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Investing.com -- Netflix (NASDAQ:NFLX) surged in pre-market trading on Wednesday after reporting better-than-expected fourth quarter results fueled by a spike in subscriber additions.
In the three months ended December 31, Netflix reported earnings of $4.27 a share on sales of $10.25 billion, topping estimates of $4.20 and $10.1 billion, respectively, according to an average of analysts' projections cited by Reuters.
The streaming giant added 18.9 million users in fourth quarter, well above the 9.2 million anticipated, underpinned by a solid content slate and growing demand for its advertising-sponsored membership tier.
"Our [fourth quarter] slate outperformed even our high expectations: Squid Game season 2 is on track to become one of our most watched original series seasons, Carry-On joined our all-time Top 10 films list, the Jake Paul vs. Mike Tyson fight became the most-streamed sporting event ever and on Christmas Day we delivered the two most-streamed NFL games in history," the company said in a statement.
In the fourth quarter, Netflix's advertising tier accounted for over 55% of sign-ups, while membership on its ads plan grew nearly 30% quarter over quarter.
"A top priority in 2025 is to improve our offering for advertisers so that we can substantially grow our advertising revenue," Netflix said. "We’ll roll out our first party ad platform in the remaining ads countries in 2025, starting with the US in April."
Following the jump in subscribers, Netflix raised the price of its ad-supported service in the US to $7.99 per month, up from $6.99, and increase the cost of its premium offering by 9% to $24.99. Prices have also been bumped up in Canada, Portugal and Argentina.
Looking ahead, the group projects 2025 revenue of $43.5 billion to $44.5 billion, $500 million higher than its prior forecast range, compared with analysts forecasts of $43.6 billion.
"This quarter was as strong as we have seen from the company since the peaks of the pandemic, with execution across various areas including live events, ads, and margins all pointing upward," analysts at Raymond (NSE:RYMD) James said in a note to clients.
(Yasin Ebrahim contributed reporting.)
