Netflix Shares Gain 9% On Strong Subscriber Growth

(RTTNews) - Online-video streaming service Netflix Inc. (NFLX), Monday reported a fourth-quarter profit that surged from last year as revenues grew driven largely by strong subscriber additions. Shares surged 9 percent in the after-hours trading.

Netflix added 8.33 million subscribers globally in the quarter, easily beating its forecast of 6.30 million, to end the quarter with 117.58 million subscribers. The company added 1.98 million customers in the U.S. during the quarter, above its estimates of 1.25 million. International subscriber additions were 6.36 million, far above its expectation of 5.05 million.

The company was able to increase its subscriber count thanks to strong demand for its big hits like "13 Reasons Why", "Stranger Things," and "the ongoing global adoption of internet entertainment."

Netflix was able to improve its subscriber growth rate despite increasing price rates of its HD and 4K video plans in October. The subscription price for the "standard" tier was raised from $9.99 to $10.99, while "premium" tier subscription rate rose from $11.99 to $13.99.

Looking forward to the first quarter, Netflix expects to add 6.35 million memberships, with 1.45 million in the U.S. and 4.90 million internationally.

Los Gatos, California-based Netflix's fourth-quarter profit surged to $185.5 million or $0.41 per share from $66.7 million or $0.15 per share last year. On average, 38 analysts polled by Thomson Reuters expected earnings of $0.41 per share for the quarter.

Netflix's revenues for the quarter rose to $3.29 billion from $2.48 billion last year. Analysts had a consensus revenue estimate of $3.28 billion for the quarter.

The video-streaming service provider said global streaming revenues rose 35 percent, driven largely by 25 percent increase in average paid membership and 9 percent growth in average selling price.

The company said it "achieved for the first time a full-year positive international contribution profit, and more than doubled global operating income."

Looking forward, the company said "We're taking marketing spend up a little faster than revenue for this year from about $1.3 billion to approximately $2 billion because our testing results indicate this is wise. We want great content, and we want the budget to make the hits we have really big, to drive our membership growth. We'll grow our technology & development investment to roughly $1.3 billion in 2018."

NFLX closed Monday's trading at $227.58, up $7.12 or 3.23% on the Nasdaq. The stock further gained $20.66 or 9.08% in the after-hours trading.