Netflix (US:NFLX) co-founder Reed Hastings is stepping down as chief executive after leading it for more than 20 years, as his company posted surprisingly positive quarter numbers.
Hastings has run the company since it posted DVDs to customers, and has overseen its evolution into a Hollywood power player. He will take on the executive chair role.
His replacement as co-chief executive is COO Greg Peters, who will work alongside current co-chief Ted Sarandos. The decision comes at a time a flux at the streaming company: the share price has dropped by more than a third in the past 12 months due to stagnating subscriber growth. The company created a new cheaper ad-supported service in response.
This helped maintain subscriber growth – in Q4, total subscriber numbers jumped 3.4 per cent on quarterly basis to 230.75mn. This is a marked change from the first two quarters of the year where subscriber numbers fell for the first time in Netflix’s history.
Despite this, revenue fell 1.4 per cent to $7.85bn (£6.35bn) from the previous quarter, while earnings per share were well below consensus (55¢) at 12¢.
The falling revenue per subscriber is likely because users switched to the cheaper service. However, management said it expects advertising revenue to build incrementally over time. The company will role out paid sharing next quarter – where users pay more to share subscriptions with multiple households – to further boost sales, Netflix said.
Management forecast revenue to rise to $8.17bn in the next quarter – a 3.9 per cent increase year-on-year.
The market reacted positively to the news with the share price up 7 per cent. This is unlikely related to Hastings' decision with shareholders often more focused on subscriber numbers.
