Netlflix Ends Year With Strong Performance

Here are the results:

• EPS: 12 cents vs 45 cents per share, according to Refinitiv.
• Revenue: $7.85 billion $7.85 billion, according to Refinitiv survey.
• Global paid net subscribers: 7.66 million adds, compared to 4.57 million subscribers expected.

“2022 was a tough year, with a bumpy start but a brighter finish,” Netflix said in its quarterly letter to investors, adding that it has a clear path to reaccelerate its revenue growth. It ended the year with 230.8 million subscribers globally.

Netflix shares were up more than 7% in after-hours trading, reports The Wall Street Journal.

Revenue rose 1.9% year-over-year to $7.85 billion in the fourth quarter while net profit plunged 91% to $55.3 million. The net-profit decline was the result of an unrealized loss from a Eurobond currency hedge that dinged the company as foreign-exchange markets shifted.

The earnings report caps a tumultuous year for Netflix. It surprised Wall Street in early 2022 with two back-to-back quarters of customer losses before rebounding in the September quarter with 2.4 million new subscribers.

The company spent much of the year focused on starting an advertising-supported tier, controlling costs and finding ways to make money from the more than 100 million Netflix viewers who watch content using someone else’s account.

Netflix said it is past the most cash-intensive phase of building out its business and is now focused on generating strong free cash flow. Its ad-supported tier and effort to get paid for account sharing are two ways it plans to do that.

Netflix in November launched its ad-supported tier of service, which the company said Thursday was beginning to drive “incremental membership growth.” It a also said it has “seen very little switching from other plans.”

As it ramps up its efforts to crack down on password sharing, Netflix said it expects to roll out efforts to spur more members to pay extra for the option of being able to share their accounts with people outside their household. That rollout will happen later in the first quarter, Netflix said, which it said is likely to result in “a very different quarterly paid net adds pattern” this year.

Netflix acknowledged that the account-sharing crackdown could result in a loss of viewership in the near term. It expects the broader rollout of the effort to result in a pattern similar to what it saw in Latin America, where customer engagement grew over time despite Netflix prompting households to pay to share with people who live outside the home.