Netflix (NFLX) Set to Report Q2 Earnings: What to Expect?

Netflix NFLX is set to report second-quarter 2022 results onJul 19.

The company forecasts its second-quarter earnings to be $3 per share, suggesting a year-over-year decline of 20%.

The Zacks Consensus Estimate for earnings is currently pegged at $2.90 per share, down 2% over the past 30 days. The figure indicates 2.36% decline from the year-ago quarter’s reported figure.

Netflix expects total revenues to increase 9.7% year over year to $8.053 billion. The consensus mark for second-quarter revenues is currently pegged at $8.03 billion, suggesting 9.33% growth from the figure reported in the year-ago quarter.

Netflix’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same in the remaining one, the average surprise being 25.42%.

Netflix, Inc. Price and Consensus

Netflix, Inc. Price and Consensus
Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Netflix expects to lose two million paid subscribers in second-quarter 2022 because of stiff competition, the unfavorable impact of account sharing, a weak economy, multi-decade-high inflation, the Russia-Ukraine conflict and some lingering COVID-19 disruptions.

Netflix’s shares have lost 71% year to date, underperforming the Zacks Broadcast Radio and Television industry’s decline of 57.2%.

Netflix has been facing stiff competition in the streaming space from the likes of Disney+ by Disney DIS, HBO Max, Comcast’s CMCSA Peacock, Paramount+, and Apple TV+ by Apple AAPL.

Netflix’s closest competitor, Disney, benefits from the growing popularity of Disney+ owing to a strong content portfolio and a cheaper bundle offering.

Disney is also expanding into international markets. Disney+, as of Apr 2, 2022, had 137.7 million paid subscribers compared with 103.6 million as of Apr 2, 2021.

Comcast’s Peacock is well poised to grow, owing to its vast library of IP and new productions. Comcast is also planning to leverage Sky’s brand and scale to expand Peacock’s footprint internationally.

Apple’s streaming service, Apple TV+, is gaining recognition, with Ted Lasso season 2 garnering 20 Emmy Award nominations and CODA winning three Academy Awards. This is expected to boost Apple TV+’s viewership.

However, courtesy of its diversified content portfolio, attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint, Netflix is still dominating the streaming market.

This Zacks Rank #4 (Sell) company expects to end the second quarter of 2022 with 219.64 million paid subscribers globally, indicating growth of 5% from the year-ago quarter.

The Zacks Consensus Estimate for paid memberships at the end of the period is pegged at 224.23 million, slightly lower than management’s expectation.

The Zacks Consensus Estimate for paid total streaming net membership loss is pegged at 1.662 million.

Netflix’s growing popularity in Asia Pacific (APAC) and Latin America (LATAM), thanks to its diversified content offerings in regional languages, is expected to have driven top-line growth.

The consensus mark for second-quarter 2022 APAC revenues is pegged at $944 million, indicating 18.1% growth from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for LATAM revenues is pegged at $1.01 billion, suggesting almost 16.8% growth from the figure reported in the previous quarter.

Moreover, the consensus mark for Europe, Middle East & Africa revenues is pegged at $2.56 billion, suggesting 6.8% growth from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for United States and Canada revenues stands at $3.51 billion, indicating 8.4% growth from the figure reported in the year-ago quarter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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