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In just a few short years, Netflix (NFLX - Free Report) has evolved from a “cool idea” into one of the most important companies in the entire entertainment sector. What was once a convenient way to rent DVDs is now at the helm of the booming video streaming business, and its recent investments in original programming have made the company a force in the media production world.
Given its influence, Netflix remains one of the most talked about publicly-traded companies in the world. The streaming behemoth is set to report its first-quarter earnings on Monday, and we can be sure that this announcement will attract significant investor attention.
Last quarter, Netflix surpassed our consensus estimates for revenue and earnings, and total paid membership grew to about 93.8 million. The service saw domestic net additions of 1.93 million, which outpaced company guidance by nearly half a million, and total net income of $154 million was almost $30 million higher than was guided for.
So what’s in store for Netflix this quarter? Well, the company guided for earnings of 37 cents per share in its previous report, which was nearly double the Zacks Consensus Estimate at the time.
Since then, estimates have caught up to Netflix’s guidance, and our current consensus estimates call for earnings of 38 cents per share on revenue of $2.641 billion. These figures would represent growth of 526% and 35%, respectively.
Of course, earnings and revenue are just two of the many things investors will be looking at when Netflix reports on Monday. Check out these three additional things to expect:
1. Netflix will flirt with the 100 million subscribers threshold
According to our consensus figures, which are pulled from the estimates of 18 separate analysts, Netflix is expected to report total domestic subscribers of 50.97 million and total international subscribers of 48.13 million. This brings the streaming service to an estimated 99.1 million subscribers, which is remarkably close to the monumental triple-digit threshold.
It’s important to note two things here. First of all, these figures account for total subscriptions, which includes trial accounts. Paid subscriptions are expect to reach about 95.4 million. Also, these estimates are a consensus average of all available estimates. If Netflix comes in more towards the high end of these estimates, the company could fly past 100 million subscribers.
2. International revenue will soar more than 60%
Early last year, Netflix completed its aggressive international expansion plan. While this global growth certainly cost the company a pretty penny, the service is now available in 190 countries, making it a viable international streaming option. Netflix is now poised for substantial growth in international revenue.
Last year, the company reported first-quarter international revenue of $651.75 million. This year, our consensus estimate calls for international revenue of $1.05 billion. That would represent year-over-year growth of more than 60% and underscore the success of Netflix’s global expansion plan.
3. Domestic DVD revenues will continue to slump
This shouldn’t come as too much of a surprise, but investors should expect Netflix’s DVD business to continue to shrink. What was once a powerful idea that helped dethrone the likes of Blockbuster is now mostly an afterthought.
Domestic DVD revenues have steadily declined over the past five quarters, with sales hitting just $126 million in the previous quarter. Our consensus estimates call for this segment to bring in just $120 million this quarter. Luckily, this is far from a major focus for Netflix these days, and chief executive Reed Hastings has even toyed with the idea of cutting the service.
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3 Key Predictions for Netflix's Q1 Earnings
In just a few short years, Netflix (NFLX - Free Report) has evolved from a “cool idea” into one of the most important companies in the entire entertainment sector. What was once a convenient way to rent DVDs is now at the helm of the booming video streaming business, and its recent investments in original programming have made the company a force in the media production world.
Given its influence, Netflix remains one of the most talked about publicly-traded companies in the world. The streaming behemoth is set to report its first-quarter earnings on Monday, and we can be sure that this announcement will attract significant investor attention.
Last quarter, Netflix surpassed our consensus estimates for revenue and earnings, and total paid membership grew to about 93.8 million. The service saw domestic net additions of 1.93 million, which outpaced company guidance by nearly half a million, and total net income of $154 million was almost $30 million higher than was guided for.
So what’s in store for Netflix this quarter? Well, the company guided for earnings of 37 cents per share in its previous report, which was nearly double the Zacks Consensus Estimate at the time.
Since then, estimates have caught up to Netflix’s guidance, and our current consensus estimates call for earnings of 38 cents per share on revenue of $2.641 billion. These figures would represent growth of 526% and 35%, respectively.
Of course, earnings and revenue are just two of the many things investors will be looking at when Netflix reports on Monday. Check out these three additional things to expect:
1. Netflix will flirt with the 100 million subscribers threshold
According to our consensus figures, which are pulled from the estimates of 18 separate analysts, Netflix is expected to report total domestic subscribers of 50.97 million and total international subscribers of 48.13 million. This brings the streaming service to an estimated 99.1 million subscribers, which is remarkably close to the monumental triple-digit threshold.
It’s important to note two things here. First of all, these figures account for total subscriptions, which includes trial accounts. Paid subscriptions are expect to reach about 95.4 million. Also, these estimates are a consensus average of all available estimates. If Netflix comes in more towards the high end of these estimates, the company could fly past 100 million subscribers.
2. International revenue will soar more than 60%
Early last year, Netflix completed its aggressive international expansion plan. While this global growth certainly cost the company a pretty penny, the service is now available in 190 countries, making it a viable international streaming option. Netflix is now poised for substantial growth in international revenue.
Last year, the company reported first-quarter international revenue of $651.75 million. This year, our consensus estimate calls for international revenue of $1.05 billion. That would represent year-over-year growth of more than 60% and underscore the success of Netflix’s global expansion plan.
3. Domestic DVD revenues will continue to slump
This shouldn’t come as too much of a surprise, but investors should expect Netflix’s DVD business to continue to shrink. What was once a powerful idea that helped dethrone the likes of Blockbuster is now mostly an afterthought.
Domestic DVD revenues have steadily declined over the past five quarters, with sales hitting just $126 million in the previous quarter. Our consensus estimates call for this segment to bring in just $120 million this quarter. Luckily, this is far from a major focus for Netflix these days, and chief executive Reed Hastings has even toyed with the idea of cutting the service.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, and for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades: value, momentum, ETFs, stocks under $10, stocks that corporate insiders are buying up, and companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>