Netflix reported it now has more than 200 million global subscribers.LUCY NICHOLSON/Reuters
Netflix Inc said on Tuesday its global subscriber rolls crossed 200 million at the end of 2020 and projected it will no longer need to borrow funds to keep financing its broad slate of streaming TV shows and movies, sending shares up 12 per cent after hours.
The world’s largest streaming service signed up 8.5 million new customers from October through December when it debuted widely praised series “The Queen’s Gambit” and “Bridgerton.” The company topped Wall Street estimates of 6.1 million, according to Refinitiv data, despite increased competition and a price increase in the United States.
Netflix had borrowed billions since 2011 to fund original programming in multiple languages to lure subscribers around the world. The company said on Tuesday it expected to break even on free cash flow in 2021, adding in a letter to shareholders, “We believe we no longer have a need to raise external financing for our day-to-day operations.”
As the company generates excess cash, it will explore returning cash to shareholders via share buybacks, the letter said.
Shares of Netflix rose 12 per cent to $564 in extended trading on Tuesday as the financial milestone validated the company’s strategy of going into debt to take on big Hollywood studios with a flood of its own programming.
With the new additions, Netflix’s worldwide membership reached 203.7 million. The company that pioneered streaming in 2007 added more subscribers in 2020 than in any other year, boosted by viewers who stayed home to help curb the coronavirus pandemic.
Now, Netflix is working to build its customer base around the globe as big media companies amp up competition. Walt Disney Co in December unveiled a hefty slate of new programming for Disney+, while AT&T Inc’s Warner Bros scrapped the traditional Hollywood playbook by announcing it would send all 2021 movies straight to HBO Max alongside theaters.
“The big growth in streaming entertainment has led legacy competitors like Disney, WarnerMedia and Discovery to compete with us in new ways,” Netflix said in the letter. “This is, in part, why we have been moving so quickly to grow and further strengthen our original content library across a wide range of genres and nations.”
For January through March, Netflix projected it would sign up 6 million more subscribers, behind analyst expectations of roughly 8 million.
Netflix also fell short of analyst estimates on fourth-quarter earnings per share, which came in at $1.19. Analysts had forecast $1.39.
Revenue rose to $6.64 billion from $5.47 billion during the quarter, edging past estimates of $6.63 billion.
Net income fell to $542.2 million, or $1.19 per share, from $587 million, or $1.30 per share, a year earlier.
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