Netflix Reports Lower Earnings for 4th Quarter

Despite growth in subscribers, Netflix reported lower fourth quarter earnings, but forecast that profit margins would grow next year.

Global subscribers rose 26% to 139.26 million from 110.64 million a year. It added a record 8.84 subscribers since third quarter, including 1.5% in the U.S.

Netflix forecasts that it will have 148.16 million global subs in the first quarter, up 24.6% from first quarter 2018.

Related: Nielsen: ‘Bird Box’ Draws Almost 26 Million Viewers in First Seven Days on Netflix

U.S. subscribers reached 58.49 million and the company forecasts topping 60 million in the first quarter by adding another 1.6 million to its roster.

Net income dipped to $134 million, or 30 cents a share, from $186 million, or 41 cents a share. The company said it expects net income to jump to $253 million, or 56 cents, in the first quarter

The company said operating margins dipped because it launched many titles during the quarter.

Related: Channing Dungey Lands at Netflix

Revenue rose to $4.187 billion from $3.286 billion a year ago. The company expects that first quarter revenue will be $4.494 billion

Netflix shares finished trading Wednesday up $1.80 at $353.19, but dipped more than 3% in after-hours trading after the earnings figures came out.

“Our multi-year plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” the company said in a letter to shareholders. It said it was aiming for a 9% margin in the first quarter and expects that to widen for a full-year margin of 13%.

One piece of fourth-quarter content, the film Bird Box will be watched by over 80 million member households, the company said, adding “we are seeing high repeat viewing.”

With Bird Box and other titles, Netflix said that its movies “mirror the success of our series offering for consumer enjoyment.”

Earlier in the week, Netflix announced plans to raise its subscription price. The company said the new pricing in the U.S. will be phased in for existing members of Q1 and Q2.

Netflix said that in the U.S. it gets about 10% of television screen time. It didn’t seem overly concerned with the rush of competitors coming into the streaming business.

“There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those with great experiences,” the company said. “Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose. Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.