As promised, I’m checking in with an update on Netflix’s (NFLX) earnings following yesterday’s preview. I must admit, I’m breathing a sigh of relief that I was on the con side of that Netflix short argument. Netflix stock is up nearly 20% since the company reported earnings figures last night.
In rare form for the market, Netflix gave investors exactly what they wanted. Netflix showed it can deliver big subscriber growth, particularly internationally, without sacrificing margins. And that’s why the stock price jumped this morning.
So you don’t have to dig through it, here are the highlights from yesterday’s earnings report:
Strong Subscriber Growth:
- Ended 2014 with 57.4 million members. Aka, nailed their target. That’s 13 million new members in 2014, vs. 11.1 million in 2013.
- The company added 1.9 million US customers last quarter, plus 2.4 million international memebers. That’s 8% more than the company projected for the 4th quarter.
- Netflix’s goal is to offer at least some streaming services in nearly 200 countries by the end of 2016 (FYI, the UN counts 206 total nations) – all while staying profitable.
- TDT Note: North Korea will likely be one of the missing 6, as Netflix is streaming The Interview starting Jan. 24.
Renenues and profits:
- Revenues rose 27% year over year to $1.4 billion, slightly under analyst estimates of $1.48 million.
- Earnings per share killed it though, at 72 cents per share vs. analyst estimates of 45 cents per share.
And best of all? Your Friends (and/or OINTB, House of Cards, Mad Men, etc.) binge watching marathon mattered:
- Median hours watched continue to climb in every single market. That’s one of the main measures Netflix tracks internally
Netflix also outlined some of its strategy for the next few years. It plans to focus on international expansion until 2016, while maintaining profitability, and then aims to use its size to focus on profit expansion starting in 2017.
I for one, believe they can do it. I’m waiting to see how Netflix stock reacts after the earnings reaction dies down in the next few days, but I’m bullish on Netflix for the long term. As I outlined in this post, I think Netflix is in a strong position given the increasing preference for cord cutting (getting rid of cable).
[Final thought: think anyone else is as happy as Mark Cuban today? The 50,000 shares he bought after October’s dip gained more than $3 million overnight.]