Netflix had a strong close to 2019, with the streaming giant on Tuesday afternoon reporting that it added 8.8 million new subscribers during the fourth quarter. That figure matched its second-best performance in terms of total subscribers during a three-month stretch and narrowly topped Wall Street revenue estimates.
After adding 8.8 million new customers, Netflix now has more than 167 million subscribers overall and for the first time, it now has more than 100 million outside the U.S. Approximately 550,000 of those Q4 subscribers came from the U.S., where Netflix is working against new competitors like Disney+; it’s also pushing towards a saturation point at home, where it already has 61 million accounts.
For Q4, Netflix increased sales 31% year-over-year and posted revenue of $5.47 billion, edging past the $5.45 billion analysts anticipated. Its $1.30 earnings per share easily beat expectations of 52 cents EPS. Net income was $587 million for the quarter.
The subscriber growth matched Netflix’s performance from the fourth quarter of 2018. Netflix set a company record the following quarter when it added 9.6 million new customers during the first quarter of 2019.
Netflix’s stock has been on a healthy run in the last three months, climbing 18% to about $339 per share when the market closed on Tuesday. After Netflix’s released its earnings report, its share price dropped about 1.5% in early after-hours trading.
Netflix’s Q4 coincided with the release of Disney+ and Apple TV+. It also came before several deep-pocketed companies are set to launch their own services by mid-2020. In its letter to shareholders, Netflix acknowledged it’s facing new competitors — but said it is looking to build on its “big headstart” by focusing on “pleasing” subscribers.
“We believe if we do that well, Netflix will continue to prosper. As an example, in Q4, despite the big debut of Disney+ and the launch of Apple TV+, our viewing per membership grew both globally and in the U.S. on a year-over-year basis, consistent with recent quarters.”
It’s worth pointing out Disney+ was only available in the U.S. and a handful of other markets during the fourth quarter.
Netflix championed “The Witcher,” its new fantasy show that stars Henry Cavill, for having the biggest first season debut in the company’s history, with 76 million households watching the show in its first month. But in a footnote, Netflix also pointed it has changed how it measures views. The company previously counted a view after 70% of a show or movie was watched, but now counts a view after 2 minutes of streaming. This is enough time to reflect an “intentional” click, according to Netflix’s note.
The company’s Q4 free cash flow was negative $1.7 billion, and Netflix closed the year with a negative $3.3 billion in FCF.