“It’s been a good year for Netflix,” wrote CEO Reed Hastings and CFO David Wells in a letter to shareholders. “People around the world want what we offer: consumer-in-control Internet television.” Today, this seems to be the understatement of the century.
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As quick as an instant streaming download, Netflix shares skyrocketed more than 16% to around $388 in after hours trading — circling a high for the year — following the news the the video streaming phenomenon beat earnings expectations.
The company reported full year net income of $112.4 million, crushing the Street’s call for $103.4 million. Earnings per share were $1.85, also well ahead of the the Wall Street consensus estimate. At $4.4 billion full-year revenue was in line with expectations.
Fort he fourth quarter, Netflix’s net income came in at $48.4 million, or 79 cents per share, beating the Streets $40.8 million and 66 cent estimates respectively. At $1.2 billion, revenue was also above expectations.
Netflix finished last year with more than 44 million members and expectations to end the first quarter 2014 with 48 million. In the fourth quarter alone domestic membership grew by 2.33 million, 14% more than the net adds during the same period last year. Internationally Netflix added 1.74 million users. In 2014 the company plans to expand its European base. On the earnings side, the company forecast net income to remain stable at $48 million, and earnings per share to fall by a penny.
In the letter, Hastings and Wells also addressed questions relevant to shareholders and subscribers alike. For one, the company is exploring a tiered pricing plan with three options available to consumers. In this scenario existing members would be able to keep their existing plan and monthly price. “There would be no material near-term revenue increase from moving to this potential broader set of options,” the letter explains. Adding, “We are in no rush to implement such new member plans.”
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