Streaming service Netflix Inc. (NFLX, Financial) reported fourth-quarter and full-year 2020 results after the market closed on Jan. 19.
The Los Gatos, California-based company, which operates a popular video streaming platform, posted earnings of $1.19 per share for the quarter ended Dec. 31, missing Refinitiv's estimates of $1.39. Revenue grew 21.5% from the prior-year quarter to $6.64 billion, beating expectations of $6.63 billion.
The company also added 8.51 million net new subscribers during the quarter, topping projections of 6.47 million.
For the full year, Netflix recorded operating income of $4.6 billion on $25 billion in sales. The total number of subscribers now stands at 203.7 million, having added 37 million paid users throughout 2020 as the Covid-19 lockdowns forced people around the world to spend more time indoors.
Despite increasing competition from Walt Disney Co. (DIS, Financial), Amazon.com Inc. (AMZN, Financial), Apple Inc. (AAPL, Financial) and other emerging streaming services, Netflix management said in their quarterly letter they were prepared.
"This is, in part, why we have been moving so quickly to grow and further strengthen our original content library across a wide range of genres and nations," they wrote. "Our fourth quarter slate highlights the breadth and diversity of our entertainment offering."
Netflix noted that it saw huge success from several of its original series and movies, including "The Queen's Gambit," "The Crown," "Bridgerton" and "Midnight Sky," during the quarter.
Looking ahead to the first quarter of 2021, Netflix expects to record 6 million paid net adds to its subscriber base, $7.12 billion in revenue and earnings of $2.97 per share.
The leading streaming service also disclosed that it is "very close" to being cash flow positive and is even considering implementing stock buybacks. Chief Financial Officer Spencer Neumann clarified during the earnings call, however, that the potential buybacks are not an indication that Netflix is backing off on investments in creating content.
"We put a premium on balance sheet flexibility, so we're going to continue to invest aggressively into the growth opportunities that we see and that's always going to come first," he said. "But beyond that, if we have excess cash, we'll return it to shareholders through a share buyback program."
Gaining around 12% in after-hours trading on Tuesday, shares of Netflix were up over 13% on Wednesday morning at $567.67. GuruFocus estimates the stock climbed more than 60% in 2020.
Disclosure: No positions.
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