Netflix Beats On Subscriber Growth, Misses Slightly On Revenue

Netflix Inc. continued to expand its customer base at a rapid clip in the fourth quarter thanks to strong growth overseas, but increased spending on content weighed on the streaming-video giant’s profit and it forecast slower revenue growth for the current quarter, reports The Wall Street Journal.

Netflix added 8.8 million paid subscribers in 2018’s final period, up 34% from a year earlier and exceeding both its and analysts’ expectations by more than a million.

Revenue grew 27% to $4.19 billion, less than the $4.21 billion analysts expected. The company forecast revenue growth of 21% for the first quarter—a pace that most media companies would relish but below what is normal for Netflix.

Fourth-quarter profit fell to $134 million, or 30 cents a share, from a year-earlier $186 million, or 41 cents a share.

Its operating margin fell due to the number of new titles that launched in the quarter, meaning more production costs were booked.

Companies including AT&T Inc.’s WarnerMedia and Walt Disney Co. are preparing their own content-streaming services to launch later this year. They will be competing with Netflix to sign up consumers and stock their services with content.

Their entry could drive up Netflix’s programming costs even further, including for popular reruns.

“We want to win,” said Netflix Chairman and Chief Executive Reed Hastings when asked about all the new competition. On the company’s earnings call, Hastings said the goal is still to provide a better environment with incredible content and “no advertising.”

Netflix said Thursday it was “ready to pay top-of-market prices for second run content.” At the same time, it is making more of its own content in-house as it aims to be less reliant on outside suppliers for original shows and movies.