Netflix reports big profits, subscriber gains

Video-rental company adds more than 3 million subscribers and net earnings outpace analysts expectations during the fourth quarter ending December 31.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read

Netflix went a long way to answering skeptics today by reporting big jumps in profits and subscriber growth.

The nation's top video rental service reported fourth-quarter net earnings of $47 million or 87 cents per share, on $596 million in revenue. These figures represent a sharp climb from the same period a year ago.

Income for the quarter, which ended December 31, rose 52 percent and revenue grew 34 percent from the year-ago period.

The big news came in the form of subscriber growth. Netflix reported that the total number of Netflix subscribers is 20 million. For the quarter, the company added 3.08 million subscribers. In October, Netflix predicted it would add 2.7 million subscribers for a total of 19.7 million.

Those 3 million new subscribers mark a 166 percent jump from the 1.1 million the company added in the same period last year. The number of total Netflix subscribers rose by 63 percent from a year earlier.

The fear on Wall Street was that Netflix would begin showing signs that the cost of content would empty its coffers. Either that, or the company would be unable to afford enough films and TV shows to attract new customers. None of that apparently occurred in the fourth quarter.

All the signs indicate that Netflix is more popular than ever.

A consensus of financial analysts expected Netflix to report earnings of 71 cents a share on revenue of $598 million. Netflix's total revenues were slightly below what analysts expected but far exceeded profit expectation.

Investors didn't appear overly confident that Netflix would see a big quarter, or at least one that could continue justifying its lofty stock price. Netflix shares closed trading today at $183.03, down $3.71 or 2 percent. The stock has tripled in price this year.

In after-hours trading however, Netflix shares traded at $198.40, up 8 percent.