Netflix reported fourth quarter revenue of $3.29 billion with income conversion of $185.5 million, impressing investors who launched share prices up 9 percent in after-hours trading and raised the market capitalization of NFLX above $100 billion for the first time.
Most of the content streaming company’s customer pick-ups were outside of the United States with 6.36 million of the 8.34 million new subscribers coming from 190 territories. Netflix was able to extract full-year profit from its international business for the first time. This is in spite of price hikes on its standard and premium plan tiers that took effect at the beginning of the quarter.
Part of the reason why, the company states, is that its customers are expecting original content thanks to its expanding budgets for promotions and content. It expects to spend $2 billion in marketing this year and up to $8 billion in content creation and acquisition. Netflix plans to combat refreshed competition from Disney and its new majority ownership in Hulu with more high-budget series production.
The company forecasts that it will take on negative cash flow of up to $4 billion in the course of this year to support it efforts, but will gain 6.35 million subscribers in the first quarter — reasonable payoff considering that the market is estimating just over 5 million.