Ending a year that the SVOD leader described as having “a bumpy start but a brighter finish,” Netflix has posted stronger than forecast fourth quarter 2022 results and has announced that CEO Reed Hastings is now to become executive chairman.
For the quarter ended 31 December 2022, Netflix posted revenues of $7.852 billion, growing 1.9% annually, driven by a 4% increase in average paid memberships. Average revenue per member declined 2% year-on-year but grew 5% on a F/X neutral basis. Operating income for the quarter was $550 million, down noticeably on Q4 2021 but above guidance forecast of $330 million primarily due to higher-than-expected revenue as well as slower-than-forecasted hiring. Operating margin for Q4 amounted to 7% compared with 8% in Q4 21.
Revenue was slightly above the company’s beginning-of-quarter projection, as paid net adds of 7.7 million were substantially higher than forecast, 4.5 million, but compared with 8.3 million a year ago. Netflix attributed the stronger adds to both strong acquisition and retention, driven primarily by the success of a Q4 content slate that included series Wednesday, its third most popular series ever; the Harry & Meghan documentary series, its second most popular; Troll, its most popular non-English film; and Glass Onion: A Knives Out Mystery, the company’s fourth most popular film.
The Q4 results also showed that Netflix ended the year with a total of 231 million paid memberships and generated $32 billion in revenue, $5.6 billion in operating income and $2.0 billion of net cash.
After its brighter end to the year, Netflix forecast Q1 23 revenue growth of 4% with an expectation that revenue growth would be driven by a combination of year-on-year growth in average paid memberships and ARM. However, this said the company would only translate into “modest” positive paid net adds in Q1 compared with the 200,000 dip in Q1 2022 which was a driver of the need to launch an advertising VOD offer.
While no official figures were given by Netflix for the growth of the latter, a study from Ampere Analysis showed that with the launch of its ad-supported plan on 3 November 2022, Netflix recorded its highest daily subscription sign-up rate in the US since the start of the pandemic in April 2020. Specifically, the release of the ad tier led to a 58% increase in the streamer’s average daily sign-up volumes from 3-5 November, compared with the three days before the launch. It added that since the new plan was made available to subscribers, 8% of those signing up to Netflix or changing their plan have taken the ad-tier.
2023 will also see a major shake-up in the Netflix boardroom with Reed Hastings passing the CEO baton to former chief content officer Ted Sarandos and COO Greg Peters who will become co-chief executives.
Revenue was slightly above the company’s beginning-of-quarter projection, as paid net adds of 7.7 million were substantially higher than forecast, 4.5 million, but compared with 8.3 million a year ago. Netflix attributed the stronger adds to both strong acquisition and retention, driven primarily by the success of a Q4 content slate that included series Wednesday, its third most popular series ever; the Harry & Meghan documentary series, its second most popular; Troll, its most popular non-English film; and Glass Onion: A Knives Out Mystery, the company’s fourth most popular film.
The Q4 results also showed that Netflix ended the year with a total of 231 million paid memberships and generated $32 billion in revenue, $5.6 billion in operating income and $2.0 billion of net cash.
After its brighter end to the year, Netflix forecast Q1 23 revenue growth of 4% with an expectation that revenue growth would be driven by a combination of year-on-year growth in average paid memberships and ARM. However, this said the company would only translate into “modest” positive paid net adds in Q1 compared with the 200,000 dip in Q1 2022 which was a driver of the need to launch an advertising VOD offer.
While no official figures were given by Netflix for the growth of the latter, a study from Ampere Analysis showed that with the launch of its ad-supported plan on 3 November 2022, Netflix recorded its highest daily subscription sign-up rate in the US since the start of the pandemic in April 2020. Specifically, the release of the ad tier led to a 58% increase in the streamer’s average daily sign-up volumes from 3-5 November, compared with the three days before the launch. It added that since the new plan was made available to subscribers, 8% of those signing up to Netflix or changing their plan have taken the ad-tier.
2023 will also see a major shake-up in the Netflix boardroom with Reed Hastings passing the CEO baton to former chief content officer Ted Sarandos and COO Greg Peters who will become co-chief executives.
