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The quarterly cycle has picked up notable steam this week, with a flurry of quarterly reports scheduled to come. The big banks helped kick off the period positively, with investors optimistic that this momentum can continue.
After the bell yesterday, we heard from streaming titan Netflix (NFLX - Free Report) and EV leader Tesla (TSLA - Free Report) . Netflix shares saw buying pressure following the release, whereas Tesla shares faced adverse price action.
It raises a valid question – what was important within each respective release? Let’s take a closer look at each.
Netflix
Netflix reported quarterly EPS of $3.73, beating the Zacks Consensus EPS Estimate of $3.46 handily and improving 20% year-over-year. Quarterly revenue totaled $8.5 billion, improving 8% from the year-ago quarter and above the company’s previous forecast due to better-than-expected membership growth.
Paid Net Membership additions totaled 9 million, nicely above expectations and boosted by the adoption of the company’s new ad-supported plans. Impressively, ad-supported memberships grew nearly 70% quarter-over-quarter, indicating significant demand and momentum.
In addition, operating income grew 25% from the year-ago period, with the company’s operating margin also improving to 22.4%.
To top it off, Netflix provided solid guidance, raising its free cash flow outlook and announcing more price hikes for membership plans in the US, UK, and France. The company’s Basic plan will now cost $11.99, and Premium plans will be raised to $22.99.
Investors cheered on the news of price hikes and better-than-expected membership growth, with Netflix shares popping in the after-hours.
Tesla
Tesla reported quarterly EPS of $0.66, below the Zacks Consensus Estimate of $0.72 and reflecting a change of -37% from the year-ago period. Revenue also missed relative to our consensus expectation, totaling $23.4 billion but improving 9% on a year-over-year basis.
The EV leader revealed in early October that it produced over 430,000 vehicles and delivered roughly 435,000 throughout Q3, penciling in a decline from the prior quarter due to planned factory downtimes. Still, Tesla’s 2023 volume target of roughly 1.8 million vehicles remains in play.
Margins were also highly focused on, especially following the rapid price cuts we’ve seen the company deploy in 2023. Tesla’s gross margin totaled 17.9% in Q3, well below 25.1% in the same period last year and modestly beneath 18.2% in Q2. It’s critical to note that Tesla’s recent upgrades to new factories are expected to continue lowering costs – costs of goods sold (COGS) per vehicle decreased to $37,500 throughout the quarter.
We also got some further news surrounding the highly-awaited cybertruck, with deliveries still slated to begin later this year. Does anybody remember the window incident?
The market didn’t react positively to the results, with Tesla shares facing pressure following the release.
Bottom Line
Earnings season is always an exciting period for investors, with companies finally pulling the curtain back and unveiling what’s transpired behind closed doors.
And so far, we’ve gotten two big reports out of the way – Netflix (NFLX - Free Report) & Tesla (TSLA - Free Report) – with many more looming on the horizon.
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Tesla & Netflix Earnings: A Closer Look
The quarterly cycle has picked up notable steam this week, with a flurry of quarterly reports scheduled to come. The big banks helped kick off the period positively, with investors optimistic that this momentum can continue.
After the bell yesterday, we heard from streaming titan Netflix (NFLX - Free Report) and EV leader Tesla (TSLA - Free Report) . Netflix shares saw buying pressure following the release, whereas Tesla shares faced adverse price action.
It raises a valid question – what was important within each respective release? Let’s take a closer look at each.
Netflix
Netflix reported quarterly EPS of $3.73, beating the Zacks Consensus EPS Estimate of $3.46 handily and improving 20% year-over-year. Quarterly revenue totaled $8.5 billion, improving 8% from the year-ago quarter and above the company’s previous forecast due to better-than-expected membership growth.
Paid Net Membership additions totaled 9 million, nicely above expectations and boosted by the adoption of the company’s new ad-supported plans. Impressively, ad-supported memberships grew nearly 70% quarter-over-quarter, indicating significant demand and momentum.
In addition, operating income grew 25% from the year-ago period, with the company’s operating margin also improving to 22.4%.
To top it off, Netflix provided solid guidance, raising its free cash flow outlook and announcing more price hikes for membership plans in the US, UK, and France. The company’s Basic plan will now cost $11.99, and Premium plans will be raised to $22.99.
Investors cheered on the news of price hikes and better-than-expected membership growth, with Netflix shares popping in the after-hours.
Tesla
Tesla reported quarterly EPS of $0.66, below the Zacks Consensus Estimate of $0.72 and reflecting a change of -37% from the year-ago period. Revenue also missed relative to our consensus expectation, totaling $23.4 billion but improving 9% on a year-over-year basis.
The EV leader revealed in early October that it produced over 430,000 vehicles and delivered roughly 435,000 throughout Q3, penciling in a decline from the prior quarter due to planned factory downtimes. Still, Tesla’s 2023 volume target of roughly 1.8 million vehicles remains in play.
Margins were also highly focused on, especially following the rapid price cuts we’ve seen the company deploy in 2023. Tesla’s gross margin totaled 17.9% in Q3, well below 25.1% in the same period last year and modestly beneath 18.2% in Q2. It’s critical to note that Tesla’s recent upgrades to new factories are expected to continue lowering costs – costs of goods sold (COGS) per vehicle decreased to $37,500 throughout the quarter.
We also got some further news surrounding the highly-awaited cybertruck, with deliveries still slated to begin later this year. Does anybody remember the window incident?
The market didn’t react positively to the results, with Tesla shares facing pressure following the release.
Bottom Line
Earnings season is always an exciting period for investors, with companies finally pulling the curtain back and unveiling what’s transpired behind closed doors.
And so far, we’ve gotten two big reports out of the way – Netflix (NFLX - Free Report) & Tesla (TSLA - Free Report) – with many more looming on the horizon.