Netflix Q3 FY2022 Earnings Report Preview: What to Look For

Key Takeaways

  • Analysts estimate EPS of $2.12 vs. $3.19 in Q3 FY 2021.
  • International paid streaming memberships are anticipated to rise YOY on the slowest tempo in at the very least six years.
  • Income is anticipated to rise YOY on the slowest tempo since at the very least 2016 because it faces growing competitors within the streaming leisure market.

Netflix Inc. (NFLX), the world’s largest streaming platform by subscribers, will most likely say third-quarter revenue plunged on the steepest fee in additional than six years as income development decelerated throughout the third quarter due to slower subscriber development and better cancellation charges.

Netflix is prone to say earnings per share (EPS) dropped by greater than a 3rd year-over-year (YOY) to $2.12 as income climbed by simply 4.7% to $7.8 billion, in line with a median estimate from Seen Alpha. That might be the second earnings decline up to now three quarters and the slowest income development in additional than six years. Netflix stories Q3 earnings after market closes on Oct. 18.

The Los Gatos, California-based firm is struggling to take care of development in an more and more aggressive market and as clients return to places of work, leading to higher-than-usual charges of cancellations by new and returning subscribers. Reflecting its urgency to rebound, Netflix’s new choices embrace cheaper, ad-supported leisure, a departure from its ad-free historical past.

Buyers will deal with Netflix’s world paid streaming memberships, a key measure of a platform’s consumer base. The information, compiled quarterly, are particularly necessary as further streaming leisure platforms compete for viewers. Netflix’s world subscribers are prone to have risen on the slowest tempo in additional than six years.

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Netflix shares are down 63.6% up to now 12 months, greater than triple the S&P’s 19.3% decline as of Oct. 16.

Supply: TradingView.

Netflix Earnings Historical past

Netflix posted strong annual EPS development throughout the pandemic in 2020 and 2021 as hundreds of thousands of shoppers worldwide sheltered at house and turned to streaming leisure companies. On a quarterly foundation, revenue development started to decelerate throughout that interval, slowing to 11.8% within the fourth quarter of 2021 and declining 5.9% on this 12 months’s first quarter.

Netflix’s income grew by at the very least 20% yearly between 2018 and 2020 and dropped to eight.6% on this 12 months’s second quarter. Progress in Q3 FY 2022 is anticipated to be 4.7%, the slowest of any interval since at the very least the primary quarter of 2016.

Netflix Key Stats
  Estimate for Q3 FY 2022 Q3 FY 2021 Q3 FY 2020
Earnings Per Share ($) 2.12 3.19 1.74
Income ($B) 7.8 7.5 6.4
International Streaming Paid Memberships (M) 221.7 213.6 195.2

Supply: Seen Alpha

The Key Metric

Netflix’s world paid streaming memberships, also called world streaming paid subscribers, signifies the variety of world customers which have signed up and paid for a subscription to obtain streaming companies. Streaming memberships have lengthy been Netflix’s main income. Video streaming has change into more and more aggressive lately, and Netflix now faces threats from rivals resembling Apple Inc.’s (AAPL) Apple TV+, Walt Disney Co.’s (DIS) Disney+, Inc.’s (AMZN) Amazon Prime Video, and AT&T Inc.’s (T) HBO Max. To draw new subscribers the corporate is spending extra on content material.

Netflix’s quarterly subscriber development has slowed within the final two years. In FY 2018 by means of FY 2020, quarterly subscriber development ranged from 20.0% to 26.0%. It decelerated to 13.6% in Q1 FY 2021 and additional slowed within the subsequent quarters, reaching 5.5% final quarter. Analysts now anticipate the slowest quarterly paid subscriber development in a number of years as the expansion fee drops to three.8% for Q3 FY 2022.