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Dissecting The Netflix, Inc. (NFLX)’s Fourth Quarter Earnings Report

Netflix, Inc. (NASDAQ:NFLX) reported its fourth quarter earnings report in an earnings call on Tuesday (you can read the transcript of NFLX’s earnings call here). Many analysts said that the performance of Netflix, Inc. (NASDAQ:NFLX) in 2015 depends completely on this earnings report. They expected that with a result beating the estimates, Netflix, Inc. (NASDAQ:NFLX) stock could sky rocket very easily. Netflix, Inc. (NASDAQ:NFLX) reported a huge beat on earnings per share and added significant amount of subscribers in the fourth quarter, due to which the stock went up by around 10%. CNBC’s Julia Boorstin reported on CNBC about the earnings report and key numbers from it.

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Boorstin reported that Netflix, Inc. (NASDAQ:NFLX) reported a revenue of $1.48 billion for fourth quarter, which was inline with the street estimate of $1.49 billion. She added that the big surprise from the report was earnings per share (EPS) of 72 cents, which was much more than the projections of 45 cents per share by the street and even more than Netflix, Inc. (NASDAQ:NFLX)’s one guidance of 44 cents per share. She said that this is a big beat to the upside.

Boorstin added that another key number from the report is the subscriber addition for fourth quarter, which was reported as 4.33 million globally. She said that majority of this addition comes globally rather than in US. She pointed out that this capped of a record breaking 2014 with 13 million new subscribers added in the year. She mentioned that Netflix, Inc. (NASDAQ:NFLX)’s total subscribers now stands at 57.4 million by the end of 2014.

Boorstin said that 4.3 million subscriber addition in fourth quarter of 2014 was more than 4.07 million new subscriber added in 2013 fourth quarter.

“[…] the company says that it is going to be fully global by the end of 2016. That means, open to anywhere in the world by the end of 2016. They have always said that they will expand as fast as they can by staying profitable and they are expanding faster than expected. The one exception here is China, where they said all depends on whether they can get a license there,” Boorstin said about Netflix, Inc. (NASDAQ:NFLX)’s global expansion plan.

She pointed out at another key factor in the letter to shareholders from Netflix, Inc. (NASDAQ:NFLX)’s CEO, Reed Hastings, which said that the company is more efficient in making original contents when compared to licensing the contents. She said that this means the company would continue to invest big on original contents in 2015 as well.

Disclosure: None

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