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Netflix Added More Q4 Subscribers Than Expected but Barely Turned a Profit

The streamer tacked on 7.66 million global paid members in final quarter of 2022, reaching revenue forecasts but missing badly at the bottom line.

Emily in Paris. Bruno Gouery as Luc in episode 304 of Emily in Paris. Cr. Marie Etchegoyen/Netflix © 2022

Bruno Gouery as Luc in episode 304 of “Emily in Paris”

Courtesy of Marie Etchegoy/Netflix

Netflix added 7.66 million global paid subscribers in the fourth quarter of 2022, bringing its total up to 230.75 million. Three months ago, Netflix predicted it would add 4.5 million subs in Q4; Wall Street, with the benefit of hindsight, believed we’d see an addition more like 5 million or so.

So credit to Netflix, and to its ad-supported “Basic with Ads” tier that launched in the U.S. in November. The company’s password-sharing crackdown likely also helped. Today, Netflix said its “paid sharing” would roll out “more broadly” during Q1 2023.

What wasn’t particularly good was Netflix’s actual earnings for the final three months of 2022. The streamer reported earnings per share (EPS) of just 12 cents on $7.852 billion in revenue; its net income was $55 million. That’s the lowest for any quarter since 2016, when Netflix was still (somewhat) meaningfully in the DVDs-by-mail business, in addition to streaming. (A word here on “profit.” Netflix still holds $14 billion in gross debt and $8 billion in net debt; all is fixed rate and within the company’s own accepted range of $10 billion-$15 billion gross.)

The revenue figure, which Netflix now considers its “primary top line metric,” was just fine: Wall Street forecast $7.85 billion there, according to a compilation of analysts published by Yahoo! Finance. But Netflix’s earnings-per-share number, 12 cents, came in nowhere near the analysts’ 45 cents estimation.

The bottom line was also a miss by Netflix’s own months-ago estimation. When reporting third-quarter results, Netflix forecast fourth-quarter earnings of 36 cents per share, or $163 million in net income. Netflix blamed the depreciation of the U.S. dollar vs. the Euro for much of the difference between its internal estimate and the ultimate result.

Netflix did make good on its internal revenue estimate, topping the $7.776 billion number it put out there months ago. With more revenue than expected, Netflix’s Q4 operating profit of $550 million was better than the estimated $330 million. NFLX shares are currently doing well in after-hours trading, up about 6 percent at this writing. Operating income is revenue minus expenses; net income also takes into account taxes, depreciation, amortization, and any SG&A expenses.

For fourth quarter 2021, a traditionally weak one for the streamer, Netflix reported net income of $607 million, or diluted EPS of $1.33. That was before the stuff hit the fan in Q1 2022, when Netflix actually lost subscribers. Those losses continued in the second quarter, but rebounded for the second half of the year. All the while, Netflix’s income and earnings figures were far stronger than they were at the very end of 2022.

Also on Thursday, company founder and co-CEO Reed Hastings announced he is stepping down as Ted Sarandos’ fellow chief executive officer. Greg Peters will take on the co-CEO title and duties with Sarandos; Hastings remains executive chairman.

Wednesday. (L to R) Naomi j Ogawa as Yoko Tanaka, Joy Sunday as Bianca Barclay, Oliver Watson as Kent, Johnna Dias-Watson as Divina in episode 108 of Wednesday. Cr. Vlad Cioplea/Netflix © 2022

Netflix’s “Wednesday” (L to R): Naomi j Ogawa as Yoko Tanaka, Joy Sunday as Bianca Barclay, Oliver Watson as Kent, Johnna Dias-Watson as Divina


Netflix attracted and maintained subscribers in Q4 not only with a cheaper ad plan, but also with content. As it turned out, “Dahmer: Monster: The Jeffrey Dahmer Story,” “The Watcher,” and “The Crown” were just the Q4 appetizers for smash-hit “Wednesday.”

The “Addams Family” spinoff ended up as Netflix’s No. 2 English-language series of all time, behind only “Stranger Things 4.” (“Dahmer” is No. 3; only Korean-language sensation “Squid Game” was bigger than all of those.) “Wednesday” premiered on November 16. The Jenna Ortega-led series amassed 1.237 billion hours viewed over its first 28 days of availability. Netflix renewed “Wednesday” for a second season on January 6.

“Glass Onion: A Knives Out Mystery” was Q4’s big movie.

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