Netflix blows away expectations on subscriber numbers
Illustration of stock trading graph of Netflix seen on a smartphone screen.
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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.
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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.
Meta CEO Mark Zuckerberg wears the Meta Ray-Ban Display glasses, as he delivers a speech presenting the new line of smart glasses, during the Meta Connect event at the company’s headquarters in Menlo Park, California, U.S., Sept. 17, 2025.
Carlos Barria | Reuters
Meta is acquiring artificial intelligence wearable startup Limitless, the companies said Friday.
“We’re excited that Limitless will be joining Meta to help accelerate our work to build AI-enabled wearables,” a Meta spokesperson said in a statement.
Limitless makes a small, AI-powered pendant that can record conversations and generate summaries.
Limitless CEO Dan Siroker revealed the deal on Friday via a corporate blog post but did not disclose the financial terms.
“Meta recently announced a new vision to bring personal superintelligence to everyone and a key part of that vision is building incredible AI-enabled wearables,” Siroker said in the post and an accompanying video. “We share this vision and we’ll be joining Meta to help bring our shared vision to life.”
The world of AI wearables has been slowly growing this year, but no company has landed a standout product.
Meta’s Ray-Ban smartglasses, which have been a surprise hit, have a sprinkling of AI flavor with the inclusion of the company’s AI digital assistant.
There are several wearable devices available that are similar to Limitless.
Friend offers a pendant-style device, Plaud comes in a small card shape or pill that can be clipped on or worn around your neck or on your wrist, and Bee, which is worn on a wristband and was scooped up by Amazon in July.
Amazon also runs AI through its Alexa+ line of Echo Speakers, while Google‘s Pixel 10 phones have the Gemini assistant built in.
WATCH: Meta is visibly seeing a return on investment from AI.
CNBC’s Chris Eudaily contributed to this report.
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