Netflix posts slower than expected subs Q4 growth | Major Businesses | Business | News | Rapid TV News
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Ending a twelve month-period in which it said it achieved several milestones, Netflix has posted fourth quarter results with fewer net additions than expected, 8.28 million, leading to the company ending the calendar year with 221.84 million paid subscribers.
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This represented growth of 8.9% for the leading streaming video-on-demand (SVOD) provider but the Q4 additions though fell short than those expected by financial analysts. Netflix conceded that it had slightly over-forecasted paid net adds in Q4 - 8.5 million paid net adds in both the year ago quarter and its beginning of quarter projection – and for the full year 2021, paid net adds totalled 18m compared with 37 million in 2020.

Significantly, more than 90% of paid net adds in 2021 were derived from outside of the core United States and Canada (UCAN) region which added 1.2 million paid memberships in Q4 21, compared with 900,000 at the same time in 2020. This made it the company’s strongest quarter of member growth in this region since the early days of Covid-19 in 2020. In APAC, it increased paid memberships by 2.6 million, up by 600,000 compared with Q4 2020, with strong growth in both Japan and India. EMEA was Netflix’s largest contributor to paid net adds in Q4 with 3.5 million. Yet this was a million fewer than at the same time in 2020. The Indian region delivered record quarterly revenue, exceeding $2.5 billion for the first time. LATAM paid net adds totalled 1.0, $200,000 less than Q4 2020.

The subs growth was the driver for Q4 21 revenue growing 16% year over year with a 9% increase in average paid memberships. Average revenue per paid member rose 7% year over year on both a reported and foreign exchange (F/X) neutral basis, two percentage points faster than Q3’21 (ex-F/X). Operating margin for Q4 amounted to 8%, a six-percentage point decrease compared with the same period a year ago. Full year revenue of $30 billion grew 19% year over year while operating income of $6.2 billion rose 35% year over year.

Netflix said the decline in operating margin was expected given its large content slate in Q4. Operating margin was above its beginning of quarter forecast of 6.5% due to slightly lower than forecasted content spend which produced a number of highlights. Netflix pointed to Squid Game, the biggest TV show of the year and its two biggest film releases of all time in the form of Red Notice and Don’t Look Up.

Going forward, Netflix's Q4 trading statement said that even in what it called a world of uncertainty and increasing competition, it was optimistic about its long-term growth prospects as in its opinion streaming supplanted linear entertainment around the world. Yet for the first quarter of Q1’22, it forecast paid net adds of 2.5 million, 1.5 million fewer than in the year ago quarter. This guidance it said reflected a more back-end weighted content slate in Q1 22.