Netflix Shares Soar on Earnings Report

Netflix added 4.33 million members worldwide in the fourth quarter, ending the year with 57.4 million, more than what Wall Street analysts expected.

Shares of Netflix were up more than 13 percent after the closing bell on Tuesday once the results were known.

The streaming-media company said it earned $83.3 million in the quarter on $1.49 billion in revenue while Wall Street was expecting Netflix to report revenue of $1.48 billion. In the year-ago quarter, Netflix earned $48.4 million on revenue of $1.18 billion.

It’s the subscriber additions, though, that will captivate investors, given that in the previous quarter Netflix missed expectations and offered weak guidance, causing the stock to sink 19 percent in a day.

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Wall Street was expecting Netflix to add 1.79 million domestic streaming subscribers and 2.13 million international streaming subscribers. Netflix said Tuesday that net additions were 1.9 million and 2.43 million, respectively.

Shares of Netflix rose $11.46 on Tuesday to $348.80 but surged another $43 during the after-hours session.

The company also said Tuesday it will offer the controversial film The Interview exclusively to its members beginning Saturday, though only to subscribers in the U.S. and Canada.

“It is increasingly clear that virtually all entertainment video will be Internet video in the future,” CEO Reed Hastings wrote in his quarterly letter to shareholders that was released with earnings figures on Tuesday.

Hastings, as has been customary since launching the effort in 2012, boasted about the quality of Netflix’s original content, which has accounted for 45 Emmy nominations, 10 Golden Globe noms and two Oscar noms.

“But there is one real shocker; last year our original content overall was some of our most efficient content,” he wrote in his letter. “Our originals cost us less money, relative to our viewing metrics, than most of our licensed content, much of which is known and created by the top studios.”

He also promised to allocate a bigger percentage of the company’s content spending to originals. “This will mean more cash usage, which means more debt.”

This year, Netflix is launching 320 hours of original programming, including the third season of House of Cards and a new comedy from Tina Fey and Robert Carlock called The Unbreakable Kimmy Schmidt.

Email: Paul.Bond@THR.com