Okay, so Netflix should be posting earnings.
Literally any minute. Now this is completely live.
Let's go ahead and see if they have it on CNBC here and I said
our expert. Julie abortion is going through
this. We're going to have all the
analysis on the other side and you can see it looks to be an
initial move higher in the OT. But what what do you have any %
9% want to hear? All right, the stock is moving
sounds. This this freshness C 4 million
subs for enforcing order. It's got to be good, we see her
down the ads here they priced it below.
Many pluses, lower add tear. And so what we're looking for
is, are we bouncing around a lot 4% to 10%, anticipated estimates
around what, that ad tears potentially going to cancel.
If we look at where the valuation, is those Scott?
We think that it's I don't see a postcode area that really is
coincident with five percent Revenue growth which is what
we're looking for on a long-term basis.
Yeah, you see this stock really pop and higher Julia.
Do I have this number? Right to?
They do 2.4 million Subs in The third quarter.
Yeah, so that was the key thing here.
Netflix beating on the top and bottom line, but before I get to
the earnings and revenue numbers, we need to look at the
paid, net additions, the company, adding 2.4 million
streaming paid net, additions as versus expectations.
That the addition of about 1 million, they had been guiding
21 million the guidance. Also better than anticipated
Netflix guiding to the addition of four and a half million paid
subscribers in the fourth quarter analysts have been
looking for around four million so better than expected.
As well. And the company beating
estimates on the top and bottom line with earnings of three
dollars and ten cents versus the 213 estimated and revenues of
seven. Point nine, three billion, a
hair ahead of the seven point eight four billion estimated.
We see the stock is up about 8% on that news.
So really want to dig in here to this report and figure out what
those factors are. That are causing a rebound,
okay? So Netflix doubled, the amount
of projected subscribers, it looks like.
Let's go ahead and look at the article.
Are they finally have it posted? Like she says the the earnings
per share came in as a beat and to me this is actually something
I do. Pay attention to three dollars
and ten cents to $2.13 revenue was a little bit of a beat the
most important metric again. The one that would have crushed
this talk is if Netflix came in and lost subscribers it would
have just been a total fail. I think it would have been a 20%
drop expected Global paid subscribers an additional one
point zero nine million subscribers according to the
Street account but it says here, they gained 2 point 4, 1 million
subscribers. So they Crush their subscriber
estimate. Thank you.
Netflix for finally doing what I've been saying to do set,
expectations, low, and crush it. Now, instead of hearing all the
analysis from CNBC, I want to jump into the actual earnings
report. This is the one reported just
today, October 18th, released just a few minutes ago, fellow
shareholders Revenue, operating income and membership slightly
exceeded our for Cast in Q3 of 2022.
We had big hits across TV and film, and Q3 launching some of
our most watched series and films of all time, including
monster the Jeffrey Dahmer story.
That one looked really disturbing actually didn't watch
that one because the subject matter is just as really
disturbing stuff stranger things season.
For I watched that one. I thought it was phenomenal.
Extraordinary attorney Wu, The Gray Man and purple hearts the
lower price ad-supported plan launches in 12 countries in
November. I think is absolutely
incredible. They're getting this out, this
fast, I think, that's incredible.
They're about to do that. Just six months.
After our initial announcement, our existing plans remain
ad-free Netflix has higher engagement than any other
streamer with room for growth in the UK Netflix accounts, for 8.2
percent of video viewing 2.3 times, Amazon and 2.7 times
Disney Disney Plus in the u.s. Netflix accounts for 7.6% of TV
time. 2.6 times Amazon and 1.4 times Disney and Hulu and who
live. So all of those combined its 1.4
times, our competitors are investing heavily to drive
subscribers and engagement, but building, a large successful
streaming, business is hard. We estimate they are all losing
money with a combined 2022. Operating losses of well above
10 billion versus Netflix. 5 to 6 billion, annual operating
profit. This is something that net
Experience, don't really look at that often.
These other companies that are growing their streaming
businesses are doing it by cannibalizing, a pre-existing
business. So if you look at Disney, it's
true, they're growing Disney plus.
And I think that's great. It's true, they're growing Hulu,
but they are shedding a cable TV business, it's losing
subscribers every day. That's why Disney's ibadah
remains flat, even though they're seeing growth in another
part of their business. Meanwhile, the Disney plus
business is losing money. They're hoping it will be even
break, even Ian and 2025 Netflix is already their operating
profits of five to six billion dollars while the rest of the
industry is losing money. So, another thing I really like
about it, Netflix is growth, doesn't come at the expense of
any part of their business, after a challenging first half,
we believe we're on a path for re accelerated growth.
The key is pleasing members, it's why we've always focused on
winning the competition. Reviewing every day, when our
series and movies, Exciter members, they tell their friends
and More people watch join and stay with us.
So we have some numbers here and there's some of these that are
more important than others. Let me go ahead and highlight
some of them here. The first thing I notice is
right here if I'm reading this correctly their Global streaming
paid members right we have to thirteen to twenty one to twenty
one point six this is them losing subscribers from 1/4 to
the next not good news and then they lost even more.
Really bad news, the exit from Russia, the the big Covid.
Boom wearing off. Then they have this corner right
here. This is a current quarter where
they just gained. Two point, two point four, two
point, four one, they're projecting a gain, a four-point,
50 million subscribers from this quarter to next quarter, that
seems very aggressive 4 million subscriber gain from one corner
to the next. I like to see that they're
confident that growth is remaining but the sets up the
same problem. I wish that Netflix would again
I have give conservative estimates and beat him like they
did this last quarter. Dublin, maybe they are, maybe
they're really going to get 8 million subscribers, but
projecting 4.5 million is a lot especially when growth has
slowed down. If this is true, Netflix is now
a growth company again, if they're growing four and a half
million subscribers and 1/4 even though it's a seasonal thing, if
they're growing again, millions of subscribers every quarter,
they are a growth company. Again they're moving out of that
X growth Purgatory that they've been in.
Let's go ahead and move on. This is the Q3 results
highlights. They do this in every single
shareholder. Letter are six percent
year-over-year, Revenue growth and Q3 was driven by a 5%
increase in the average, paid members and a 1% rise in AR M
average. Revenue per member excluding the
impact of Foreign Exchange revenue and arm grew 13% in
eight percent year. Over year respectively, this
sequential decline of Revenue was entirely due to f x.
So, 100% of it, doing the fornix, Due to Foreign Exchange
Netflix is a global company. When the currency they're
getting outside of the u.s. is worth less that hurts their that
hurts their bottom line. So the FX exchange factors that
in we under forecasted paid, net additions, which totaled 2.4
million, aren't we? Yeah, we under forecasted them.
That's a good thing. In my opinion, which total 2.4
million versus are 1 million forecast and compared to 4.4
million a year ago. This quarter In Asia, Pacific
Asia, Pacific Revenue grew. 19%, excluding FX as an average paid
members Rose 23% year over year. This is, I think the place
they're getting the most growth right now.
Asia-pacific, excluding FX partially driven by lower arm
and India's somewhat offset by higher arm and Australia and
Korea. We added 1.4 million paid
members in the region, then they have emea, which is Europe,
Middle East, and Africa, the revenue, grew 13%, and 7%
respectively, paid net additions, totaled point, six
million versus 1.8 million, and the year-ago quarter.
So they're growing at a slower rate than they did last year,
but they're still growing nonetheless, and keep in mind,
last year, things are a little bit.
Wonky, a lot of companies did really well, because of the
whole supply and demand shifts that happen in Latin America,
Revenue increased 19% year over year supported by average
revenue per member growth of 16. Percent versus the year-ago
quarter excluding FX, we added Point 3.
Million paid memberships in line with our membership growth and
Q3 2021. They're growing slower than I'd
like to see in Latin America point three members per per
quarter is not a lot, but they're still growing there.
Nonetheless. And then United States and
Canada are most penetrated Market.
The average revenue per member and revenue grew by 12%.
And 11% respectively excluding FX paid net ads, total, 2.1
million. So they basically kept the same
out of members grew 100,000 barely any Change the keep in
mind, they are saturated in the US.
That's where they saying. Hey guys, we know that you've
been sharing your parents account for the past 10 years.
It's time to start paying a little bit.
You can get off your parents account and start paying, It's
upsetting a lot of people. But that's the truth, they're
saying, we've maxed out our Market here.
We're going to start charging for individuals.
That's another little growth path.
Q4 forecast as a reminder, the quarterly guidance, we provide
is our actual internal internal forecast.
As the time we report, the appreciation of the US dollar
remains a significant headwind for us and other US based
multinationals in general for Q4 2022.
We're expecting revenue of seven point eight billion.
With the sequential decline entirely due to the continued
strength of the u.s. dollar versus other currencies.
So they saying it's going to be a sequential And but it's
entirely to blame for FX issues. Not because our business is
actually taking in less lesser amounts of Revenue on a constant
currency basis, this equates to nine percent year-over-year
Revenue growth so they're still growing and top-line revenue.
Our Revenue growth forecast is driven by our expectation.
For 4.5 million paid net ads, verse eight point three million
in Q4 of 2021, and ERM growth of six percent year-over-year
excluding FX. I like what I see.
I see here. I have to be honest, as a
Netflix shareholder. I'm always worried about how the
stocks going to do, but not really the stock as much as the
actual business. Now we have on qual trim, this
is a website that I use for Patron members.
You get access to it. It's included as part of the
patreon along with hundreds of exclusive episodes and a Discord
Community with thousands of members.
If you haven't tried it out, try it out.
There's a link in the pin comment below.
It has a free trial, but quatrain is a website that gives
us data visualization. So we can see the status
Reported right here on it is, has a note and this is updated
by the minute. Netflix Shares are trading
higher. After the company reported
better than expected, Q3 results and reporter Global streaming
paid net, additions of 2.4 million Global streaming paid
members, grew 4.5 percent year over year.
So, that's a little note to give you an explanation of why the
stock is trading up. Now, we also get the data in
very quickly. So we already have this latest
earnings report in to call trim right after the earnings.
Let's go ahead and Take a look at how these numbers look
visualized. Their revenue actually went
down, sequentially from quarter to quarter but remember this is
not because they're taking in less money from customers and
the reach in the scale of the company is smaller.
It's simply because of FX, currency problems.
Money outside of the US is worth a lot less than money inside of
the u.s. So now, the revenue they're
getting outside of their, with the exchange rates is worth a
lot less. That's the only reason why on an
fx basis at grew nine. So, you'll see some bears say,
oh the revenues declining for the first time ever.
Ignoring the fact that this isn't the fundamental problem
with Netflix. This is just a temporary issue
with FX. And the same thing is happening
with Microsoft or any other International Company.
My opinion. Not something that is a
fundamental issue for the company.
The ibadah continues to grow at PACE.
We can see the latest quarter in here, five point five, three
billion dollars of ibadah the highest ever.
And then we have the free cash flow.
We have the latest quarter free, cash flow right there. 471
billion dollars. So as of right now, Netflix is
free cash flow. Yield is actually starting to go
up. It's instantly starting to go up
as the company's generating. More free cash flow on a
trailing 12 month basis. We have at the beginning of this
year, the first quarter, they generated 801 million dollars in
free cash, flow Q to 12 million dollars.
So we have eight hundred and thirteen million dollars and
then Q 3. 471 million dollars. So we have what 13 1.3 billion
dollars in free cash flow so far unless they have a heavily -
free cash flow next quarter which may be the case I think
they're going to come in for the full year of 2020 to around a
billion dollars of free cash flow.
So this company actually is generating free cash flow right
now. Something that a lot of these
other streamers are not doing, they're not generating
consistent free. Casual.
Now, Netflix is a free cash flow.
Whoa, positive company, we can look at the latest net income
1.3 billion dollars of net income, the earnings per share
of 3.10 that be expectation by a huge margin by about 30%, we can
look at their cash balance here, their debt went down.
So the company is improving their balance sheet, which is
something I like to see. I don't like companies that are
heavily levered and in debt, but you can see the trend here
quarter after quarter. If I zoom in on this quarter
after quarter, their debt is going down.
Remember the popular bear. From the investors used called
debt flicks. They used to say it was just in
indebted company, it's never going to be able to repay it.
That bear case is crushed. The debt goes down every single
quarter, the cash balance goes up.
Now, their debt is 13.8 billion. Last quarter was 14.2 last
quarter, the cash was 5.8 billion.
Now it's 6.1 debts going down, cash is going up, we can move on
and look at some other things here.
It looks like the company is Still doing share issuance.
So they're not buying back shares aggressively right now,
which is something that I wish they would do to some extent.
Maybe they're investing in these other endeavors, but my, my
thesis are I really don't think that Netflix is going to be a
dilute of company. They're barely issuing more
shares as it is there a point four seven year over year.
So this is barely a dilute of company and if anything they're
going to have the free cash flow to start doing share buyback so
I don't consider this, a long-term problem.
So overall looking at the fundamentals here, I He liked
the direction. Everything is going generating
growing ibadah, the revenues only down because of FX the free
cash flow looks better than expected.
Growing. Net income growing growing, EPS
the cash balance and the debt profiles getting better.
The balance sheets improving for the company.
I think everything looks great. I really like this earnings
report and obviously doubling the amount of expected
subscribers is a very welcome, surprise, looking at the stock
move today of 15.6 percent. Who knows if this will hold, but
my opinion. I think it's I think it's fine.
I don't get too excited about this.
This stock is highly volatile. Again, I'm looking ten years in
the future and right now, my initial reaction, I think things
are back on track for Netflix. So I hope you enjoyed this live
reaction. I'll have more in-depth analysis
later on, as I'm able to dive in to the actual earnings column.
Listen to the questions and read more about the earnings report.
I'll get into the nitty-gritty details, but this is just a
quick reaction. Hope you enjoyed.
See you in the next one.