In a letter to shareholders, Narcos network Netflix said that it added a record 5.59 million members in the fourth quarter of 2015, exceeding its forecast of 5.15 million and closing the quarter with 74.76 million members.
For Q1 the over-the-top service predicts it will add 6.1 million users, compared to 4.88 million a year earlier, following its recent expansion to 130 more countries around the world.
In terms of earnings, Netflix said it remained profitable in Q4 despite foreign exchange headwinds, recording operating income of US$60 million and net income of US$43 million.
Internationally, Netflix made a loss of US$109 million in Q4 – up quarter over quarter due to launches in Japan, Italy, Spain and Portugal.
For Q1 it said it expects international losses of about US$114 million after its most recent set of rollouts.
“Our move into 130 additional countries broadens our addressable market by 190 million broadband homes, on top of the 360 million we counted at the end of 2015,” said Netflix CEO Reed Hastings and CFO David Wells in the shareholders letter.
“Our global availability sets us up for continued growth for many years and we continue to expect material global profits beginning in 2017.”
Netflix said that it plans to launch over 600 hours of original programming, up from about 450 hours in 2015, with current plans for new seasons of 30 or so original series, eight original feature films, 35 new seasons of original series for kids, 12 documentaries, and nine stand up comedy specials.
Netflix said that viewers spent 42.5 billion hours streaming content on the service in 2015, up from 29 billion hours in 2014.
“Netflix is in a strong position because, even if its results fall short of expectations, it will undergo massive subscriber growth in Q1 2016 as a result of an international expansion it completed ahead of schedule,” said eMarketer analyst Paul Verna. “Netflix does face growing competition at home, but there’s nothing to indicate it will lose its leadership in any of the major markets it serves.”
The research firm predicts Netflix will have 126.9 million US users by the end of 2016 and 134.9 million users by 2017 – the equivalent of 49.9% of US internet users.
Joshua Raymond of FX and CFD broker XTB.com said that despite fears of an earnings slowdown,” shareholders cheered this result in after hours trading”, with shares rising 10%.
“But the biggest factor that pleases here is the growth in demand for Netflix outside of the US,” he added. “As long as international growth can maintain momentum and the firm see’s success in new markets, this will help to contain concerns over a domestic slowdown and this could give its share price, which has more than doubled in the last year, a second wind.”
Separately, Strategy Analytics claims that Netflix leads the streaming video on-demand market in both the US and the UK, attracting 77% of US SVOD users and 65% in the UK.
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