Netflix blows away expectations on subscriber numbers
Illustration of stock trading graph of Netflix seen on a smartphone screen.
Rafael Henrique | SOPA Images | Lightrocket | Getty Images
Netflix added millions more subscribers in the fourth quarter than Wall Street expected, helping to send shares of the streamer up after the bell despite a big earnings miss.
The company also disclosed that co-CEO Reed Hastings would be stepping down from his position and transitioning to the post of executive chairman. Greg Peters, the company’s chief operating officer has been promoted to co-CEO alongside the already established Ted Sarandos.
related investing news
Here are the results:
- EPS: 12 cents vs 45 cents per share, according to Refinitiv.
- Revenue: $7.85 billion $7.85 billion, according to Refinitiv survey.
- Global paid net subscribers: 7.66 million adds, compared to 4.57 million subscribers expected, according to StreetAccount estimates.
Netflix’s EPS missed largely due to a loss related to euro-denominated debt, but its margins of 7% still topped Wall Street’s expectations. The depreciation of the U.S. dollar compared to the euro during the fourth quarter isn’t an operational loss.
This is the first quarter that Netflix’s new ad-supported service is included in its earnings results. The company launched this cheaper tier in November, but has not disclosed what portion of the new subscriptions are from users who have opted for this service.
During the company’s prerecorded earnings call, Netflix said that it has seen comparable engagement from its new ad tier members as it has seen with its regular consumers. Additionally, it noted that it has not seen a significant number of people switching plans. So, those who subscribe to its premium and more expensive offerings are rarely bumping down to the cheaper ad-supported model.
“We wouldn’t be getting into this business if it couldn’t be a meaningful portion of our business,” said Spencer Neumann, the company’s chief financial officer, during the call. “We’re over $30 billion in revenue, almost $32 billion in revenue, in 2022 and we wouldn’t get into a business like this if we didn’t believe it could be bigger than at least 10% of our revenue.”
Last quarter, the streamer said it was “very optimistic” about its new advertising business. Going forward, Netflix will no longer give subscriber guidance, although it will still report those numbers in future earnings reports. The rationale is that the company is growing its focus on revenue as its primary top line metric instead of membership growth.
“2022 was a tough year, with a bumpy start but a brighter finish,” the company said in a statement. “We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time.”
Netflix touted new releases like the television series “Wednesday,” the docuseries “Harry and Meghan” as well as Rian Johnson’s film “Glass Onion” as popular content during the quarter.
The company predicts that revenue growth in the first quarter 2023 will rise 4%, higher than the 3.7% Wall Street is currently projecting. Netflix says this growth will be driven by more paid memberships and more money per paid membership.
Additionally, the first quarter will mark Netflix’s preliminary roll out of its paid sharing program, which aims to make money from users who previously shared passwords with people outside their own homes.
The company said it expects some users who were borrowing accounts to stop watching programming on the platform, because they are not added as extra members to existing accounts or do not convert to paid members.
“However, we believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts,” the company said.
Jensen Huang, chief executive officer of Nvidia Corp., during the US-Saudi Investment Forum at the Kennedy Center in Washington, DC, US, on Wednesday, Nov. 19, 2025.
Stefani Reynolds | Bloomberg | Getty Images
In the weeks leading up to Nvidia’s third-quarter earnings report, investors debated whether the markets were in an AI bubble, fretting over the massive sums being committed to building data centers and whether they could provide a long-term return on investment.
During Wednesday’s earnings call with analysts, Nvidia CEO Jensen Huang began his comments by rejecting that premise.
“There’s been a lot of talk about an AI bubble,” Huang said. “From our vantage point we see something very different.”
In many respects, Huang’s remarks are to be expected. He’s leading the company at the heart of the artificial intelligence boom, and has built its market cap to $4.5 trillion because of soaring demand for Nvidia’s graphics processing units.
Huang’s smackdown of bubble talk matters because Nvidia counts every major cloud provider — Amazon, Microsoft, Google, and Oracle — as a customer. Most of the major AI model developers, including OpenAI, Anthropic, xAI and Meta, are also big buyers of Nvidia GPUs.
Huang has deep visibility into the market, and on the call he offered a three-pronged argument for why we’re not in a bubble.
First, he said that areas like data processing, ad recommendations, search systems, and engineering, are turning to GPUs because they need the AI. That means older computing infrastructure based around the central processor will transition to new systems running on Nvidia’s chips.
Second, Huang said, AI isn’t just being integrated into current applications, but it will enable entirely new ones.
Finally, according to Huang, “agentic AI,” or applications that can run without significant input from the user, will be able to reason and plan, and will require even more computing power.
In making the case of Nvidia, Huang said it’s the only company that can address the three use cases.
“As you consider infrastructure investments, consider these three fundamental dynamics,” Huang said. “Each will contribute to infrastructure growth in the coming years.”
Reversing the slide
In its earnings release, Nvidia reported revenue and profit that sailed past estimates and issued better-than-expected guidance. Last month, Huang provided a $500 billion forecast for sales of the company’s AI chips over calendar 2025 and 2026.
The company said on Wednesday that its order backlog didn’t even include a few recent deals, like an agreement with Anthropic that was announced this week or the expansion of a deal with Saudi Arabia.
“The number will grow,” CFO Colette Kress said on the call, saying the company was on track to hit the forecast.
Prior to Wednesday’s results, Nvidia shares were down about 8% this month. Other stocks tied to the AI have gotten hit even harder, with CoreWeave plunging 44% in November, Oracle dropping 14% and Palantir falling 17%.
Some of the worry on Wall Street has been tied to the debt that certain companies have used to finance their infrastructure buildouts.
“Our customers’ financing is up to them,” Huang said.
Specific to Nvidia, investors have raised concerns in recent weeks about how much of the company’s sales were going to a small number of hyperscalers.
Last month, Microsoft, Meta, Amazon and Alphabet all lifted their forecasts for capital expenditures due to their AI buildouts, and now collectively expect to spend more than $380 billion this year.
Huang said that even without a new business model, Nvidia’s chips boost hyperscaler revenue, because they power recommendation systems for short videos, books, and ads.
People will soon start appreciating what’s happening underneath the surface of the AI boom, Huang said, versus “the simplistic view of what’s happening to capex and investment.”
WATCH: Nvidia posts Q3 beat
Technology
Asian chip names rally as Nvidia forecasts hotter-than-expected sales after earnings beat
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024