 original series including The Crown and The Get Down, eight original feature films, 35 new season of original series for kids, a dozen documentaries, and nine stand-up comedy specials.