The 10-second takeaway
For the quarter ended June 30 (Q2), Netflix met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved and GAAP earnings per share dropped significantly.
Margins dropped across the board.
Netflix chalked up revenue of $889.2 million. The 28 analysts polled by S&P Capital IQ expected a top line of $889.0 million on the same basis. GAAP reported sales were 13% higher than the prior-year quarter's $788.6 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.11. The 20 earnings estimates compiled by S&P Capital IQ forecast $0.04 per share. GAAP EPS of $0.11 for Q2 were 91% lower than the prior-year quarter's $1.26 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 27.6%, 1,030 basis points worse than the prior-year quarter. Operating margin was 1.8%, 1,280 basis points worse than the prior-year quarter. Net margin was 0.7%, 790 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $910.1 million. On the bottom line, the average EPS estimate is $0.08.
Next year's average estimate for revenue is $3.63 billion. The average EPS estimate is $0.05.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 7,806 members out of 9,550 rating the stock outperform, and 1,744 members rating it underperform. Among 2,534 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,235 give Netflix a green thumbs-up, and 299 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 $89.50.
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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. The Motley Fool owns shares of Netflix. 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.