Reed Hastings, co-CEO and co-founder of Netflix (NFLX), announced Thursday that he was stepping down from his role as head of the company. COO Greg Peters will join current Netflix co-CEO Ted Sarandos in this role. Hastings will now serve as Executive Chairman of the company.
Netflix also reported mixed fourth-quarter financial results, with subscriber growth beating expectations, coming in at 7.66 million vs. guidance of 4.5 million, with adjusted earnings missing expectations.
Netflix shares rose as much as 6% following the news.
Here are Netflix’s fourth-quarter results compared to Wall Street consensus estimates compiled by Bloomberg:
Revenue: $7.85 billion versus $7.86 billion expected
Adj. earnings per share (EPS): $0.12 versus $0.58 expected
Subscribers: 7.66 million vs 4.5 million expected net additions
Quarterly net adds rose 7.66 million, beating the company’s guidance of 4.5 million, as the streaming giant rolled out new initiatives like a crackdown on password sharing and a recently launched ad-supported layer to fuel growth.
A string of high-profile and record-breaking content releases, including Glass Onion, Troll, All Quiet on the Western Front, My Name is Vendetta, and Wednesday, also added to subscriber momentum.
Guidance was strong as revenue expectations for the first quarter of 2023 were set at $8.17 billion as exchange rate headwinds begin to ease amid a weakening U.S. dollar. As previously mentioned, the company hasn’t provided any projections for subscriber growth because “revenue is our primary revenue metric.”
Netflix also said it expects earnings per share of $2.82 with free cash flow expectations of at least $3 billion for 2023.
Netflix stock has been on a run for the past few weeks, up about 60% over the past six months with a year-to-date gain of about 10% in January, outperforming the Nasdaq Composite’s 5% gain.
The story goes on
“2022 was a tough year with a bumpy start but a better ending. We believe we have a clear path to re-accelerating our revenue growth: continue to improve all aspects of Netflix, introduce paid portions, and expand our advertising offerings,” the company wrote in a letter to shareholders. “As always, our North Stars continue to delight our members and build even greater profitability over time.”
Investors will be closely watching the company’s earnings call for further updates regarding its newly launched ad-supported tier in addition to its crackdown on password sharing.
Analysts have warned investors that given the tier only launched in November, it will take time for the effects of Netflix’s foray into advertising to be felt.
Dubbed “Basic with Ads,” the advertising plan costs $6.99 per month in the US and serves as a complement to Netflix’s existing ad-free plans – the Standard plan ($15.49/month) and the Basic plan ( $9.99). )
Other questions include whether or not Netflix will slow its $17 billion in content spending, as well as the possibility that the company will attempt more mergers and acquisitions once WWE is up for sale.
Alexandra is a senior entertainment and media reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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