What To Expect From Netflix's Q3 Earnings

Netflix (NASDAQ: NFLX) shares are up almost 11% over the last month and have delivered an outstanding 400% return over the last five years. But with Amazon (NASDAQ: AMZN) and Disney+ (NYSE: DIS) breathing down its neck, how long can Netflix defend its turf?

Recently, the streaming service has made headlines all over the world for its hit show 'Squid Game,' with reports suggesting that Netflix has made a staggering $900 million so far from the original series. With 'Squid Game' allegedly only costing the company just shy of $20 million to make, investors are considering the value of Netflix creating content in cheaper, foreign markets. 

Shareholders will be keen to ask Netflix how it intends to stay the leading streaming service on the earnings call on Tuesday.

When is Netflix's earnings date?

Netflix reports earnings for the third quarter of 2021 on Tuesday, October 19 after the bell at 5:00 PM Eastern Time. 

How can I listen to Netflix's earnings call?

To listen to the call and to access the transcript, as well as the shareholder's letter and the financial statements for the quarter, all you need to do is go to Netflix's Investor Relations Page.

What to expect from Netflix's earnings

Wall Street expects Netflix to post adjusted earnings per share (EPS) of $2.56 on revenue of $7.48 billion. However, the company has guided for earnings of only $2.55 per share on sales of $7.47 billion. In the second quarter, the company posted EPS of $2.97, which missed analyst estimates by over 6%. 

Netflix investors will be looking out for the following components on the call, including:

1. Subscriber growth slowing down post-pandemic. Analysts expect Netflix to add 3.7 million, coming in slightly ahead of the company's estimates of 3.5 million. To keep shareholders happy, Netflix will need to at least meet its predictions for new users.

The company added around 5.52 million net subscribers in the first and second quarters of this year. This was compared negatively to a record 25.86 million it attracted in the first half of 2020 at the height of the pandemic. However, the boost it received for the viral success of 'Squid Game' has investors excited that subscriber additions have soared. 

2. Content releases for 2021 are being delayed due to lockdown restrictions. Even though this is still a worry for future releases, Netflix has managed to release great content during the pandemic. The company has grown its users by investing heavily in new seasons of shows including 'Sex Education' and movies like 'The Duchess.' 

3. Increasing competition from huge companies. Within a year-and-a-half of Disney+'s launch, the House of Mouse's streaming services has captured more than 174 million subscribers. In addition, Disney+ is also significantly cheaper so it does have the potential to lure Netflix's subscribers away. 

Despite these concerns, Netflix's diversified content portfolio, investments in production, and distribution of localized and foreign-language content have helped it expand its global footprint. For example, Spanish language content, in particular, has again delivered excellent results.

Netflix's long-awaited foray into gaming has also excited shareholders as this form of entertainment has remained hugely popular even as pandemic restrictions ease. This represents a massive step for the company, and investors will want to know more about its future gaming plans on the earnings call. 

Netflix will need to assure investors that it will remain the top streaming platform by explaining its plans for further investment in foreign-language content, more exclusive deals with production houses, and potential opportunities to create more content in cheaper overseas markets. 

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