Trending Assets
Top investors this month
Trending Assets
Top investors this month
Netflix Q3
So $NFLX crushed it. I covered it on my channel as well.

FYI, I will compare Netflix's numbers with their own forecast and not analysts'.

In Q2, all we could hear is how Netflix is losing subscribers and it was the end of the streaming giant. Which as you know is far from the truth but very close to classic clickbait stuff.

The lower-priced ad-supported plan launches in 12 countries in November. These 12 markets account for ~$140 billion of brand advertising spend across TV and streaming, or over 75% of the global market.

Imagine how much a spot will cost when Squid Game S2 or Stranger Things S5 launches...

So in Q3, they reported the following.

Revenue $7.92B vs $7.83B (forecasted), up 5.9% YOY
Operating Income $1.53B vs $1.25B
Operating margin 19.3% vs 16%
Net Income $1.39B vs $961M
Diluted EPS $3.10 vs $2.14
Global Streaming Paid Net Additions 2.41M vs 1M (sandbagging at work), reaching 223.09M.

Regional Breakdown

Image upload

Image upload


Netflix vs Competitors

  • In the UK, Netflix accounts for 8.2% of video viewing, 2.3x Amazon, and 2.7x Disney+

  • In the US, Netflix accounts for 7.6% of TV time, 2.6x Amazon, and 1.4x Disney+ Hulu+
Hulu Live.
  • According to Netflix, the competition is losing money (operating losses of over $10B) while Netflix generates $5B-$6B in annual operating profit. (shots fired)

Outlook for Q4

Revenue $7.77 (A decline QOQ due to a strong USD). On a constant currency basis, this equates to 9% year-over-year revenue growth.
Operating Income $300M
Operating margin 4.2% (high content and marketing spend + strong USD)
Net Income $163M
Diluted EPS $0.36
Global Streaming Paid Net Additions 4.5M!
The acquisition of the animation studio Animal Logic (The Lego Movie) was closed in October. This was funded with cash and will be reflected in Q4's cash flow statement.

**A strong USD will impact full year 2022 revenue and operating income by ~$1 billion and $0.8 billion.
**
Image upload

Focus on new metrics

Revenue is their primary top-line metric. As the company develops new revenue streams like advertising and paid sharing, this will become more important.

"So, starting with our Q4’22 letter in January of 2023, we’ll continue to provide guidance for revenue, operating income, operating margin, net income, EPS and fully diluted shares outstanding for the following quarter, but not paid membership."

Content is king

Image upload

The limited series Monster: The Jeffrey Dahmer Story (824 million hours viewed) is now Netflix's second-largest English series. (I don't why but every fcked-up crime series is super popular... it does make you wonder)

Gaming
Netflix now has 35 games on service and 55 more games in development(more games based on Netflix IP). They're seeing encouraging signs of gameplay leading to higher retention.

Example of a mix of games and TV/film. Netflix released the animated show Cyberpunk: Edgerunners.
What happened next is -> Cyberpunk’s peak daily player count on PC gaming service Steam reached 136,724 on Sunday, more than 7x its daily high in August.

Account sharing

Roll out in early 2023. Netflix is going to offer the ability for borrowers to transfer their Netflix profile into their own account, and for sharers to manage their devices more easily and to create sub-accounts (“extra member”) if they want to pay for family or friends. In countries with our lower-priced ad-supported plan, we expect the profile transfer option for borrowers to be especially popular.

End

I don't own shares of Netflix but to those that said that they're done because of two "bad" quarters, you just got proven wrong. The pandemic pulled a lot of growth forward and the current macro environment is making it tricky to predict things.

Netflix still has a lot of growth ahead. The shift from linear to streaming is far from over.
YouTube
Netflix Stock Crushed Q3 Earnings! Is It A Buy Now? | NFLX Stock
In this video, I will go over Netflix's Q3 earnings report which was much better than expected. The company also shared some interesting metrics with regard ...

Neil's avatar
$24.6MFollowers
Related
Already have an account?