Media & Entertainment

Netflix Q4 Earnings Beat The Street, But Next Quarter May Be A Different Story


Image Credits:

Saying 2011 was a rocky road for Netflix would be an understatement, as it split its DVD and streaming offerings into two businesses, then reneged. They also hiked their prices, only to experience a veritable customer revolt, and CEO Reed Hastings was forced to publicly say that they’d made a huge mistake.

Today, Netflix has released its fourth quarter earnings from 2011, and it looks like there’s at least a sliver of good news, as the company beat Wall Street’s forecasts of $0.54 a share and $857 million in revenues, rising instead to $0.73 per share and $876 million in revenues (a 47 percent increase from the year prior).

In its letter to shareholders this afternoon, Netflix said that it saw a rise in streaming members in the U.S., up 220,000 to 21.67 million in the fourth quarter. In October and November, growth was slow, but December was kinder to Netflix, as the company said that it “returned to positive net streaming additions,” boosted by strong seasonal growth additions and exceeded its own forecasts. More importantly, based on its exodus last year, Netflix saw fewer streaming cancellations, as well as a lower rate of migration to DVD-only plans.

All in all, domestic streaming reached nearly 22 million subscriptions, adding a total of 610K, while domestic DVD subscriptions came in at 11.7 million, with international subscriptions at 1.86 million. In relation to the latter, Netflix has warned that it will lose money throughout 2012 as it ramps up its international content, and as DVD subscriptions continue to underperform: “We expect modest quarterly losses, as well as losses for the calendar year,” the company said in its shareholder letter. Due to international expansion, particularly in its launch in the UK, Netflix expects a consolidated loss of between $9 and $27 million in the first quarter.

The company sustained a sharp decline in DVD members in the fourth quarter and thus expects DVD revenues in the first quarter to decline at approximately the same rate, while streaming revenues will increase, with an expected flat sequential revenue in the first quarter.

In total, Netflix ended 2011 with 24.4 million subscribers in the U.S., which was up 25 percent from 2010, and rose from 23.79 total domestic subscriptions in the third quarter. All things considered, this is a good sign for Netflix, especially as it attempts to recover from the whopping 800K subscribers it lost in the third quarter. Although 2012 will continue to be shaky, it seems that the company has at least regained some trust, and is seeing stronger growth.

As to how shareholders are taking the news? Today, Netflix’s stock rose by $3 per share, up 2.37 percent, and in after hours trading, the stock is up 13 percent to $108 a share — another good sign, as shareholders seem at least somewhat contented by the company’s outlook going forward.

The earnings report comes on the heels of some management changes for Netflix, as the company announced last week that its Leslie Kilgore, its CMO for the last 12 years, would be joining the Netflix board as a nonexecutive director. Jessie Becker was appointed interim CMO, and Jonathan Friedland would be promoted to Chief Communications Officer.

Another thing that Netflix may have to contend with in the near future: Amazon. The New York Post published an article today saying that Jeff Bezos and company are seriously considering a move to expand the company’s streaming service, potentially even carving it out as a standalone, subscription-based operation.

In January of last year, Amazon acquired LoveFilm, a U.K. version of Netflix, and some expected at the time that Amazon would eventually rebrand the service, taking advantage of its strong European presence in the video streaming and rental markets. There’s no doubt that Amazon is positioning itself as a major competitor to Netflix, and with its growing clout as a media company, backed by the addition of its new Kindles, Netflix has reason to be nervous.

It’s strong push into international markets could be very important to Netflix in the long term, even if that means lower forecasts and declining profits over the next few quarters. Today, however, shareholders are a bit happier, and Netflix may just be proving that its regaining its footing.

Updating in realtime. We’ll also be listening in on Netflix’s earnings call at 3pm PT/6pm ET.

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

10 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

12 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android