Netflix will no longer raise debt to fund its spending spree on television shows and films and may begin returning money to shareholders through buybacks, marking a milestone in the company’s evolution as it said it had passed 200m subscribers.
Since 2011 when Netflix leapt into original programming with House of Cards, the streaming pioneer has funded content through high-yield bonds, as it sought to outspend Hollywood studios and build an enticing catalogue.
Netflix’s latest quarterly figures on Tuesday underscored how successful that strategy had been: it had nearly 204m subscribers at the end of 2020, it said, having added 37m new paying customers during the year.
Some 8.5m of those were added in the quarter to the end of December, eclipsing analyst forecasts of 6m.
“We believe we no longer have a need to raise external financing for our day-to-day operations,” Netflix said in a letter to investors, adding that it would explore stock buybacks.
The shares jumped about 10 per cent in after-hours trade.
The California-based company has delighted investors in recent years despite burning billions in cash. Netflix had promised that as it hooked more customers and raised subscription prices, eventually it would no longer need to keep raising junk debt to fuel its content spending.
That thesis has largely played out, helped by a global pandemic that lured people stuck at home in lockdowns to Netflix’s streaming platform and kept it comfortably ahead in the race for subscribers. Its fiercest rival, Disney Plus, has 87m subscribers globally.
The majority of new sign-ups in the fourth quarter came from outside the US. In October, Netflix raised prices in the US, its largest market, by $1 to $14 a month for its most popular plan.
Revenues in the quarter jumped 22 per cent from the same period last year to $6.6bn, in line with analysts’ forecasts. Net income fell to $542m, from $587m a year ago.
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