2020 was the year of streaming, and nothing is a bigger proof of that than Netflix’s Q4 earnings report. The company said that it added 8.5 million users in the last quarter of 2020, bringing its total paying subscriber base to a massive 204 million users, up from 167 million in 2019.
The company claims that its global presence is becoming more and more ubiquitous, as 83% of its paid net additions in 2020 came from outside the UCAN area.
The streaming giant reported $6.64 billion in revenue, with a net income of $521 million in Q4. Compare this to Q4 2019, when the revenue was $5.467 billion and the net income stood at $587 million, its clear that Netflix’s expenditure increased in the last quarter.
Moreover, its EPS (earnings per share) came out to be $1.19, which is a little lower than the $1.30/share that it raked in back in 2019.
Nonetheless, the company says that its average revenue per membership has grown from $9.88 in 2018 to $11.02 in 2020, and it expects this number to grow even further in the near future.
“Average paid streaming memberships increased 23% year over year in Q4, while average revenue per membership was flat year over year both on a reported and foreign exchange (F/X) neutral basis. Revenue was 1% higher than our guidance forecast, as paid net adds exceeded our 6.0m projection by 2.5m. Operating margin of 14.4% (a 600bps increase from Q4’19) also came in above our guidance, due to higher-than-expected revenue. EPS of $1.19 vs. $1.30 a year ago included a $258m non-cash
unrealized loss from F/X remeasurement on our Euro denominated debt,” the company said in a letter to its shareholders.
The company also reported that the latest season of Crown was “the biggest season so far and drove new watchers of prior seasons.” Moreover, it expects its latest film-The Midnight Sky to bring 72 million households to its platform. The company says that it aspires to have hits that become part of the cultural zeitgeist, and with titles like Tiger King and Queen’s Gambit (which attracted 62 million users in the first 28 days of launching), the goal is becoming more and more clearer.
“Netflix series accounted for nine out of the 10 most searched shows globally in 2020, while our films represented two of the top 10,” Netflix said.
The streaming giant also admitted that it is facing massive competition from other streaming services like Disney+, AppleTV+, WarnerMedia’s HBO Max, and NBCUniversal’s Peacock streaming services among others. Netflix seems to think that the only way it can grow in this heavily competitive market is by improving every day, and that is what it hopes to do in the future.
Talking about the future, Netflix predicts a revenue of $7.129 billion in Q1 2021, while adding just about 6 million new users.
“For Q1’21, we expect paid net adds of 6.0m vs. last Q1’s 15.8m, which included the impact from the initial COVID-19 lockdowns,” the company said.
