Netflix Q1 2021 Earnings Report Recap

NFLX beat on earnings and revenue

Netflix Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $3.75 $2.97
Revenue  Beat $7.2B $7.1B
Global Paid Subscribers Miss 207.6M 209.8M

Source: Predictions based on analysts' consensus from Visible Alpha

Key Takeaways

  • Netflix's global paid subscribers missed expectations by about 2.2 million.
  • The number of global paid subscribers is becoming more difficult to expand the bigger it gets and the more competitive the streaming market becomes.
  • Netflix's board approved a $5 billion stock repurchase program beginning in 2021.

Netflix (NFLX) Financial Results: Analysis

Netflix, Inc. (NFLX) reported Q1 FY 2021 earnings that beat analyst expectations by a significant margin. Revenue also came in higher than forecast. Global paid subscribers, which Netflix refers to as "global streaming paid memberships," came in at 207.6 million for the quarter, missing analyst estimates. It also fell below Netflix's own guidance of 210 million paid memberships. The company's shares fell as much as 11% in after-market trading. Over the past year, Netflix's shares have provided a total return of 32.5%, below the S&P 500's total return of 38.2%.

NFLX Global Paid Subscribers

Global paid subscribers represent the number of global users that have signed up and paid for a subscription to receive streaming services. A core feature of Netflix's strategy is to grow its streaming membership business globally, as it is the company's main source of revenue. Netflix recently surpassed the 200 million mark in total global paid subscribers at the end of FY 2020. Growth for the year was helped along by viewers sheltering at home during the COVID-19 pandemic and eager for streaming entertainment. There is also a longer-term trend of consumers switching from traditional TV to online streaming content.

However, the recent miss for Q1 shows that new subscribers don't come easily, especially considering how competitive the market is. Netflix faces competition from The Walt Disney Company's (DIS) Disney+, Apple Inc.'s (AAPL) Apple TV+, NBCUniversal's Peacock, and others. But Netflix does not think competitive intensity picked up during the quarter. The company did say that it believes paid membership growth slowed as a result of the pandemic pulling forward subscribers in 2020 as well as a lower slate of content on the platform in the first half of the year due to pandemic-related production delays.

Netflix is currently projecting 1 million net additions to its global paid subscribers in Q2 FY 2021, which would bring the total to about 208.6 million paid subscribers. It also expects content production to pick up, leading to more content in the second half of the year. Netflix also noted that its board approved a $5 billion stock buyback program beginning in 2021 and with no fixed expiration date.

Netflix's next earnings report (for Q2 FY 2021) is estimated to be released on July 14, 2021.

Article Sources
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  1. Netflix Inc. "Q121 Shareholder Letter," Page 1.

  2. TradingView. "Price Chart: NFLX and S&P 500."

  3. Netflix Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 21.

  4. Netflix Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 1.

  5. Netflix Inc. "Q121 Shareholder Letter," Pages 1 & 2.

  6. Netflix Inc. "Q121 Shareholder Letter," Page 5.

  7. Yahoo! Finance. "Earnings Calendar: NFLX."

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