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Netflix (NFLX) Set to Report Q1 Earnings: What to Expect?

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Zacks Equity Research
·4 min read
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Netflix NFLX is set to report first-quarter 2021 results on Apr 20.

The company forecasts its first-quarter earnings to be $2.97 per share, implying year-over-year growth of 89.2%.

The Zacks Consensus Estimate for earnings is currently pegged at $2.98 per share, up 2.4% over the past 30 days. Moreover, the figure indicates 89.8% growth from the year-ago quarter’s reported figure.

Further, total revenues are anticipated to be $7.13 billion, up 23.6% year over year. The consensus mark for first-quarter revenues is currently pegged at $7.14 billion, suggesting 23.7% growth from the figure reported in the year-earlier quarter.

Notably, the company missed the Zacks Consensus Estimate in all of the trailing four quarters, the average negative surprise being 12%.

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. Price and EPS Surprise
Netflix, Inc. Price and EPS Surprise

Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote

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

Factors to Consider

Netflix is expected to have faced stiff competition from the launch of new services like Disney+ by Disney DIS, HBO Max, Peacock and Apple TV+ by Apple AAPL, as well as existing services like Amazon AMZN prime video.

Notably, Netflix’s shares have returned 1.5% year to date, underperforming the Zacks Broadcast Radio and Television industry’s rally of 13.8%.

Year-to-date Performance

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

Netflix is leading the Oscar race with 35 nominations for 16 movies, including Mank and The Trial of the Chicago 7, reflecting the strength in its content portfolio. Markedly, Mank got the most nominations, including best picture, director, actor and supporting actress.

Moreover, Netflix is expected to have benefited from increased consumption of media content due to coronavirus-induced social distancing and lockdowns.

This Zacks Rank #3 (Hold) company expects to end the first quarter of 2021 with 209.66 million paid subscribers globally, indicating growth of 14.7% from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for paid memberships at the end of the period is pegged at 209.97 million, slightly better than management’s expectation.

Netflix’s first-quarter 2021 subscriber growth is expected to have been driven by a strong slate of releases that included season 3 of Cobra Kai, Lupin, To All the Boys I’ve Loved Before 3, Fate: The Winx Saga, Yes Day, Sky Rojo and Space Sweepers.

The Zacks Consensus Estimate for paid total streaming net membership addition is pegged at 6.27 million, slightly better than Netflix’s expectation of 6 million but much lower than the year-ago quarter’s reported figure of 15.77 million.

Markedly, 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 first-quarter 2021 APAC revenues is pegged at $738 million, indicating 52.4% growth from the figure reported in the year-ago quarter. Further, the Zacks Consensus Estimate for LATAM revenues is pegged at $872 million, suggesting almost 10% growth from the figure reported in the previous quarter.

Moreover, consensus for the Europe, Middle East & Africa (EMEA) revenues is pegged at $2.30 billion, suggesting 33.6% growth from the figure reported in the year-ago quarter. Raised subscription prices for millions of customers in Britain are expected to have benefited subscriber growth and revenues.

Additionally, the consensus mark for United States and Canada (UCAN) revenues stands at $3.18 billion, indicating 17.5% growth from the figure reported in the previous quarter.

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