Another Business Milestone Achieved
Netflix reported that it added a total of 8.5 million paid net subscribers in its Q4 to finish 2020 with 37 million new subscribers — an increase of 31% from 28 million paid net ads in 2019 — a new record for a single year. In total, the company said it serves 203.6 million subscribers globally, which is a remarkable achievement for the company, given that it had 111 million subscribers at the beginning of 2018.
“2020 was an incredibly difficult year with extraordinary loss for so many families, new restrictions that none of us have ever had to live with before and great uncertainty. We’re enormously grateful that in these uniquely challenging times we’ve been able to provide our members around the world with a source of escape, connection and joy while continuing to build our business,” the company said in a statement.
The Q4 earnings report gives us insight into how Netflix has performed lately. The streaming platform recorded $25 billion in annual revenue (1% higher than the company’s earlier guidance) which will make the company more sustainable. According to company management, Netflix doesn’t have a need to raise external funds.
Higher company revenue is a result of an increase in the average paid streaming memberships by 23% year-over-year. The paid net ads came in at 8.5 million vs. 6.0 expected from the platform. A better-than-expected business revenue also raised operating margin to 14.4% from the previously expected 13.8% for the company.
As for the forward-looking guidance, Netflix said it expects paid net ads to come in at 6.0 million compared to last year’s 15.8 million. It is simply not realistic for Netflix to repeat last year’s first-quarter numbers as they were heavily influenced by lockdowns.
“As we said last quarter, we intend to continue to grow our operating margin each year at an average rate of three percentage points per year over any few-year period, but we anticipate some lumpiness. Some years we’ll be a little over (like in 2020), some years a little under (like in 2021), but we are trying to keep on an average three percentage points per year long-term trajectory,” it is added in the statement.
Netflix stock price soared higher in pre-market trading Wednesday after the business reported stronger-than-expected financial results in their Q4.
About the Author
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media