Netflix Q4 - Blowout quarter with record subs

Netflix shares closed up 10.7% after growing its subscribers the most in a quarter since 2020. As if that's not enough for one day, the company also inked a $5 billion, 10-year contract with WWE.

Netflix added 13.1 million subscribers during the fourth quarter, 50% higher than analysts had expected, and more than the combined subscriber growth of Disney, Warner Bros. Discovery, and Paramount Global for the same period.

The total paid subscribers number grew to a record 260.8 million, solidifying its position as the King of Kontent! The company's revenue was $8.83 billion, up from $7.85 billion in the year-ago quarter. The growth is thanks to increased subscriber activity in Europe and North America.

The streaming giant's net income for the quarter was $937.8 million, soaring from $55.3 million in the previous year. Netflix increased its 2024 full-year operating margin forecast to 24% and projected earnings per share of $4.49 for the fiscal first quarter of 2024.

Netflix signed a 10-year deal valued at over $5 billion to air WWE's flagship program "Raw", starting next year. This is its first significant foray into live sports and will have the option to exit the contract after five years or extend it for another decade. The agreement grants Netflix global streaming rights for "Raw" and exclusive rights in the US, Canada, the UK, and Latin America.

Netflix's focus on enhancing profits while continuing to invest in a larger content slate, amid competitors cutting back on spend, is remarkable and it's paying off. The company secured nominations across 34 titles at the Emmys and emerged victorious with a total of 22 awards.

Despite the challenges, Netflix remains committed to improving its entertainment offering and sees potential in the advertising-based plan, recently announcing it has over 23 million global monthly active users for its ad-supported tier, which is 9.42% of its US subscribers and 49% of all new subs.

The streaming giant acknowledges that the competitive landscape won't change much due to the current consolidation in the space, but remains optimistic about long-term revenue potential. Management expressed their disinterest in acquiring other "linear assets". We love this company because they are focused on the future of entertainment, not the past.