Netflix grew its streaming subscriber base by 20 percent year-on-year to 167.09 million at the end of 2019. Quarterly growth totaled 8.8 million new customers in the last quarter of 2019, led by expansion at the international operations. Growth in the US of 420,000 was slower than forecast, amid competition from new streaming services from Apple and Disney launching during the period.
Netflix said it saw record customer growth in the LatAm, EMEA and APAC regions during the period and gave its first breakdown of results for each of the regions. Total net additions in Q4 were higher than its forecast of around 7.6 million.
The weaker performance in its home market was due to competition as well as churn after price increases, and the company expects these trends to continue in Q1. Netflix said it expects "more balanced" net adds in Q1 and Q2, helped by a strong content launch line-up for the second quarter. Total net additions are forecast at 7.0 million for the first quarter, down from the all-time high of 9.6 million reported in Q1 2019.
In terms of profitability, the company met its target for an annual operating margin of 13 percent, up from 10 percent in 2018. This is forecast to improve to 16 percent in 2020. In the fourth quarter, operating profit more than doubled year-on-year, to USD 459 million, slightly below the company's guidance. Net profit increased to USD 587 million from USD 134 million a year earlier.
Revenues for the quarter rose 30.6 percent to USD 5.5 billion, slightly ahead of forecast. Netflix said average revenue per streaming customer increased 12 percent year-on-year, excluding forex effects. Its mobile plan launched in Malaysia and Indonesia during the quarter was also contributing positively to revenue and will be expanded further, the company said.
Netflix reported negative free cash flow of USD 1.7 billion for Q4, taking the total outflow for the year to USD 3.3 billion. The company confirmed this should be the peak of the cash deficit, and cash flow should improve from this year, to around negative USD 2.5 billion. The group will continue to issue debt to finance its operations until it reaches positive cash flow.
