Netflix finishes 2014 solidly ahead of expectations

January 21, 2015 12:56 PM

Netflix Inc. had 57.4 million consumers around the world customers of its video streaming service during the final quarter of 2014, 29% more than 44.49 million it had a year earlier. The content streaming service yesterday reported those customers generated $1.305 billion in revenue for the company in Q4, up 35.7% from $962 million in Q4 2013.

The e-retailer forecasts it will add another 4.05 million customers this quarter, many of them from outside the United States. 56.1% of Netflix’s new customers in Q4 came from outside the United States.

Netflix will be reaching further afield to find new customers. In a letter to shareholders released Tuesday, Netflix said it is moving to expand services toward a goal of 200 countries; first up in the next wave of expansion are Australia and New Zealand. The company says it will launch in those countries later in Q1 and in “additional major countries” later in 2015. The letter says it is still exploring options related to China. In 2014, China surpassed the United States as the largest market for e-retail sales, based on data from China's Ministry of Commerce and the U.S. Department of Commerce.

“Progress has been so strong that we now believe we can complete our global expansion over the next two years, while staying profitable, which is earlier than we expected,” wrote CEO Reed Hastings and chief financial officer David Wells in the shareholder letter.

The duo also wrote that it is seeing the strongest domestic new customer gains come from lower income areas of the United States, which leads them to believe that a price increase Netflix made in the United States in May 2014 was not the root cause of a subsequent decline in new domestic customer gains. “We think, instead, the reduction in year over year in net additions is a natural progression in our large U.S. market as we grow,” they wrote.

For the fourth quarter ended Dec. 31, Netflix, No. 7 in Internet Retailer’s Top 500 Guide, reported:

  • Net income of $83.4 million, up 72.3% from $48.4 million in Q4 2014.
  • 39.1 million domestic streaming subscribers, who together generated $917.4 million in revenue, up 23.8% from $740.6 million in Q4 2013.
  • 18.3 million international streaming  subscribers, who together generated $387.8 million in revenue, up 75.2% from $221.4 million in Q4 2013. 
  • 5.8 million domestic DVD subscribers generated $179.5 million in revenue, down 15.8% from $213.3 million. Netflix’s domestic DVD subscribers have been declining for the past several quarters, and were down 15.9% from 6.9 million in Q4 2013.

 For the full year ended Dec. 31, Netflix reported:

  • Net income of $266.80 million, up 137.4% from $119.24 million in 2013.
  • Revenue of $5.505 billion, up 25.8% from $4.375 billion in 2013.



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