- Netflix reported Q2 2022 earnings per share (EPS) of $3.20, coming in ahead of analysts' predictions.
- Revenue matched forecasts, while global paid streaming membership numbers were higher than expected.
- The number of global paid streaming memberships represents how Netflix generates most of its revenue.
|Netflix Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Estimate|
|Earnings Per Share||Beat||$3.20||$2.93|
|Global Paid Streaming Memberships||Beat||220.7M||219.6M|
Source: Predictions based on analysts' consensus from Visible Alpha
Netflix (NFLX) Financial Results: Analysis
Netflix Inc. (NFLX) reported Q2 FY 2022 financial results that overall were strong compared to analysts' expectations. Earnings per share (EPS) solidly beat estimates as Netflix posted EPS of $3.20, a 7.7% increase year over year (YOY) and ahead of $2.93 that analysts expected. This is a sharp reversal of the YOY decline in EPS that Netflix experienced in Q1 FY 2022. Revenue matched analyst predictions, growing by 8.6% YOY. Netflix's revenue climbed at the slowest pace in at several years.
Revenue growth was particularly strong in Asian markets (APAC). Netflix said revenue increased by 23% YOY in the APAC region, excluding foreign exchange. The company's Latin America business (LATAM) saw 19% YOY revenue growth, excluding foreign exchange.
Netflix said in the earnings release that its recently announced ad-supported membership plan would be offered at a lower price and in addition to its existing membership plans, which will remain ad-free. The company said it is targeting a launch of early 2023 for the ad-supported plan.
NFLX Global Paid Streaming Memberships
Global paid streaming memberships, also referred to as global paid streaming subscribers, climbed by 5.5% to 220.7 million, beating estimates. The company has worked to bolster its subscriber numbers because streaming subscriptions are its primary source of revenue. By the end of FY 2021, Netflix had about 222 million paid streaming subscribers in 190 countries. But subscriber growth has slowed dramatically in recent quarters due to increasing competition from rivals including Apple Inc.'s (AAPL) Apple TV+, The Walt Disney Co.'s (DIS) Disney+, Amazon.com Inc.'s (AMZN) Amazon Prime Video, AT&T Inc.'s (T) HBO Max, and others.
NFLX Guidance and Stock Performance
Netflix said it anticipated that Q3 revenue would grow by 12% YOY on a constant currency basis, with operating profit declining by 3%, excluding the impact of currency. The company expects operating margin to be 20% for the quarter, and 19-20% for the full year.
Netflix shares traded up 6.7% in at 4:52pm New York time in extended trading hours immediately following the earnings release. The company's stock has a 1-year trailing total return of -62.1% compared with -10.0% for the S&P 500 as of this writing.
Netflix's next earnings report (for Q3 FY 2022) is estimated to be released on Oct. 17, 2022.
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Netflix Inc. "Q2 '22 Shareholder Letter," Pages 1-2.
Netflix Inc. "Q2 '22 Shareholder Letter," Page 6.
Netflix Inc. "Form 10-K for the Fiscal Year Ended December 31, 2021," Page 1.
Netflix Inc. "Q2 '22 Shareholder Letter," Page 2.
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