Going into Netflix's (NASDAQ:NFLX) fourth-quarter update on Tuesday afternoon, questions loomed about how the company would hold up against new streaming services in the U.S., namely those from Walt Disney (NYSE:DIS) and Apple (NASDAQ:AAPL), both of which launched services during Q4. But Netflix kept growing its subscribers in its domestic market as total revenue jumped about 31% year over year. Furthermore, global subscriber additions during the quarter came in more than a million higher than management's guidance.

Here's a closer look at the quarter's results.

A group of young people watching TV together

Image source: Getty Images.

Netflix's fourth-quarter earnings


Q4 2019

Q4 2018



$5.47 billion

$4.19 billion



167.1 million

139.3 million






Data source: Netflix fourth-quarter shareholder letter.

Revenue rose 30.6% year over year to $5.47 billion. Management had guided for revenue of $5.44 billion. This was fueled by a 20% year-over-year increase in subscribers, with 8.76 million added during Q4 alone. This beat management's guidance for net paid member additions of 7.6 million during the quarter. Analysts on average were expecting Netflix to add 7.76 million subscribers.

Earnings per share for the period were $1.30, up from $0.30 in the year-ago period. But management said the quarter benefited from an adjustment for over-accruing reported tax obligations during the year -- so much so that reported net income during the period was higher than the company's operating income.

Meaningful domestic growth despite new competition

Netflix added a total of 550,000 paid net members in the U.S. and Canada, with 420,000 additions in the U.S. This isn't too far from management's guidance for 600,000 net paid member additions in the U.S. during the period. Investors should note that Netflix's guidance represents management's actual internal forecast and is not a lowball figure for the sake of conservatism; slight underperformance relative to guidance, therefore, arguably shouldn't alter an investment thesis for the stock.

Management had mostly brushed off the news of intensifying competition when it reported its third-quarter results in October.

"The launch of these new services will be noisy," the company said in its third-quarter shareholder letter. "There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long term, though, we expect we'll continue to grow nicely given the strength of our service and the large market opportunity."

Given Netflix's growth in the U.S. despite the Disney+ and Apple TV+ launches during the quarter, there's now some substance behind management's beliefs about the competitive environment.