Q4 Net Profit Plummets 91%
[Asia Economy Reporter Yujin Cho] Reed Hastings, co-CEO and founder of the U.S. online video service (OTT) Netflix, will step down from company management after 25 years and initiate a management reshuffle.
On the 19th (local time), Hastings announced at the Q4 earnings release that he would step back from frontline management and take on the role of chairman.
Hastings cited examples such as Amazon founder Jeff Bezos and Microsoft founder Bill Gates remaining as chairman (board chair) and said, "The board has been discussing management restructuring plans for years," adding, "Now is the right time to complete my succession."
Ted Sarandos, who has led the company alongside Hastings, and Greg Peters, Chief Operating Officer (COO), were appointed as co-CEOs.
Netflix announced after market close that the number of new subscribers in Q4 last year was 7.7 million, significantly exceeding Wall Street's forecast of 4.5 million. Although this was a decrease compared to the same period last year (8.3 million), it represented a 220% increase compared to the previous quarter (2.41 million).
Netflix stated that the advertising subscription plan introduced in Q4 last year led to subscriber growth, and both advertisers and customers have positively evaluated the new plan.
As of the end of last year, Netflix's global membership reached 230.8 million. Netflix's new subscriber count had sharply declined for two consecutive quarters in the first half of last year but showed an increasing trend from Q3. The total new subscribers for the year increased by only 8 million, marking the worst annual growth rate in 10 years.
In a letter to investors, Netflix said, "2022 was a challenging year. We secured 230.8 million subscribers worldwide last year."
With the end of the COVID-19 boom and intensified competition from latecomers, the worst slump in the company's history experienced in the first half of last year has bottomed out but performance remains sluggish.
Netflix's Q4 revenue rose 1.9% year-on-year to $7.852 billion, operating profit fell 13% to $550 million, and net income plunged 91% to $55 million from $607 million in the same period last year. Earnings per share were $0.12.
The company explained that the strong dollar negatively impacted net income as much as the economic downturn.
Netflix shares, which fell 3.23% during regular trading hours, surged more than 8% in after-hours trading following the earnings announcement.
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