Netflix Inc (NASDAQ:NFLX) stock rose 6.76% (As on January 20, 11:10:09 AM UTC-4, Source: Google Finance) after the company posted mixed result for the fourth quarter of FY 22. Netflix said it added 7.66 million subscribers in the fourth quarter, beating Wall Street forecasts of 4.57 million with help from “Harry & Meghan” and “Wednesday” in the battle to attract streaming television viewers. The company is facing restrained consumer spending and competition from Walt Disney Co, Amazon.com Inc and others spending billions of dollars to make TV shows and movies for online audiences. Netflix lost customers in the first half of 2022. It returned to growth in the second half, but new customer additions remain below the pace of recent years. To kick-start growth, Netflix introduced a cheaper, ad-supported option last November in 12 countries. It also has announced plans to crack down on password sharing. Meanwhile, Netflix Inc co-founder Reed Hastings said on Thursday he will step down as chief executive, handing the reins of the streaming service to longtime partner and co-CEO Ted Sarandos and the company’s chief operating officer, Greg Peters.
NFLX in the fourth quarter of FY 22 has reported the adjusted earnings per share of 12 cents, missing the analysts’ estimates for the adjusted earnings per share of 59 cents. The company had reported the adjusted revenue growth of 2 percent to $7.85 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue of $7.84 billion. This is driven 2 by a 4% increase in average paid memberships. ARM declined 2% year over year, but grew 5% on a F/X 3 neutral basis. Operating income of $550M in Q4 was down vs. $632M in Q4 ‘21. This was above the guidance forecast of $330M primarily due to higher than expected revenue as well as slower-than-forecasted hiring. Operating margin for Q4 amounted to 7% compared to 8% in Q4’21. This year over year decline was due to the appreciation of the US dollar.
Moreover, Q4 content slate outperformed even our high expectations: Wednesday was the third most popular series ever, Harry & Meghan the second most popular documentary series, Troll the most popular non-English film, and Glass Onion: A Knives Out Mystery the fourth most popular film. The company has closed two previously announced acquisitions in Q4 – leading animation studio Animal Logic and games studio Spry Fox.
NFLX forecast Q1’23 revenue growth to be of 4% (8% on a F/X neutral basis).