Netflix reported its fourth-quarter 2022 earnings Thursday, revealing financial performance for the three-month period during which the platform’s cheaper, ad-supported plan launched and Tim Burton’s “Wednesday” regularly dominated the weekly Top 10 rankings.

The streamer added 7.66 million net new subscribers in Q4, compared to its own estimation of 4.5 million additions, to end 2022 with 230.75 million worldwide, smashing their previous target of 227.59 million. That represents 4% year over year growth in total subs.

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In a letter to shareholders Thursday, Netflix wrote: “2022 was a tough year, with a bumpy start but a brighter finish. 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.”

Aside from the big news it had blown its own subscriber estimates away, Netflix revealed an even bigger bombshell in the Q4 financial update: Reed Hastings is stepping down as co-CEO. He will remain executive chairman of the company, while Ted Sarandos, currently co-CEO and chief content officer, and Greg Peters, chief product officer and formerly COO, will now serve as co-CEOs.

Netflix reported 2.41 million net new paid subscribers in Q3, including a gain of 100,000 in the U.S./Canada region, to stand at 223.1 million worldwide as of the end of September. At that time, it advised to investors not to expect a “material” lift in subscriber growth from the ad-plan launch in Q4’s results.

When releasing its third-quarter earnings report in October, Netflix announced that starting with its Q4 earnings report in January, it would not provide subscriber guidance for the next quarter (Q1 of 2023) as it shifts its focus away from subs growth and toward revenue. Netflix held true to this decision Thursday, releasing projections of $8.2 billion in revenue and diluted EPS of $2.82 for the first quarter of 2023 — but not making any forecast on subscriber additions.

For the fourth quarter, Wall Street forecast earnings per share (EPS) of 45 cents on $7.85 billion in revenue, according to analyst consensus data provided by Refinitiv. On Thursday, Netflix reported diluted EPS of 12 cents on $7.85 billion in revenue. Revenue was up 1.9% year over year, but profit came in well bellow Netflix’s own projection of 36 cents per share, which the streamer attributes to “a $462M non-cash unrealized loss from the F/X remeasurement on our Euro denominated debt as a result of the
depreciation of the US dollar vs. the Euro during Q4’22.”

Netflix stock closed Thursday at $315.78 per share, and was up more than 5% in after-hours trading as of 4:11 p.m. ET. The regular U.S. stock markets will reopen Friday at 9:30 a.m. ET.

The streamer will release a pre-recorded interview with Netflix executives discussing the quarter in greater detail at 6 p.m. ET.

More to come…

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