Netflix shares dropped slightly after the streamer reported fourth-quarter domestic subscriber growth that fell short of expectations.
The company said it added 550,000 streaming subscribers in the U.S. and Canada, lower than the company’s 589,000 guidance and 611,000 consensus on Wall Street. But overall, Netflix had another big subscriber growth quarter thanks to its international business.
Global paid net additions totaled 8.76 million (mostly on pace with 8.84 million in the year-ago quarter), which came in well ahead of the company’s 7.6 million forecast. Netflix said it generated fourth quarter-record paid net adds in each of the EMEA, LATAM and APAC regions, and that it now has more than 100 million paid memberships outside the U.S.
In the first quarter of 2020, Netflix expects to add 7 million global streaming paid subscribers, which would raise its overall subscriber total to approximately 174 million.
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Despite strong subscriber growth in international markets, Netflix still saw its stock decline slightly, possibly amid concerns that new competitors like Disney+ and Apple TV+ are impacting growth in the U.S. and Canada. Netflix’s overall subscriber growth for the U.S. and Canada this quarter was significantly less than the 1.75 million the company added in those countries during the year-ago quarter.
“Our low membership growth in UCAN is probably due to our recent price changes and to US competitive launches. We have seen more muted impact from competitive launches outside the US (NL, CA, AU). As always, we are working hard to improve our service to combat these factors and push net adds higher over time,” Netflix wrote in a letter to shareholders.
Aside from some mixed signals on subscriber growth, Netflix reported positive financial momentum for the fourth quarter. Revenue totaled $5.47 billion, up 30.6% year over year, and operating income totaled $459 million, up from $216 million during the fourth quarter of 2018. Operating margin expanded to 8.4% and net income totaled $587 million, up from $134 million one year ago.