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Netflix reports fourth-quarter 2018 membership miss, EPS beat; shares fall

Netflix Inc. grew its global paid streaming video members by 8.84 million during the fourth quarter of 2018, falling below its earlier guidance predicting global paid net additions of 9.4 million.

The subscriber growth added 25.9% to the company's total global memberships on a year-over-year basis, bringing that figure to 139.26 million global streaming paid memberships. For the first quarter, the company said it expects paid memberships to climb by 8.90 million, to 148.16 million.

The company reported fourth-quarter 2018 revenue of $4.19 billion, up 27.4% year over year and just below guidance of $4.20 billion. Netflix forecasted first-quarter 2019 revenue would climb 21.4% year over year to $4.49 billion.

On profitability, Netflix reported fourth-quarter net income of $134 million, or 30 cents per share, down from 186 million, or 41 cents per share, in the prior-year period. The fourth quarter was impacted by a $22 million noncash unrealized gain from foreign-exchange remeasurement on euro-denominated debt, and its operating margin of 5.2% was impacted by a large fourth-quarter content-release cycle.

The fourth-quarter 2018 consensus EPS estimate was 24 cents, according to S&P Global Market Intelligence.

Netflix expects first-quarter 2019 EPS of 56 cents. The S&P Global Market Intelligence consensus EPS estimate for the first quarter was 83 cents on a GAAP basis.

For full year 2018, Netflix reported revenue of $15.79 billion, up from $11.69 billion in the prior year. Full-year net income came to $1.21 billion, or $2.68 per share, compared to $558.9 million, or $1.25 per share, in the prior year.

The 2018 consensus EPS estimate was $2.64 on a normalized basis, according to S&P Global Market Intelligence.

Netflix shares were trading down over 3% in after-hours speculation after the release.