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Netflix (NFLX) to Report Q3 Earnings: What's in the Cards?

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Netflix (NFLX - Free Report) is set to report third-quarter 2021 results on Oct 19.

The company forecasts third-quarter earnings to be $2.55 per share. The Zacks Consensus Estimate for earnings has moved up 1.2% to $2.56 per share in the past 30 days. The figure indicates 47.1% growth from the year-ago quarter’s reported figure.

Total revenues are anticipated to be $7.47 billion, up 16.2% year over year. The consensus mark for third-quarter revenues is currently pegged at $7.48 billion, suggesting 16.29% growth from the figure reported in the year-earlier quarter.

The company missed the Zacks Consensus Estimate in three of the trailing four quarters, while beating in one. It has a trailing four-quarter negative earnings surprise of 3.06%, on average.

Let’s see how things have shaped up for this announcement.

Factors to Note

Netflix has been dominating the streaming market driven by its diversified content offering, attributable to its heavy investments in production and distribution of localized, foreign-language content and an expanding international footprint.

Through the first half of 2021, the company spent $8 billion in cash on content, up 41% year over year, of more than $17 billion allotted for this year.

Netflix’s content strength is evident from the fact that it recently received an impressive total of 44 Emmy wins this year at the 2021 Emmy Awards.

This Zacks Rank #3 (Hold) company expects third-quarter 2021 global paid subscribers to be 212.68 million, indicating growth of 9% from the year-ago quarter’s levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for paid memberships is pegged at 212.91 million, slightly better than management’s expectation.

However, the streaming giant operates in a saturated streaming market in the United States. It is expected to have faced stiff competition from new streaming providers like Disney+ by Disney (DIS - Free Report) , HBO Max, Peacock and Apple TV+ by Apple (AAPL - Free Report) as well as existing services like Amazon (AMZN - Free Report) prime video in the to-be-reported quarter.

The company has also been witnessing sluggish subscriber growth in recent times, primarily due to rising competition and easing of coronavirus-induced social distancing norms.

Netflix’s shares have returned 17.2% year to date compared with the Zacks Broadcast Radio and Television industry’s rally of 16.2%.

Year to Date Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Netflix’s third-quarter 2021 subscriber growth is expected to have been driven by a strong slate of releases that included new seasons of La Casa de Papel (aka Money Heist), Sex Education, Virgin River and Never Have I Ever. Movies include Sweet Girl, Kissing Booth 3, Kate and Vivo.

The Zacks Consensus Estimate for paid total streaming net membership addition is pegged at 3.73 million, slightly better than Netflix’s expectation of 3.5 million.

Netflix’s growing popularity in Asia Pacific (APAC) and Latin America (LATAM), courtesy of its diversified content offerings in regional languages, is expected to have driven top-line growth.

The consensus mark for third-quarter 2021 APAC revenues is pegged at $839 million, indicating 32.1% growth from the figure reported in the year-ago quarter. Further, the Zacks Consensus Estimate for LATAM revenues is pegged at $891 million, suggesting almost 12.9% growth from the figure reported in the previous quarter.

The consensus estimate for the Europe, Middle East & Africa (EMEA) revenues is pegged at $2.44 billion, suggesting 21.4% growth from the figure reported in the year-ago quarter.

The consensus mark for United States and Canada (UCAN) revenues is $3.25 billion, indicating 10.9% growth from the figure reported in the previous quarter.

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