Netflix (NASDAQ: NFLX) shares exploded higher in after-hours trading Friday after the online movie service blew past Wall Street’s expectations in every important category – earnings, revenues and new subscribers.
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The shares surged as much as 18% to $392 after the company reported earnings per share of 79 cents, easily beating analysts’ forecasts of 66 cents.
Net earnings were $48.4 million, slightly above expectations of $48 million. And fourth quarter revenue rose 24% to $1.18 billion, another beat of the $1.17 billion forecast.
Also significant was Netflix announcement that the service added 2.33 million new subscribers last quarter while analysts had predicted 2 million. Netflix said it expects to add 2.25 million new subscribers in the first quarter.
Elsewhere in its earnings report, the company suggested price increases may be on the horizon, but promised existing subscribers that their fees would be “generously grandfathered.”
Netflix found itself in hot water with subscribers and shareholders two years ago when the company bungled an attempt at raising prices.
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Netflix predicted a total of about 34.3 million paying domestic streaming subscribers by the end of the first quarter.
Netflix primary business allows customers to stream videos over the Internet and receive DVDs in the mail. The company has recently begun producing original content for its subscribers and is negotiating deals with media companies such as Walt Disney (NYSE: DIS) to provide additional exclusive content.
Overseas, Netflix said it gained 1.7 million new subscribers in the quarter just ended, and predicted 1.6 million more in the current quarter. It ended the last quarter with more than 9.7 million paid members abroad, also more than forecast.
Membership at the DVD-by-mail business continued to decline, the company said, a trend that has been more than offset by new online streaming subscribers.
Looking ahead, the company forecast first-quarter earnings of about 78 cents a share, a penny more than what analysts are forecasting.
“It’s been a good year for Netflix. People around the world want what we offer: consumer-in-control Internet television,” CEO Reed Hastings said in a letter to shareholders.