What To Expect From Netflix’s Q4

by Trefis Team
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Netflix (NASDAQ:NFLX) is set to announce its fourth quarter results on Monday, January 22. Despite the intensifying competition in the over-the-top (OTT) streaming market, we expect Netflix to report growth in revenues and subscribers across both the domestic and international markets. Netflix’s revenues should continue to outperform, and we expect it to exceed its guidance of $2.97 billion. We expect the company to report revenues in excess of $3.28 billion as Netflix’s services witnessed strong adoption in the international market, while revenues from the U.S. streaming market should remain steady. Furthermore, we anticipate that the total subscriber base for both international and U.S. streaming services will grow to over 115 million during the quarter. We have created an interactive dashboard that illustrates our expectation for Netflix’s various divisions. You can modify the revenue and contribution profit expectations for each division to see how the EPS will be affected in Q4.

For Q4, we expect

  • Domestic streaming revenues to improve to $1.6 billion as the company adds substantial net subscribers to the business. Additionally, we also expect its ARPU to grow to around $10 in Q4.
  • International streaming revenues to improve to over $1.5 billion and total membership to swell to nearly 62 million. However, Netflix’s international operations are still not as profitable as its domestic business, as the company continues to invest heavily in expansion through marketing and content development.
  • The DVD business will continue to lose steam, and revenues will likely decline to just over $100 million.
  • Increases in the cost of content production and marketing expenses will continue to impact profitability and cash flows during the quarter. Nevertheless,  the company is expected to report y-o-y growth in contribution margins.

At present, we have a $187 price estimate for Netflix, which is 15% below the current market price.

See our complete analysis for Netflix

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