Yahoo Finance Netflix (NFLX) Gears Up for Q3 Earnings: What's in the Cards?
Netflix NFLX is set to report its third-quarter 2023 results on Oct 18.
Netflix expects its third-quarter earnings to be $3.52 per share, suggesting a year-over-year increase of almost 10%.
The Zacks Consensus Estimate for earnings is currently pegged at $3.47 per share, down 0.6% over the past 30 days. The figure indicates an increase of 11.94% from the year-ago quarter.
NFLX expects total revenues to increase 7% year over year to $8.52 billion. The consensus mark for third-quarter revenues is currently pegged at $8.53 billion, suggesting 7.65% growth from the figure reported in the year-ago quarter.
The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in the remaining one, the average negative surprise being 2.38%.
Let’s see how things are shaping up for this announcement.
Netflix, Inc. Price and EPS Surprise
Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote
Factors to Consider
Netflix now expects revenue growth to accelerate in the second half of 2023, driven by the launch of paid sharing.
The company launched its paid-sharing model in the United States on May 23, notifying members that their accounts cannot be shared for free with users outside their residences. In the third quarter, Netflix ended password sharing in India, announcing that only members of a household will be able to access a single account.
Moreover, ad-supported low-priced plans are expected to have a modest incremental benefit toward top-line growth in the to-be-reported quarter.
NFLX’s sprawling games portfolio is also expected to have boosted user engagement in the to-be-reported quarter. In the third quarter, the company launched four new games, such as SNK Corporation’s Samurai Shodown, LEGO Legacy: Heroes Unboxed by Gameloft, WrestleQuest by Mega Cat Studios and Cut the Rope Daily by Zeptolab.
Netflix, currently carrying a Zacks Rank #3 (Hold), is expected to have benefited from its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nevertheless, stiff competition from streaming services like Disney’s DIS Disney+, HBO Max, Comcast’s CMCSA Peacock, Paramount+, Apple’s AAPL Apple TV+ and Amazon has been a headwind for Netflix. It is also facing competition for consumer time from linear TV, YouTube, short-form entertainment like TikTok and gaming.
Nevertheless, Netflix’s strong content portfolio is expected to have helped keep the subscriber base intact in the third quarter of 2023.
The company is expanding its footprint in India through partnerships with the likes of Yash Raj Films and acclaimed director Neeraj Pandey’s Friday Storytellers LLP, the digital content production arm of Friday Filmworks.
The launch of Indian drama series like Choona and Kohrra, the addition of German Originals like Dear Child and Korean originals like Mask Girl besides the ongoing K-dramas Behind Your Touch and Destined With You are expected to have aided international subscriber growth in the to-be-reported quarter.
Shares of the company have gained 22.6% year to date, outperforming the Zacks Broadcast Radio and Television industry’s growth of 10.5%. Shares of Apple and Comcast have returned 39.1% and 25.5%, respectively, while shares of Disney have declined 2.9%.
Top-Line Growth Estimates Positive in Q3
The Zacks Consensus Estimate for paid total streaming net membership additions is pegged at 5.854 million. Netflix gained 2.413 million paid subscribers globally in the year-ago quarter.
The consensus mark for third-quarter 2023 Asia-Pacific revenues is pegged at $959 million, indicating 7.9% growth from the figure reported in the year-ago quarter.
Our estimate for Asia-Pacific is pegged at $954.7 million, indicating 7.4% year-over-year growth.
The Zacks Consensus Estimate for Latin America (LATAM) revenues is pegged at $1.12 billion, suggesting a rise of 10.3% from the figure reported in the previous quarter.
Our estimate for LATAM revenues is pegged at $1.11 billion, indicating 8.5% year-over-year growth.
Moreover, the consensus mark for Europe, Middle East & Africa revenues is pegged at $2.67 billion, suggesting an increase of 12.6% from the figure reported in the year-ago quarter.
Our estimate for Europe, Middle East & Africa revenues is pegged at $2.6 billion, suggesting a 9.5% year-over-year increase.
The Zacks Consensus Estimate for the United States and Canada revenues is pegged at $3.76 billion, indicating a 4.6% rise from the figure reported in the year-ago quarter.
Our estimate for the United States and Canada revenues is pinned at $3.82 billion, indicating 6.2% year-over-year growth.
Upcoming Earnings
Comcast is set to report its third-quarter 2023 results on Oct 26, while both Apple’s and Disney’s fourth-quarter fiscal 2023 results are set for Nov 3 and Nov 8, respectively.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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