International User Growth to Aid Netflix (NFLX) Q3 Earnings?
Netflix NFLX is set to report third-quarter 2020 results on Oct 20.
The company’s international subscriber growth is expected to have been steady in the to-be-reported quarter due to the coronavirus-induced safe-distancing and lockdown norms that drove consumption of media content on the Internet.
Further, the availability of low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is expected to have spiked Netflix’s subscriber strength in Asia-Pacific (APAC).
Click here to know how the company’s overall Q3 performance is expected to be.
APAC Momentum Expected to Drive Top Line
Courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint, Netflix has been dominating the streaming space despite the launch of new services like Disney+ from Disney DIS and Apple TV+ from Apple AAPL, as well as existing services like Amazon AMZN prime video.
Moreover, robust regional-language content portfolio has helped Netflix improve its competitive position in APAC, Europe, Middle East & Africa (EMEA) and Latin America (LATAM).
Notably, APAC revenues surged 63% year over year to $569 million in second-quarter 2020. Moreover, revenues from EMEA and LATAM increased 43.5% and 16% to $1.89 billion and $785 million, respectively.
The Zacks Consensus Estimate for APAC revenues is pegged at $623 million, indicating 9.5% growth from the figure reported in the previous quarter.
Moreover, the consensus mark for EMEA revenues stands at $1.97 billion, suggesting 4.1% growth from the figure reported in the previous quarter.
Further, the consensus mark for LATAM revenues are pegged at $833 million, indicating 6.1% growth from the figure reported in the previous quarter.
Additionally, the third-quarter earnings call is expected to provide a sneak peek into Netflix’s content plans and spending strategy.
Markedly, this Zacks Rank #3 (Hold) company has been spending aggressively to build its original-show portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This, in turn, is expected to have negatively impacted profitability in the to-be-reported quarter.
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