Netflix share price rockets after results beat expectations and revenue rises 23 per cent

 
Madeline Ratcliffe
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Netflix shares jumped 8.15 per cent to $116.68 in after hours trading, having jumped as much as 10 per cent, after releasing fourth quarter earnings which beat analysts expectations.

The figures

Revenue for the last quarter of 2015 was $1.82bn (£1.29bn), up 23 per cent from $1.49bn the year before.

Earnings per share were 10 cents a share, down from 19 cents the year before, but ahead of analysts' expectations of two cents a share.

Net profit was $43m, down from $83m in 2014. This was less to do with the strong US dollar, and down to a $39m tax benefit in the last quarter of 2014.

There were a record 5.59m new subscribers in the quarter, bringing total membership to 74.76m.

Why it's interesting

Earlier this month, Netflix said it had expanded service to more than 190 countries globally, but its domestic subscription numbers grew by 1.56m, less than analysts predicted, and down from 2.28m in 2014. Netflix was hoping for US subscriber growth of 1.65m. The company said this was down to "new credit/debit card rollover [which] continues to be a background issue".

International customers increased by 4.04m, in line with Netflix's expectations.

The company's chief executive and chief financial officers also updated investors on their ambitions for China, one of the few countries where Netflix does not operate:

In the last remaining major market, China, we have work and uncertainty ahead. We are building relationships, understanding the market, and seeking the conditions we require to provide our service to entertainment lovers there. Our expectations are modest and long‐term. We may be able to get started this year and thus deliver on “whole world by end of 2016” or it may take longer.

What Netflix said

The company said in its letter to investors it expected the number of subscribers to grow in the first quarter of 2016, by 6.1m, compared to 4.88m a year ago.

Chief executive Reed Hastings and chief financial officer David Wells said: "On earnings, we stayed profitable in the fourth quarter despite foreign exchange headwinds."

However, they warned: "We expect similar modest operating income results for the first quarter, as we invest in our international expansion."

In short

Though it may be less profitable in the process, Netflix is on track for world domination

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