Netflix Earnings: What To Expect

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Netflix Inc. is an American media-services provider and production company headquartered in Los Gatos, California, founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California. The company’s primary business is its subscription-based streaming service which offers online streaming of a library of films and television programs, including those produced in-house.

Q3 2019 Financial Results

Last quarter Netflix (NFLX) beat earnings estimates, despite missing estimates on subscribers. Revenue came in at $5.24 billion vs. $5.25 billion expected. Earnings per share came in at $1.47 vs $1.04 expected. Netflix’s revenue was up 31.3% year over year in the third quarter of 2019. Netflix is expected to report EPS of $0.50 per share for the quarter (Q4 2019). The reported EPS for the same quarter last year was $0.30.

Netflix Price Increase

Netflix has recently increased it’s subscription prices for its U.S. subscribers. The price of the basic plan will rise from $8.00 to $9.00 per month, the standard plan will rise from $11.00 to $13.00 per month, and the price of it’s premium plan will rise from $14.00 to $16.00 per month. These price increases have caused individuals and families across the U.S. to unsubscribe, slowing growth for it’s domestic user base.

In Netflix letter to shareholders the company said in a statement, ”Since our U.S. price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower U.S. membership growth.”

Forward Guidance

Competition from new streaming services (Apple T.V., Disney Plus, Peacock, HBO Max) can hurt subscription growth over the next few quarters. Management have projected 7.6 million in global net subscribers for the quarter, compared to 8.8 million for the same quarter last year. Netflix said in its letter to shareholders that the ”noisy” launch of new streaming services may cause ”some modest headwind to our near term growth.” Netflix Inc. is set to report its fourth-quarter financial results on Tuesday, January 21st, after market close.

About Netflix

Netflix Inc. is the world’s leading streaming entertainment service with over 158 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen.

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