Netflix Misses Earnings Target, Cites Tax Dispute in Brazil

Strategic Insights -

Netflix, the popular video streamer, missed the earnings target set by stock market analysts during its latest quarter, marking a six-quarter streak of unmet projections. The company attributed the shortfall to a $619 million unexpected expense tied to a tax dispute in Brazil. Despite a solid revenue growth, investors were disappointed, and Netflix's shares fell by about 5% in extended trading.

Key Takeaways:

  • Netflix missed the earnings target of $6.96 per share, citing a $619 million expense tied to a tax dispute in Brazil.
  • The company earned $2.5 billion, or $5.87 per share, in its July-September quarter, an 8% increase from the same time last year.
  • Revenue climbed 17% from last year to $11.5 billion, matching analyst forecasts.
  • Netflix has stopped disclosing its subscriber count, but revenue growth indicates an increase in subscribers from 302 million at the end of last year.
  • The company has maintained its lead by adding more live sports and video games to its wide array of scripted programming.
  • Netflix may have another opportunity to add compelling programming with Warner Bros. Discovery announcing it may sell all or part of its holdings, which include HBO, DC Studios, and CNN.

Statistics:

  • Netflix earned $2.5 billion in its July-September quarter, an 8% increase from the same time last year.
  • Revenue climbed 17% from last year to $11.5 billion.
  • Analysts surveyed by FactSet Research had predicted Netflix to earn $6.96 per share on revenue of $11.5 billion.
  • Netflix's stock price rose about 40% so far this year.
  • The company's subscriber count increased from approximately 302 million at the end of last year.

Sources:

  • Bloomberg, "Netflix Q3 First Look: Streaming Giant Heads for Subpar Earnings"
  • Barron's, "Netflix Reports Earnings, Revenue That Beat Estimates, Misses on Earnings"