Netflix "Subscribers Surpass 260 Million"... 8% Increase After Market Close

13.1 Million New Subscribers in Q4↑
Revenue Exceeds $8.83 Billion Forecast
2024 Operating Profit Margin Outlook Revised Upward

Netflix, the world's largest online video service (OTT) company, posted results that exceeded market expectations.

According to Netflix's Q4 earnings report released on the 23rd (local time), the company gained 13.1 million new subscribers in the fourth quarter alone. More than 5 million customers were added in Europe, the Middle East, and Africa. As a result, Netflix's paid subscriber count reached a record high of 260.8 million. After the earnings release, Netflix's stock price surged more than 8% in after-hours trading.

Netflix logo [Image source=Netflix]

Revenue also recorded strong performance at $8.83 billion. This represents a 12.5% increase from $7.85 billion a year ago and surpassed the London Stock Exchange Group (LSEG) forecast of $8.71 billion.

However, Q4 earnings per share (EPS) were $2.11, up from the previous quarter but below the market expectation of $2.22. In response, Netflix explained in its shareholder letter, "We expect Q1 FY2024 EPS to be $4.49, higher than Wall Street's estimate of $4.10."

Netflix further warned, "The strong subscriber growth seen at the end of last year is unlikely to continue this year," adding, "Q1 numbers this year may exceed the 1.75 million added a year ago but could fall short of last quarter's figures." Currently, Wall Street expects Netflix to add 4.31 million subscribers in Q1 this year.

Netflix appears to be focusing on profitability rather than subscriber growth through subscription fee increases, cracking down on account sharing, and ad-supported plans. In fact, the annual operating margin forecast for 2024 was raised from 22% to 23%. The weak US dollar and strong Q4 results exceeding market expectations are expected to support this.

While other OTT competitors are cutting content spending to maximize profitability, Netflix is making large-scale investments in content and business model diversification. However, Netflix stated in its shareholder letter that it is not interested in simply expanding its size through M&A with legacy media.

Netflix added, "Nevertheless, we will continue steady collaboration with traditional content creators," and noted, "The WWE Raw streaming deal, a traditional entertainment powerhouse, will be the first step toward Netflix's new vision."

RAW is one of the popular pro wrestling programs in the US, with over 2 million viewers per episode. Netflix signed a major streaming deal with RAW worth approximately $5 billion over 10 years. Accordingly, Netflix will broadcast RAW worldwide starting January 2025, holding exclusive rights in the US, Canada, the UK, South America, and other regions.