Netflix shares surged over 10% in after-hours trading, hitting a record high, driven by exceptional fourth-quarter earnings.
Subscriber Growth and New Strategy
The company gained 19 million new subscribers in Q4, doubling analyst expectations and reaching 302 million global users.
Netflix credited its crackdown on password sharing and popular content for the growth. The ad-supported tier drove 55% of sign-ups in ad-available markets.
This quarter marked the last time Netflix reported subscription numbers, shifting focus to profit margins and revenue growth in 2025.
Content and Business Highlights
Netflix attributed its growth to hit content like Squid Game Season 2, Carry-On, and live sports like Jake Paul vs Mike Tyson.
The platform secured US broadcasting rights for the 2027 and 2031 FIFA Women’s World Cups, solidifying its focus on special event programming.
Ad-supported memberships grew 30% sequentially. Netflix aims to enhance its advertising model, expanding both its user base and advertiser appeal.
Josh Gilbert of eToro noted, “Netflix is evolving into a one-stop entertainment hub, attracting premium advertisers and delivering value to investors.”
Financial Performance
Netflix’s revenue rose 16% year-on-year to $10.25 billion, exceeding analysts’ forecasts of $10.11 billion. Earnings per share reached $4.27, up from $2.11 the prior year.
However, the operating margin fell to 22%, reflecting heavy investments in live sports programming. For the full year, revenue increased 16%, and net income rose 62%.
Regional Growth and Future Outlook
The US-Canada (UCAN) and Europe-Middle East-Africa (EMEA) markets contributed 44% and 32% of total sales, with modest revenue growth of 4% and 1%, respectively.
Netflix plans price increases in markets like the US, Canada, and Portugal to fund more content and programming.
For 2025, Netflix projected revenue between $43.5 billion and $44.5 billion, reflecting 12%-14% growth. Free cash flow is expected to reach $8 billion.
The company remains committed to expanding its series, films, live events, and gaming content, with flagship shows returning in 2025.
“Price increases will be justified if Netflix continues delivering strong content, ensuring a sustainable growth path,” added Gilbert.