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Netflix (NFLX) Q1 Earnings Preview: International Sales, Subscribers & More
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Shares of Netflix (NFLX - Free Report) have climbed over 33% this year, but have slowed recently. This might mean that investors who bought Netflix stock on the dip right after Christmas are now waiting to see the streaming TV power’s actual first quarter earnings results that are due out on April 16.
Company Overview
Netflix is currently the largest of the big U.S. streaming powers. The company closed the fourth quarter with over 139 million paying memberships, up over 25% from the year-ago period’s 110.6 million. Meanwhile, Amazon (AMZN - Free Report) boasts roughly 100 million Prime subscribers. However, a Reuters report suggests that only 26 million of those U.S. users watch content on Amazon Prime Video, which could be seen as either good or bad for the e-commerce giant. The other major player, Hulu, said its subscriber total jumped 48% in 2018 to 25 million.
Clearly, Netflix has a significant lead on its peers. The company’s impressive paying subscriber base should also help it stand out against soon-to-be-launched platforms from Disney (DIS - Free Report) , Apple (AAPL - Free Report) , and AT&T (T - Free Report) . Inventors should also remember that Netflix has remained out of the controversies that Facebook , Google (GOOGL - Free Report) , and Amazon have faced over the last year. In fact, momentum appears to have grown on both sides of the political aisle to possibly regulate or even try to break up some of these tech titans.
Looking ahead, Netflix’s international growth will likely play a larger role as the U.S. market becomes more saturated. The streaming service is already available in over 190 countries, with China the only major untapped market. Netflix has said that it “continues to explore options for providing the service” in China, but it will likely find it hard to penetrate the market given the country’s censorship concerns.
One major point of concern for some investors has been Netflix’s spending and debt load. Netflix reported negative cash flows of $3 billion last year and executives expect to report a similar level of negative cash flows in 2019. With that said, the company projects that its cash flows will improve going forward even as it spends billions of dollars on new original content, which will be its lifeblood.
Outlook
Netflix said last quarter that it expects to add 8.9 million paying subscribers in Q1 2019 to reach 148.16 million. As a non-ad supported platform, the firm’s user growth will remain the main driver of Netflix’s revenues for years to come. Our current Zacks Consensus Estimate calls for Netflix’s first-quarter revenue to jump 21.4% to hit $4.49 billion, which would mark a slowdown from last quarter's 27.4% top-line expansion.
More specially, NFLX’s international streaming revenue is projected to surge over 32% from $1.78 billion in the prior-year quarter to reach $2.35 billion, based on our current NFM estimates. However, this would also fall below Q4’s 36% international sales growth. Meanwhile, the company’s domestic streaming revenue is expected to pop roughly 14% to hit $2.07 billion. Last quarter, U.S. streaming sales climbed over 22%.
We can see that Netflix’s first-quarter revenue growth is expected to come down from Q4, which isn’t shocking as top-line growth often becomes harder to come by. Still, we will have to wait to see how Wall Street reacts if our top-line estimates prove right and signal a new reality for the once-mighty growth stock.
At the bottom end of the income statement, NFLX’s adjusted Q1 earnings are projected to dip 9.4% to $0.58 per share. Despite the negative near-term outlook, investors will likely be pleased to see that the streaming firm’s full-year 2019 earnings are projected to soar over 50% to reach $4.03 a share. With that said, we can also see that the company’s earnings revisions have trended a bit more heavily in the wrong direction recently.
Bottom Line
Netflix stock closed regular trading Friday at $356.56 per share. As we touched on at the top, shares of Netflix are up 33% this year. Despite the climb, shares of NFLX still sit 16% below their 52-week high of $423.21 a share to give the stock room to run heading into earnings.
Netflix is a Zacks Rank #3 (Hold) at the moment, based in part on its mixed earnings estimate revision activity. The company is scheduled to release its Q1 2019 financial results after the closing bell on Tuesday, April 16.
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Netflix (NFLX) Q1 Earnings Preview: International Sales, Subscribers & More
Shares of Netflix (NFLX - Free Report) have climbed over 33% this year, but have slowed recently. This might mean that investors who bought Netflix stock on the dip right after Christmas are now waiting to see the streaming TV power’s actual first quarter earnings results that are due out on April 16.
Company Overview
Netflix is currently the largest of the big U.S. streaming powers. The company closed the fourth quarter with over 139 million paying memberships, up over 25% from the year-ago period’s 110.6 million. Meanwhile, Amazon (AMZN - Free Report) boasts roughly 100 million Prime subscribers. However, a Reuters report suggests that only 26 million of those U.S. users watch content on Amazon Prime Video, which could be seen as either good or bad for the e-commerce giant. The other major player, Hulu, said its subscriber total jumped 48% in 2018 to 25 million.
Clearly, Netflix has a significant lead on its peers. The company’s impressive paying subscriber base should also help it stand out against soon-to-be-launched platforms from Disney (DIS - Free Report) , Apple (AAPL - Free Report) , and AT&T (T - Free Report) . Inventors should also remember that Netflix has remained out of the controversies that Facebook , Google (GOOGL - Free Report) , and Amazon have faced over the last year. In fact, momentum appears to have grown on both sides of the political aisle to possibly regulate or even try to break up some of these tech titans.
Looking ahead, Netflix’s international growth will likely play a larger role as the U.S. market becomes more saturated. The streaming service is already available in over 190 countries, with China the only major untapped market. Netflix has said that it “continues to explore options for providing the service” in China, but it will likely find it hard to penetrate the market given the country’s censorship concerns.
One major point of concern for some investors has been Netflix’s spending and debt load. Netflix reported negative cash flows of $3 billion last year and executives expect to report a similar level of negative cash flows in 2019. With that said, the company projects that its cash flows will improve going forward even as it spends billions of dollars on new original content, which will be its lifeblood.
Outlook
Netflix said last quarter that it expects to add 8.9 million paying subscribers in Q1 2019 to reach 148.16 million. As a non-ad supported platform, the firm’s user growth will remain the main driver of Netflix’s revenues for years to come. Our current Zacks Consensus Estimate calls for Netflix’s first-quarter revenue to jump 21.4% to hit $4.49 billion, which would mark a slowdown from last quarter's 27.4% top-line expansion.
More specially, NFLX’s international streaming revenue is projected to surge over 32% from $1.78 billion in the prior-year quarter to reach $2.35 billion, based on our current NFM estimates. However, this would also fall below Q4’s 36% international sales growth. Meanwhile, the company’s domestic streaming revenue is expected to pop roughly 14% to hit $2.07 billion. Last quarter, U.S. streaming sales climbed over 22%.
We can see that Netflix’s first-quarter revenue growth is expected to come down from Q4, which isn’t shocking as top-line growth often becomes harder to come by. Still, we will have to wait to see how Wall Street reacts if our top-line estimates prove right and signal a new reality for the once-mighty growth stock.
At the bottom end of the income statement, NFLX’s adjusted Q1 earnings are projected to dip 9.4% to $0.58 per share. Despite the negative near-term outlook, investors will likely be pleased to see that the streaming firm’s full-year 2019 earnings are projected to soar over 50% to reach $4.03 a share. With that said, we can also see that the company’s earnings revisions have trended a bit more heavily in the wrong direction recently.
Bottom Line
Netflix stock closed regular trading Friday at $356.56 per share. As we touched on at the top, shares of Netflix are up 33% this year. Despite the climb, shares of NFLX still sit 16% below their 52-week high of $423.21 a share to give the stock room to run heading into earnings.
Netflix is a Zacks Rank #3 (Hold) at the moment, based in part on its mixed earnings estimate revision activity. The company is scheduled to release its Q1 2019 financial results after the closing bell on Tuesday, April 16.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>