NFLX

Netflix, Inc.

195.19
USD
1.98%
195.19
USD
1.98%
162.71 700.99
52 weeks
52 weeks

Mkt Cap 86.39B

Shares Out 442.60M

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Netflix slides 11% as users fall short despite profit beat

Netflix (NASDAQ:NFLX) has tumbled 11.4% after hours following its fourth-quarter earnings, where revenues were in line with expectations and EPS beat consensus, but subscriber additions fell short of both Street expectations and company guidance. The company added 8.28 million net subscribers worldwide, below its own expectations for 8.5 million and previous Street assumptions for 8.32 million. Those additions brought the company to 221.84 million global paid memberships, marking 8.9% year-over-year growth. (In Q3, additions came at a 9.4% Y/Y pace.) Revenues grew an in-line 16% to land at $7.71 billion. Operating income fell by 34% to end up to $631.8 million, beating an expected $559 million. And operating margin was a slim 8.2%, vs. last quarter's 23.5% and a year-ago 14.4%. "The decline in operating margin was expected given our large content slate in Q4 this year," the company says, adding it came in above its own beginning-of-quarter forecast due to content spend that was a little lighter than expected. It notes that U.S./Canada added 1.2 million paid subscribers, its strongest growth there since the early days of the COVID-19 pandemic in 2020. Asia Pacific added 2.6 million subs, vs. a year-ago 2.0 million; Latin America added 1 million (vs. 1.2 million a year ago), and EMEA was the biggest contributor, adding 3.5 million (vs. 4.5 million prior year). In another heavily watched metric, free cash flow went more sharply negative, to -$569 million. That compares with -$106 million last quarter, and -$284 million a year ago. Notably it marks a third quarter of negative free cash flow after the company turned positive with $692 million in Q1. Net cash used in operations was $403 million, vs. a net inflow of $82 million last quarter. For the upcoming first quarter, it's forecasting just 2.5 million net subscriber additions to land at 224.34 million total (and representing 8% year-over-year global growth). Its quarterly video earnings interview is set to come at 6 p.m. ET.

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