By Tess Stynes
Netflix Inc. said it added 4.33 million streaming subscribers
globally in the fourth quarter, above the company's estimate of 4
million, boosted by a better-than-expected number of U.S.
additions.
Shares of Netflix, which fell more than 19% following the
company's previous quarterly report, rose more than 11% in
after-hours trading as the report Tuesday eases concerns about
subscriber growth.
The streaming-video service has bet big on a rapid international
expansion as it faces growing domestic competition, such as rival
HBO's plans to offer a stand-alone streaming service to U.S.
consumers, without requiring a cable subscription.
In the U.S. and abroad, Netflix has been pursuing tie-ups with
pay-TV operators. In the quarter, it sealed a deal with its biggest
U.S. partner yet, satellite TV provider Dish Network Corp., to make
Netflix's app available on Dish's latest set-top boxes.
In the latest quarter, the streaming TV and DVD-by-mail provider
added 1.9 million U.S. streaming customers, compared with 2.33
million in the year-earlier quarter and above its forecast for 1.85
million U.S. customers.
For the first quarter, the company forecast that it would add
1.8 million new domestic customers, compared with 2.25 million in
the first quarter of 2014.
In its international business, Netflix added 2.43 million
subscribers, above its expectations for 2.15 million and the 1.74
million international subscribers added a year earlier.
For the first quarter, the company forecast that it would add
2.25 million new international streaming customers, compared with
1.75 million in the first quarter of 2014.
Netflix's costs have been growing as it seeks to become a global
service. In September, Netflix launched in six additional European
countries, including France and Germany. Its international loss
widened to $79 million from $57 million a year earlier, narrower
than its expected loss of $95 million. The company said it expects
to launch Netflix in Australia and New Zealand late in the first
quarter.
In the latest quarter, Netflix's streaming content obligations
rose to $9.5 billion, from $7.3 billion a year earlier. In the
quarter, Netflix struck deals to save some high-profile U.S.
television series from cancellation. It bought rights to the new
comedy "Unbreakable Kimmy Schmidt" from Universal Television after
NBC scrapped plans to air the show, which was co-created by Tina
Fey. Netflix also struck a deal with Warner Bros. to make new
episodes of the popular drama "Longmire" after it was canceled by
A+E Networks.
Overall, Netflix reported a fourth-quarter profit of $83.4
million, or $1.35 a share, up from $48.4 million, or 79 cents a
share, a year earlier. Excluding certain items, per-share earnings
were 72 cents a share in the latest quarter; the company said in
October that it expected 44 cents a share.
Revenue increased 26% to $1.48 million, slightly below the
estimate of $1.49 billion by analysts polled by Thomson
Reuters.
For the current quarter, the company forecast per-share earnings
of 60 cents a share. Analysts polled by Thomson Reuters expected
per-share profit of 77 cents.
U.S. contribution margin reached 28%, compared with expectations
for 28.4%, an increase from 23.4% a year earlier, but down slightly
from 28.6% in the third quarter.
Write to Tess Stynes at tess.stynes@wsj.com
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