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Netflix Hits 203 Million Subscribers as This fall Earnings Fall

Netflix has change into the primary streaming firm to cross the 200 million subscriber mark after saying on Tuesday it added 8.5 million subscribers throughout the fourth quarter of 2020. The firm now has 203.65 million subscribers general. At the identical time, Netflix’s This fall earnings fell in need of Wall Street’s expectations — however traders don’t appear to be sweating it, with the corporate’s inventory worth taking pictures greater in after-hours buying and selling.

On the monetary aspect, Netflix reported earnings per share of $1.19, in comparison with the $1.36 EPS analysts had projected. Revenue of $6.64 billion matched analyst estimates, though its 21.5% year-over-year gross sales progress fell in need of the 30% year-over-year progress Netflix loved throughout the identical interval a 12 months earlier.

Two key takeaways from Netflix’s letter to shareholders: Netflix mentioned it plans on being cash-flow impartial by the tip of 2021 and cash-flow constructive yearly after. (Netflix mentioned its “very close” to being free cash-flow constructive after posting -$138 million internet money circulation throughout This fall.) The firm additionally mentioned “we believe we no longer have a need to raise external financing for our day-to-day operations.”

Netflix added it intends to “maintain $10 billion-$15 billion in gross debt” and can “explore” inventory buybacks, one thing the corporate hasn’t executed since 2011.

Netflix’s 8.5 million new prospects simply tops the 6 million the corporate — and most analysts — had projected it could add throughout the quarter. Most of these new viewers got here from exterior the U.S. and Canada, however Netflix did add one other 860,000 home subscribers, which was up 56% from the 12 months earlier than.

Investors appeared thrilled at first blush, with Netflix’s inventory worth leaping 7.15% in after-hours buying and selling to $537 per share.

“2020 was an incredibly difficult year with extraordinary loss for so many families, new restrictions that none of us have ever had to live with before and great uncertainty,” Netflix mentioned in a letter to shareholders.  “We’re enormously grateful that in these uniquely challenging times we’ve been able to provide our members around the world with a source of escape, connection and joy while continuing to build our business.”

Heading into This fall, Netflix had added 28.1 million subscribers throughout the first three quarters of 2020, which was already greater than the corporate added in all of 2019. The firm completed its record-setting 12 months with 37 million new prospects becoming a member of the fold, thanks largely to the coronavirus pandemic, which accelerated the streaming revolution by forcing tens of millions of individuals to remain inside, sitting on their couches. More than 80% of Netflix’s subscriber positive aspects final 12 months got here from exterior of North America.

Top Netflix releases for This fall included The Queen’s Gambit, which was considered one of Netflix’s largest exhibits ever and helped spark a digital chess revolution, “Bridgerton,” and the return of “The Crown.” It was additionally the primary quarter to replicate the worth hikes Netflix applied in late October, which pushed customary month-to-month subscriptions to $13.99 within the U.S.; the corporate’s Premium subscription, its most costly plan, now prices $17.99 per thirty days.

The firm will maintain a video convention name to debate its earnings at 3:00 p.m. PT.

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