Netflix  (NASDAQ: NFLX) on Wednesday announced fourth quarter earnings of $40.7 million, or 73 cents a share, beating out Wall Street expectations of 55 cents a share. As a result, shares surged more than 13 percent to $107.89 in after-hours trading.

Still, earnings for the Los Gatos, Calif.-based company were less than the $47 million, or 87 cents, a year earlier.

Netflix announced adding 220,000 new domestic customers in the fourth quarter, boosting the number to 21.67 million. The company said it saw fewer cancellations, as well as lower migration to DVD-only plans, resulting in the outperformance for streaming members. As expected, Netflix reported DVD-by-mail subscribers fell to 11.2 million.

Netflix has struggled since September, when it announced a plan to split up its video streaming and DVD-by-mail services. Earlier it had announced plans to charge separately for DVD-by-mail and streaming, thus raising prices by 60 percent. Netflix backed down on the split amid consumer outrage, but kept the price increases intact.

Shares have fallen since the company's self-admitted misstep. When subscribers bolted, the shares fell as low as $62.37, well off the high of $304.79. On Tuesday, Netflix traded around $92.70, giving the company a market value of $4.87 billion.

The last few months...have been difficult for shareholders, employees, and most unfortunately, many members of Netflix, CEO Reed Hastings wrote in a letter to shareholders following the third-quarter earnings announcement. We've hurt our hard-earned reputation and stalled our domestic growth.

However, shares have slowly gained momentum since hitting a 52-week low in November. Shares rose when the company announced Jan. 4 that its more than 20 million members had streamed over two billion hours of TV shows and movies in the fourth quarter. The shares also after rumors of buyouts by companies such as Yahoo, Amazon and Verizon Communications.

Looking ahead, the company said it expects losses for at least the first quarter of 2012 as it makes a push into Europe. Netflix launched its streaming service in the UK and Ireland in January.

Shares closed Wednesday at $95.04, up 2.6 percent. Shares rose more than 10 percent in the first 30 minutes of after-hours trading.