The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Netflix beat expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue increased significantly, and earnings per share dropped significantly.
Margins shrank across the board.
Netflix recorded revenue of $875.6 million. The 30 analysts polled by S&P Capital IQ anticipated net sales of $857.2 million. Sales were 47% higher than the prior-year quarter's $596.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
EPS came in at $0.73. The 26 earnings estimates compiled by S&P Capital IQ forecast $0.57 per share. GAAP EPS of $0.73 for Q4 were 16% lower than the prior-year quarter's $0.87 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 34.3%, 10 basis points worse than the prior-year quarter. Operating margin was 8.1%, 510 basis points worse than the prior-year quarter. Net margin was 4.7%, 320 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $867.3 million. On the bottom line, the average EPS estimate is -$0.27.
Next year's average estimate for revenue is $3.65 billion. The average EPS estimate is -$0.23.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 7,706 members out of 9,448 rating the stock outperform, and 1,751 members rating it underperform. Among 2,671 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,395 give Netflix a green thumbs-up, and 276 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Netflix is hold, with an average price target of $76.30.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.