(Netflix earnings updated with additional analysis.)

NEW YORK ( TheStreet) -- Netflix ( NFLX) is trading higher after it posted a record jump in new subscribers in the fourth quarter and earnings topped estimates.

The movie rental company earned $47.1 million, or 87 cents on revenue of $596 million, compared with Wall Street's estimates of 71 cents a share on revenue of $598 million.

This is up significantly from its profit of $30.9 million, or 56 cents a share, on revenue of $445 million, in the fourth quarter of 2009.

The company also saw its subscriber base top 20 million for the first time, as Netflix added 3.1 million new users during the quarter. Analysts predicted new users would grow to 19.5 million for the year.

Operating margins were also better than expected at 13%. Wall Street's biggest fear has been that Netflix's growing content costs for its streaming library will erode the bottom line.

Netflix refrained from providing full-year guidance, other than saying it expects "domestic subscriber net additions to continue to grow in 2011." The company defended this move by saying its business "is so dynamic."

But the company did say that it expects to end the first quarter with 21.9 million to 22.8 million and revenue to come in between $684 million and $704 million.

Netflix has been attempting to wean users off physical DVDs as it openly moves from a DVD-by-mail company to a streaming company.

During the quarter, Netflix began offering a streaming-only plan for $7.99 per month and raised prices on its DVD rental plans. And last week Netflix announced on its blog that it is removing its "Add to Queue" button from streaming devices.

Shares of Netflix are surging 7.6% to $197.11 in after-hours activity.

--Written by Jeanine Poggi in New York.

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