1/19/2023: Netflix Reports Higher Than Expected Subscriber Growth
Founder/CEO Reed Hastings is stepping down
Netflix reported Q4 financial results after market close. Revenue was $7.85 billion versus $7.86 billion expected. EPS was $0.12 versus $0.58 expected. Subscriber growth was 7.66 million versus 4.5 million net additions expected. The better-than-expected subscriber growth is a nice surprise and NFLX 0.00 stock soared after the report was out.
Founder/CEO Reed Hastings also announced his plan to step down after 25 years and transition into the chairman role. Congratulations to an amazing run, Mr. Hastings. You made something people want. I love Netflix as a customer and I can’t imagine a life without on-demand video streaming. Thanks for being a pioneer and making it happen.
Netflix also made the following statement in the press release:
2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time.
Apparently, Netflix found it more challenging to grow in 2022 as everyone already has Netflix. In order to grow their revenue to make investors happy, the company decided to clamp down on account sharing and launch a lower-price ad-supported tier. I can see why Mr. Hastings decided it is time for him to step down as the innovation phase of the company is ending and it’s probably better for professional managers to take over. I hope the new management will keep Netflix’s user experience delightful while trying to monetize it better. It is a bit sad but the Netflix story is a Silicon Valley story. Innovations eventually become part of our daily life and it’s no longer considered innovative as people take it for granted. Same for light bulbs, cars, washing machines, TV sets, personal computers, etc. It’s the end of an era. But I believe Netflix on-demand video streaming will go down in history as one of the top 100 inventions of the 21st century.
Horrible earnings. More subs. Less revenue QoQ . Less fcf QoQ.
100x fcf company needs to have growth.
Promises of doubling fcf for 2023 which don't make sense. They are canabalizing revenue with new ad model and not monetizing forced account share conversion.