Netflix had good news for investors in its Q4 2015 earnings report, released today. The streaming service posted earnings per share (EPS) of 10 cents on revenue of $1.823 billion, beating the market forecast of an EPS of 2 cents on revenue of $1.83 billion.
The company’s shares rose as high as 10% in after-hours trading following the release of the earnings report. But the news was not as good as in the same quarter the previous year (Q4 2014), when it posted an EPS of $0.72 on revenue of $1.49 billion.
Netflix’s lower earnings are largely due to the expense of its international roll-out. In September, Netflix launched its streaming service in Japan, followed by Spain, Portugal and Italy in October. On Jan. 6, the company announced it had added an additional 130 countries to the service — including India, Russia and South Korea — bring the total number of countries where it’s available to 190.
Today, Netflix reported an international contribution loss of $109 million in Q4 that “increased sequentially due to these launches,” and projected international losses of approximately $114 million for Q1 2016.
But with new territories came new subscribers. In Q4 2015, Netflix added a record 5.59 million members, bring total membership to 74.76 million. On Jan. 1, just after Q4 closed, the member count passed the 75 million mark. In the U.S., it experienced a 1.56 million net gain in subscribers during Q4, surpassing the consensus estimate of 1.37 million and Netflix’s guidance of 1.3 million. In contrast, in Q3 2015, the company reported only 880,000 net adds in the U.S. Net subscribers adds for 2015 totaled 17 million.
Netflix still has one territory left unexplored: China. In the company’s letter to shareholders released today, it characterized its expectations for the country as “modest and long-term.”
“We are building relationships, understanding the market, and seeking the conditions we require to provide our service to entertainment lovers there,” said the letter, which was signed by Netflix’s CEO Reed Hastings and its CFO David Wells. “We may be able to get started this year and thus deliver on ‘whole world by end of 2016’ or it may take longer.”