Netflix on Wednesday announced a surprise profit in the fourth quarter of 2012 and a new total of 27 million streaming subscribers in the United States, a jump of more than two million from the third quarter.
The company also added nearly two million new subscribers in other countries, though it continued to lose money overseas, as expected. Overall, however, the company reported $8 million in net income and $945 million in revenue. Analysts had expected a slight loss, not a profit, due to the rising costs of acquiring must-see streaming content.
Netflix’s fourth-quarter earnings exceeded not just Wall Street’s expectations but also its own, as the chief executive, Reed Hastings, and chief financial officer, David Wells, noted in a letter to investors. Revenues, they said, were driven in part by holiday season sales of new tablets and television sets.
Investors cheered the news, and at one point sent Netflix shares soaring more than 30 percent in after-hours trading.
The growth spurt in the fourth quarter attested to the popularity of on-demand libraries of television shows and movies. Streaming services by Amazon, Hulu, and Redbox are competing on the same playing field as Netflix, but for now Netflix is the biggest such service by far.
“The fact that our growth remains this strong despite intensifying competition, and our already substantial U.S. market penetration, underlines the large opportunity ahead,” Mr. Hastings and Mr. Wells wrote.
Netflix ended 2012 with 27.1 million streaming subscribers in the United States and 6.1 million elsewhere. On Wednesday it predicted that it would end the first quarter of 2013 with somewhere between 28.5 and 29.2 million in the United States and somewhere between 6.6 and 7.3 million elsewhere.
Net income will be about in line with the fourth quarter, Netflix said, since the revenue from new subscribers will be offset by licensing expenses and continuing declines in its DVD-by-mail business.
Media Decoder Blog: Adding Subscribers, Netflix Posts Surprise Profit
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Media Decoder Blog: Adding Subscribers, Netflix Posts Surprise Profit
