Investing.com -- Netflix (NASDAQ:NFLX) shares jumped by their most since October in early U.S. trading on Wednesday, after a slate of popular programming helped the streaming giant add far more paying subscribers in the fourth quarter than Wall Street had expected.
The company signed up a robust 13.12 million users during the three months ended on Dec. 31, a 71% surge compared to the year-ago period and markedly above analyst estimates of about 8.9 million, as viewers tuned in for the series finale of "The Crown" and "Squid Game: The Challenge", the reality TV spin-off of its record-breaking TV show.
Revenue grew by around 12% year-on-year to $8.83 billion, also beating projections. In a letter to shareholders, Netflix backed the health of its business, raising its full-year operating margin outlook to 24% from 22%-23% and forecasting "healthy double-digit" annual top-line growth.
Executives outlined plans to roll out more price increases this year and turn Netflix's nascent ads unit into a "sustained, healthy" revenue stream in "2025 and beyond" -- although analysts at Piper Sandler noted that momentum in the ad-tier business remains in "investment mode" and is not seen having a major contribution to revenue this year.
In a call with analysts, Co-Chief Executive Gregory Peters said the firm anticipates ongoing benefits from a recent crackdown on password sharing as well.
The figures came shortly after Netflix announced a more than $5 billion, 10-year rights deal with WWE to air the pro wrestling promotion's weekly flagship program.
Under the terms of the agreement, Netflix will become the "exclusive new home" of WWE's "Raw" event in several territories, including the U.S., U.K., and Canada. "Raw," a blend of scripted content and wrestling that launched the careers of stars like John Cena and Dwayne "The Rock" Johnson, first debuted in 1993.
Netflix is also set to exclusively show WWE programming, such as its "WrestleMania" and "Royal Rumble" pay-per-view telecasts, outside the U.S. "as available."
The announcement marked a fresh push by Netflix into live events, as it looks to boost subscribers and ward off rivals like Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). It has already secured the rights to broadcast a tennis match between Rafael Nadal and Carlos Alcaraz, and streamed a golf tournament featuring Formula One drivers and professionals.
However, Co-CEO Ted Sarandos played down expectations that the WWE partnership is a sign that Netflix is interested in similar types of global sports rights deals. Instead, he argued that the agreement is in the "sweet spot" of its sports business, which often focuses on sports-related documentaries rather than the live events themselves.
"It has options and has the protections that we seek in our general licensing deals and with economics that we're super happy with
globally. So I would not look at this as a signal of any other change or any change to our sports strategy," Sarandos said.
Yasin Ebrahim contributed to this report.
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