On Tuesday, Netflix, Inc. (NASDAQ: NFLX) reported the fourth quarter financial results. Total revenues increased 5.8% to $1,672 million compared with last quarter, and net income jumped up 48% to $43 million compared with last quarter. Earnings per share surged 43% to $0.1 from $0.07 in last quarter. Moreover, the company offered next quarter guidance as $1,813 million in total revenues, $11million in net income and $0.03 in earnings per share. Shares of Netflix close Tuesday at $107.89, and jumped up to $119 during after market. However, it slumped to lowest $97.5 during Wednesday trading.
According to the fourth quarter financial results, Netflix added 5.59 million streaming subscribers, topping the company’s projection of 5.15 million, and bringing its total global customer base to approximately 75 million. Netflix also expects to add 6.1 million streaming subscribers in the next quarter.
On an interview for investors, Netflix Chief Executive Reed Hastings notified that the company may take some time to gain traction in new markets. “Being light in the beginning doesn’t worry us a bit,” Mr. Hastings said.
Netflix has put a high priority on investing in original programming which can stream around the world. In the fourth quarter, the company premiered Marvel’s “Jessica Jones” as well as “Beasts of No Nation,” its first feature film. Netflix said it plans to launch more than 600 hours of original programming in 2016 which increase 150 hours compared with 2015.
During the same interview, Netflix Chief Content Officer Ted Sarandos said the company isn’t speeding up its spending on originals out of concern that Hollywood studios are becoming unwilling to license their content.
“There’s a lot of rhetoric going around about how quickly and aggressively people will license,” he said. “It’s still a very competitive business. People sell their programming to the highest bidder—if we’re that bidder, we’ll get the programming.”
In order to reduce the cost, Netflix has raised prices which may be affecting the growth pace of domestic customer. The company announced that adding U.S. customers is more difficult than before, because of Netflix’s higher penetration in the marketplace. Some Wall Street analysts had already forecasted Netflix wouldn’t meet its U.S. target due partly to the $1 price increase it had rolled out in October for new customers to its most popular streaming plan.