Two days after announcing that the price of its most popular plan would go up by $2, Netflix revealed that it has grown its subscriber base by 8.84 million, or nearly 26 percent.
The jump, which puts it at 139 million subscribers worldwide, was a record for the streaming giant and ahead of the 7.6 million paid additions it previously forecast. Broken out, Netflix added 1.53 million subscribers in the U.S. and 7.31 million subscribers internationally. Soft growth in the U.S., where Netflix already has significant penetration and where the price hike will take effect, appears to have led investors to push Netflix’s stock down as much as 4 percent during after-hours trading.
Netflix is forecasting that it will add 8.9 million subscribers during the first three months of 2019, that’s 1.6 million in the U.S. and 7.3 million abroad.
Revenue for the final three months of the year was up 27 percent to $4.19 billion, a slight miss from Wall Street’s expectations, and earnings came in at 30 cents per share. Analysts were looking for revenue of $4.21 billion and earnings of 24 cents per share.
Annual revenue grew 35 percent to $16 billion during 2018 and operating profits nearly doubled to $1.6 billion.
Netflix must continue to spend big on programming to keep subscribers engaged with its service and prevent churn. The company’s annual content budget, which includes licensed and original projects, was expected to reach as much as $8 billion during 2018. Investors cheered the price increase as a sign that Netflix, which is currently burning through cash, is committing to covering those growing programming (and marketing) costs.
In a rare move for Netflix, the company showcased on Thursday just how that content spend is paying off by revealing select viewership data for shows like You (a recent pick up from Lifetime) and movies like Bird Box.
Much has been made of what will happen to the Netflix business when entertainment giants like Disney, WarnerMedia and NBCUniversal start pulling their library programming for their own streaming services. Netflix hinted at that change in its earnings report by noting, “We are ready to pay top-of-market prices for second run content when the studios, networks and producers are willing to sell, but we are also prepared to keep our members ecstatic with our incredible original content if others choose to retain their content for their own services.”
Netflix maintains that it isn’t concerned with the growing competition from the entertainment giants. In its shareholder letter, the company noted that it earns around 10 percent of screen time in the U.S. “We compete with (and lose to) Fortnite more than HBO,” reads the letter. “When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time. Hulu is small compared to YouTube for viewing time, and they are successful in the U.S., but non-existed in Canada, which creates a comparison point: our penetration in the two countries is pretty similar.”
Netflix shares closed the day up less than 1 percent to $353.19. The stock dropped more than 4 percent after-hours on the lower-than-expected subscriber growth.
More to come.
This article originally appeared on The Hollywood Reporter.