Netflix had a stellar fourth quarter, posting revenues and subscriber numbers well above analyst estimates. That has got investors excited again, driving the stock up 25 percent in after hours trading.
In its fourth-quarter 2012 earnings report, the company announced $945 million for the quarter, up from $876 million last year. Wall Street’s consensus forecast for the quarter was $935 million. It also reported earnings of 13 cents share, compared to earnings of 64 cents a share in the same quarter last year. That was well above analyst expectations for a loss of $0.12 a share.
As in previous quarters, much of Wall Street’s focus is on Netflix’s domestic subscriber growth. That’s especially true for the fourth quarter, which is typically the biggest for adding new users, thanks to users signing up during the holidays and receiving new, Netflix-compatible gadgets as gifts. Netflix failed to disappoint, as it added 2 million U.S. subscribers for the quarter, compared to 220,000 in the prior year’s fourth quarter. It’s above its own forecast of 1.3 million to 2 million new adds during the period.
Netflix said its improved domestic subscriber numbers were due to users buying new connected devices in the quarter, as well as improved voluntary and involuntary retention. That included improved payment processing, as well as “steady improvements in service and content relative to the broad array of video choices available.” Netflix believes that it will be able to keep subscribers on board also thanks to continued growth in the amount of content viewed by each member.
Overseas, Netflix added 1.8 million new subscribers, bringing its total customer count overseas to 6.1 million. That growth has pushed international revenue over $100 million for the quarter. Meanwhile, subscriber losses in its DVD business continued to slow, as it has 380,000 few subscribers in the quarter. But that’s below the loss of 2.76 million a year ago.