The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Netflix beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped significantly. The profit was a surprise, as analysts had predicted a loss.
Margins dropped across the board.
Netflix reported revenue of $945.2 million. The 30 analysts polled by S&P Capital IQ expected to see a top line of $934.6 million on the same basis. GAAP reported sales were 8.0% higher than the prior-year quarter's $875.6 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 $0.13. The 24 earnings estimates compiled by S&P Capital IQ averaged -$0.14 per share. GAAP EPS of $0.13 for Q4 were 80% lower than the prior-year quarter's $0.64 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 26.4%, 790 basis points worse than the prior-year quarter. Operating margin was 2.1%, 600 basis points worse than the prior-year quarter. Net margin was 0.8%, 320 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $969.7 million. On the bottom line, the average EPS estimate is -$0.08.
Next year's average estimate for revenue is $4.07 billion. The average EPS estimate is $0.37.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 7,799 members out of 9,587 rating the stock outperform, and 1,788 members rating it underperform. Among 2,585 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,300 give Netflix a green thumbs-up, and 285 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 $66.41.
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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 recommends Netflix. The Motley Fool owns 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.