Netflix Gears Up For Q4 Earnings: What's In The Cards?

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Netflix (NFLX - Free Report) is set to report its fourth-quarter 2022 results on Jan 19, 2023.

Netflix expects its fourth-quarter earnings to be 36 cents per share, suggesting a year-over-year decline of 73%.

The Zacks Consensus Estimate for earnings is currently pegged at 45 cents per share, up by a penny over the past 30 days. The figure indicates a 66.2% decline from the year-ago quarter.

Netflix expects total revenues to increase 0.9% year over year to $7.776 billion. The consensus mark for fourth-quarter revenues is currently pegged at $7.84 billion, suggesting 1.67% growth from the figure reported in the year-ago quarter.

Netflix’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 35.09%.

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 4.5 million paid subscribers in fourth-quarter 2022 compared with the year-ago quarter’s addition of 8.28 million.

This Zacks Rank #3 (Hold) company expects to end the fourth quarter of 2022 with 227.59 million paid subscribers globally, indicating growth of 2.6% from the year-ago quarter.

The Zacks Consensus Estimate for paid memberships at the end of the period is pegged at 227.42 million, slightly lower than management’s expectation.

Netflix’s shares have lost 36.7% year to date, outperforming the Zacks Broadcast Radio and Television industry’s decline of 41.2%.

Netflix has been facing stiff competition in the streaming space from the likes of Disney+ by Disney (DIS - Free Report), HBO Max, Comcast’s (CMCSA - Free Report) Peacock, Paramount+, Apple TV+ and Amazon (AMZN - Free Report).

Per a recent report by Parks Associates, Netflix has been surpassed by Amazon prime video in terms of its subscriber base in the United States.

Netflix’s latest ad-supported service also failed to excite its user base. The ad-supported plan, launched on Nov 3, accounted for only 9% of new Netflix sign-ups in the United States in November.

Moreover, Netflix is expected to face competition in the ad-supported streaming market from the likes of Disney and Comcast.

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 Oct 1, 2022, had 164.2 million paid subscribers compared with 118.1 million as of Oct 2, 2021.

Comcast’s Peacock also offers a free-to-watch tier with ad support that has about 40,000 hours of content. Peacock is well-poised to grow, owing to its vast library of IPs and new productions.

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 4.471 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 fourth-quarter 2022 APAC revenues is pegged at $892 million, indicating 2.4% growth from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for LATAM revenues is pegged at $996 million, suggesting almost 3.3% growth from the figure reported in the previous quarter.

Moreover, the consensus mark for Europe, Middle East & Africa revenues is pegged at $2.31 billion, suggesting an 8.6% decline from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for the United States and Canada revenues stands at $3.559 billion, indicating 7.6% growth from the figure reported in the year-ago quarter.

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