Netflix Surprises with 4Q Profit as Domestic Subscriptions Grow

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Published January 23, 2013

| FOXBusiness

Netflix (NFLX) blew past Wall Street expectations in the fourth quarter as it boasted domestic subscriber growth above its own projections and unveiled a surprise quarterly profit. 

The Los Gatos, Calif.-based video streamer posted net income of $8 million, or 13 cents a share, compared with a year-earlier $35 million, or 64 cents. The results widely topped average analyst estimates calling for a 13-cent loss.

Revenue for the three-month period was $945 million, up from $876 million a year ago, beating the    Street’s view of $934.1 million.

Shares of Netflix soared 26% after hours to $129.86.

The company said it added 10 million global streaming members in 2012, bringing the total to more than 33 million. The company added 2.05 million subscribers in its domestic streaming market, above its goal of adding 1.3 million to 2 million, and grew to more than 6 million international members.

Netflix, which is facing growing competition from the likes of Amazon (AMZN) and Coinstar’s (CSTR) Redbox and Hulu, has announced several new licensing deals over the last quarter, including an exclusive partnership with Walt Disney (DIS) that begins in 2016, and Warner Bros.

The movie streamer said the holiday season was particularly strong for subscription additions, as more people activated electronic devices like tablets and smart TVs.

“We've been investing in making our service better with increased spending on content, which helps both retain and attract members, and have been able to trim marketing spending yet maintain strong net additions,” Netflix said in a statement.

Netflix also defended itself against growing competition in an effort to calm investor concerns, saying that after a careful internal examination it has found that none of the rival services' most watched shows overlap with those of Netflix.

“When it comes to competition, we not only have a superior content offering due to our larger budget, but we are further along the experience curve,” Netflix said. “The fact that our growth remains this strong despite intensifying competition, and our already substantial U.S. market penetration, underlines the large opportunity ahead.”

Netflix said it expects this fiscal year’s first-quarter net additions to be slightly higher than last year’s 1.7 million.

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