The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Netflix met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share dropped significantly.
Margins shrank across the board.
Netflix reported revenue of $905.1 million. The 31 analysts polled by S&P Capital IQ expected a top line of $905.0 million on the same basis. GAAP reported sales were 10% higher than the prior-year quarter's $821.8 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 $0.13. The 25 earnings estimates compiled by S&P Capital IQ averaged $0.04 per share. GAAP EPS of $0.13 for Q3 were 89% lower than the prior-year quarter's $1.16 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 26.8%, 790 basis points worse than the prior-year quarter. Operating margin was 1.8%, 1,000 basis points worse than the prior-year quarter. Net margin was 0.8%, 680 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $943.2 million. On the bottom line, the average EPS estimate is -$0.10.
Next year's average estimate for revenue is $3.61 billion. The average EPS estimate is -$0.02.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 7,847 members out of 9,617 rating the stock outperform, and 1,770 members rating it underperform. Among 2,404 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,093 give Netflix a green thumbs-up, and 311 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 $71.40.
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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 recommend 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.