Netflix Q3 2021 Earnings Report Recap

NFLX beat on earnings and matched on revenue

Key Takeaways

  • Netflix's global paid streaming subscribers beat analysts' expectations.
  • The number of global paid streaming subscribers represents how Netflix generates most of its revenue, but it is becoming more difficult to attract new subscribers the more saturated the streaming market becomes.
  • During the third quarter, Netflix acquired Night School Studio, its first video game studio acquisition.
Netflix Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $3.19 $2.56
Revenue Match $7.5B $7.5B
Global Paid Streaming Subscribers Beat 213.6M 212.9M

Source: Predictions based on analysts' consensus from Visible Alpha

Netflix (NFLX) Financial Results: Analysis

Netflix, Inc. (NFLX) reported Q3 FY 2021 earnings that beat analyst expectations. Earnings per share (EPS) exceeded consensus estimates, rising 83.3% compared to the year-ago quarter. Revenue matched analyst forecasts, up 16.3% year over year (YOY). Global paid streaming subscribers, which Netflix refers to as "global streaming paid memberships," came in at 213.6 million for the quarter, above analysts' expectations. The company's shares rose nearly 5% in after-market trading. Over the past year, Netflix's shares have provided a total return of 29.9%, above the S&P 500's total return of 16.7%.

NFLX Global Paid Streaming Subscribers

Netflix's global paid streaming subscribers rose 9.4% YOY, the second slowest pace of growth in at least 19 quarters. Global paid streaming 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 streaming subscribers at the end of FY 2020.

Attracting new subscribers is becoming ever more difficult amid an increasingly competitive environment that includes rivals like Apple, Inc.'s (AAPL) Apple TV+, The Walt Disney Company's (DIS) Disney+,, Inc.'s (AMZN) Amazon Prime Video, and AT&T Inc.'s (T) HBO Max. Netflix has started to venture into other entertainment offerings amid the saturation of the video streaming market. During the third quarter, the company acquired its first video game studio, Night School Studio, which makes a number of critically acclaimed games such as OXENFREE.

NFLX Guidance

Netflix provided forecasts for EPS, revenue, and global paid streaming subscribers for Q4 FY 2021. The company expects EPS of $0.80, which would be down 32.8% YOY. Revenue is expected to rise 16.1% YOY to $7.7 billion. Global paid streaming subscribers are forecast to grow 9.0% to approximately 222.1 million.

Netflix's next earnings report (for Q4 FY 2021) is estimated to be released on Jan. 17, 2022.

Article Sources
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  1. Netflix Inc. "Q321 Shareholder Letter," Page 1.

  2. Visible Alpha. "Financial Data."

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

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

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

  6. Reuters. "Netflix buys first video game studio, rolls out mobile games."

  7. Netflix Inc. "Q321 Shareholder Letter," Page 4.

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

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