Netflix powered previous the 200 million subscriber mark in 2020 to cap its biggest-ever yr of progress, pushed by viewership positive aspects throughout COVID-19.
Within the fourth quarter of 2020, Netflix added 8.51 million paid streaming subscribers, about 2.5 million greater than anticipated, to face at 203.7 million worldwide on the finish of the yr.
Netflix beforehand forecast 6 million international paid web provides for Q4 (down from 8.8 million within the year-prior quarter), after the streamer noticed a pandemic-driven increase within the first half of 2020. For the total yr, Netflix added 36.6 million streaming prospects — its highest annual acquire, beating its earlier report of 28.6 million in 2018.
On the subscriber beat, shares of Netflix popped as a lot as 13% in after-hours buying and selling Tuesday.
Netflix reported Q4 income of $6.64 billion (up 21.5%) and earnings of $1.19 per share. Wall Avenue analysts on common had anticipated Netflix to submit Q4 income of $6.63 billion and earnings per share of $1.39, in response to Refinitiv.
Netflix mentioned it has greater than 500 titles at present in submit manufacturing or “making ready to launch.” That features its huge 2021 movie slate of 71 titles — with plans to debut a minimum of one new film each week of the yr.
Amongst its hottest originals throughout Q4 was Season 4 of “The Crown.” Within the first 28 days after its Nov. 15 premiere, Netflix mentioned, extra member households had opted to observe S4 than every of the prior seasons. It didn’t present a breakout quantity for the newest season however mentioned “The Crown” Season 4 helped push complete viewers of the present to greater than 100 million since its preliminary launch. (Netflix counts viewers in the event that they watch a minimal of two minutes of a title.) As Netflix has beforehand claimed, 62 million households watched “The Queen’s Gambit” in its first 4 weeks, making its most-watched unique restricted collection up to now.
The sturdy Q4 subscriber outcomes come because the No. 1 SVOD participant faces stepped-up competitors from a slew of rivals together with Disney Plus, Hulu, HBO Max, Peacock, Discovery Plus, Paramount Plus and Amazon Prime Video.
The surge of aggressive exercise “signifies that these corporations all acknowledge the long run is streaming leisure, a imaginative and prescient we’ve got been working in the direction of since inception,” Netflix mentioned in its Q4 letter to shareholders. “Our technique is easy: if we will proceed to enhance Netflix each day to higher delight our members, we could be their first alternative for streaming leisure. This previous yr is a testomony to this method.” The corporate tipped its hat to Disney Plus, acknowledging the service’s “huge first yr” with 87 million paid subscribers.
Netflix co-CEO Reed Hastings, on the earnings video interview Tuesday, mentioned the corporate has much more headroom for progress. Even within the U.S., the place it has the very best family penetration of about 60%, Netflix remains to be below 10% of complete TV viewing time, he mentioned: “We’ve got a number of subscribers within the U.S. however we’ve got much more viewing time we wish to earn.”
For the primary quarter of 2021, Netflix expects paid web provides of 6.0 million in contrast with the report 15.8 million it racked up within the year-ago quarter, which the corporate famous “included the impression from the preliminary COVID-19 lockdowns.” The corporate forecast Q1 income of $7.13 billion and EPS of $2.97, with web earnings projected at $1.36 billion — practically double the year-earlier interval.
Netflix posted adverse free money circulate (FCF) for the quarter (of -$284 million) however famous that FCF for the total yr was constructive — $1.9 billion in 2020 vs. -$3.3 billion in 2019. A part of the rationale for that was Netflix’s considerably decrease spending on content material given coronavirus manufacturing shutdowns. However Netflix informed buyers that it “imagine[s] we’re very near being sustainably FCF constructive.” For the total yr 2021, it’s projecting free money circulate to be round break-even.
As such, Netflix mentioned it doesn’t anticipate to want to situation further debt to fund content material spending or day-to-day operations — and mentioned it would “discover” returning money to shareholders by way of inventory buybacks, which it had beforehand performed from 2007-11. Netflix reported $15.8 billion in long-term debt as of the top of 2020; the corporate intends to take care of $10 billion-$15 billion in gross debt.
On a money foundation, Netflix spent $11.8 billion on streaming content material in 2020, versus $13.9 billion the yr prior. Nonetheless, that’s just one image of the corporate’s complete programming funds: Netflix additionally has content material funds due over a number of years, and people content material obligations totaled $19.5 billion on the finish of 2019 per its annual 10-Ok submitting.
In the meantime, Netflix delivered the higher-than-expected Q4 subscriber quantity additionally as the corporate raised costs on its hottest plans in the usduring the quarter, with the Customary two-stream HD plan going up a greenback from $12.99 per thirty days to $13.99.
Within the Q4 shareholder letter, Netflix referred to the “Shuffle Play” button it has been testing for a number of months on linked TV platforms. The corporate mentioned it expects to formally roll out the function, which streams a random title based mostly on a consumer’s viewing historical past or playlists, within the first half of 2021.
Hastings, in response to query within the earnings interview about any regrets the corporate has, mentioned, “We remorse not shopping for a worldwide license to ‘Home of Playing cards’ within the first deal… We had to return and piecemeal it at extraordinary expense.”
Pictured above: Emma Corrin as Princess Diana in Netflix’s “The Crown” Season 4