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Netflix (NFLX) Gears Up for Q3 Earnings: What's in the Cards?

Zacks Equity Research
·3 min read

Netflix NFLX is set to report third-quarter 2022 results on Oct 18.

The company expects its third-quarter earnings to be $2.14 per share, suggesting a year-over-year decline of 20%.

The Zacks Consensus Estimate for earnings is currently pegged at $2.12 per share, unchanged over the past 30 days. The figure indicates a 33.54% decline from the year-ago quarter.

Netflix expects total revenues to increase 4.7% year over year to $7.838 billion. The consensus mark for third-quarter revenues is currently pegged at $7.85 billion, suggesting 4.91% growth from the figure reported in the year-ago quarter.

Netflix’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 29.51%.

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. Price and EPS Surprise
Netflix, Inc. Price and EPS Surprise

Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote

 

Let’s see how things are shaping up for this announcement.

Factors to Consider

Netflix now expects to gain one million paid subscribers in third-quarter 2022 compared with the year-ago quarter’s addition of 4.38 million.

This Zacks Rank #3 (Hold) company expects to end the third quarter of 2022 with 221.67 million paid subscribers globally, indicating growth of 3.8% from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for paid memberships at the end of the period is pegged at 221.782 million, slightly higher than management’s expectation.

Netflix’s shares have lost 63.4% year to date, underperforming the Zacks Broadcast Radio and Television industry’s decline of 44.3%.

Netflix has been facing stiff competition in the streaming space from the likes of Disney+ by Disney DIS, HBO Max, Comcast’s CMCSA Peacock, Paramount+, and Apple TV+ by Apple AAPL.

Netflix’s closest competitor, Disney, benefits from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering.

Disney is also expanding into international markets. Disney+, as of Jul 2, 2022, had 152.1 million paid subscribers compared with 116 million as of Jul 3, 2021.

Comcast’s Peacock is well poised to grow, owing to its vast library of IP and new productions. Comcast is also planning to leverage Sky’s brand and scale to expand Peacock’s footprint internationally.

Apple’s streaming service, Apple TV+, is gaining recognition, with Ted Lasso season 2 winning an Emmy for Outstanding Comedy Series. Jason Sudeikis also won an Emmy for Lead Actor. This is expected to boost Apple TV+’s viewership.

However, courtesy of its diversified content portfolio, attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint, Netflix is still dominating the streaming market.

The Zacks Consensus Estimate for paid total streaming net membership gain is pegged at 1.090 million.

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

The consensus mark for third-quarter 2022 APAC revenues is pegged at $900 million, indicating 7.9% growth from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for LATAM revenues is pegged at $1.002 billion, suggesting almost 9.5% growth from the figure reported in the previous quarter.

Moreover, the consensus mark for Europe, Middle East & Africa revenues is pegged at $2.39 billion, suggesting 1.7% growth from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for the United States and Canada revenues stands at $3.539 billion, indicating 8.6% growth from the figure reported in the year-ago quarter.


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