Netflix, the global streaming juggernaut, has reported a strong performance in the fourth quarter of 2023. The company reported the addition of a staggering 13.1 million subscribers, surpassing Wall Street expectations and reinforcing its position as one of the premier premium video-streaming platforms of the world. This strong performance comes on the back of a weak few quarters in the past, and Netflix going strong on live streaming, shedding its low-cost plans and banning account sharing.
For the fourth quarter of the previous year, the streaming giant’s revenue surged to $8.83 billion, marking an annual growth of 12.5%. Its operating income for the same period amounted to $1.49 billion, while its diluted earnings per share (EPS) clocked a year-over-year decline to reach $2.11. Netflix’s net income for the fourth quarter was an impressive $937.8 million, translating to $2.11 per share. This represents a substantial leap from the prior-year period, where net income was $55.3 million, or 12 cents per share.
Netflix shares were up more than 8% in after-hours trading once the earnings call was revealed, and its shares are currently priced at $492.19 per share. In its quest to enhance profitability, Netflix raised its 2024 full-year operating margin forecast to 24%, up from the previously projected range of 22% to 23%. This adjustment is attributed to a stronger-than-forecast performance in Q4 and the impact of the weakening U.S. dollar. Looking ahead, Netflix projects earnings per share of $4.49 for the fiscal first quarter of 2024, surpassing Wall Street’s expectation of $4.10, alongside “healthy double-digit revenue growth” in the current fiscal year.
“We’ve just ended our first year with Ted [Sarandos] and Greg [Peters] as co-CEOs and, under their leadership, Netflix achieved the key financial objectives we set at the start of 2023,” reads the letter to Netflix’s shareholders. “The year has shown the need for Netflix to balance consistency and continuous improvement with adaptability. We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment. If we can continue to improve Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers, creators, and shareholders.”
The standout feature of Netflix’s Q4 2023 performance is the strong growth in its subscriber base, showcasing a remarkable year-over-year increase of 12.8%. The platform now boasts an unparalleled 260.8 million paid subscribers globally, marking a substantial leap from the 231 million reported at the end of 2022. This surge during Q4 2023 stands as the second-highest in the company’s history, falling just short of the peak witnessed in Q1 2020 during the initial months of the COVID-19 pandemic. At the end of the year, Netflix boasted having 260.28 million total members globally. Analysts had expected the company to report about 8.8 million net new subscribers for the year-end quarter.
Last year, Netflix’s original content garnered significant viewership, with standout performances such as “The Crown,” “My Life with the Walter Boys,” “Leo,” and “Leave the World Behind.” The company received 18 Academy Awards nominations, the highest among all studios, as well. Going forward, the streaming major remains optimistic about its content slate for 2024, with promises of a “big, bold slate” that includes highly anticipated series and movies. While Netflix’s primary revenue driver remains its subscription-based model, the company continues to explore opportunities for growth beyond traditional streaming. The ad-supported tier, introduced at $7 a month, has shown promising results. Netflix’s ad-tier membership experienced significant growth, rising almost 70% compared to the previous quarter. The company reported more than 23 million global monthly active users on ad plans as well.
Speaking of Netflix’s tiers, the company aims to retire its ad-free Basic plan. According to media reports, the cheapest tier will be retired in some countries where ad-supported plans are available. It’s starting with Canada and the UK in the second quarter of this year. The Basic plan costs $11.99 per month, and once it is gone, users will have the $15.49/month option as Netflix’s cheapest ad-free plan.
