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Netflix’s Q4 Earnings: What Should Worried Investors Expect?

After a packed content slate in Q4 and the announcement of a price increase, here’s what to expect when Netflix reports Q4 earnings.

Netflix (NASDAQ: NFLX) has been the leader in the streaming space for many years, and the stock has returned roughly 280% in the last five years despite increased competition from other players. With recent hits such as ‘Squid Game’ and diversification into merchandising and gaming, can the streaming giant remain the dominant player?

In the last month, amidst a broader market sell-off, the stock has dropped by approximately 13% despite a slight jump in its stock price after announcing that it will raise subscription prices in the U.S. and Canada. Although this is unlikely to have any material impact in Q4, investors may question whether this is due to slowing subscriber growth or simply demonstrative of its pricing power. 

Here’s what to expect when Netflix reports its Q4 earnings. 

When is Netflix’s earnings date?

Netflix reports earnings for the fourth quarter of 2021 on Thursday, 20th of January, 2022, at 4:00 pm Eastern Time. 

How can I listen to Netflix’s earnings call?

To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Netflix’s investor relations page

What to expect from Netflix’s earnings 

For the quarter ending in January, Netflix has forecast 19-20% year-over-year revenue growth for fiscal 2021, which amounts to between $29.7- $29.9 billion. However, analysts are guiding on the lower side of this guidance with an average estimate of $29.7 billion. 

It is worth considering that Netflix attempts to be accurate when forecasting rather than guiding low and beating expectations which sometimes leads to it missing its estimates. Netflix has missed its consensus earnings per share (EPS) estimates several times in recent quarters. Analysts estimate an average of $0.83 EPS for Q4 and $10.72 EPS for fiscal 2021. 

In a post-covid world and an increasingly competitive environment, subscriber growth is a crucial metric that investors should watch. Management was keen to stress in Q3 that Netflix was in “uncharted territory” regarding the sheer volume of content slated for Q4, and investors will be keen to see if this correlates with a jump in subscriber numbers. It is guiding for 8.5 million paid subscribers in Q4, which would be consistent with the same period a year prior, although some analysts are expecting Netflix to fall short of this. Another metric worth watching is international growth, as this will be key to success going forward as growth in mature markets such as America and Canada slows. 

Investors will also be keen to hear management’s commentary on the subscription price increase and whether it will have a knock-on effect on subscriber growth. Management may also provide updates on its relatively new gaming and merchandizing exploits which could fuel further growth.

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