trending Market Intelligence /marketintelligence/en/news-insights/trending/SEUDawyRFn5w78O1rtwFVQ2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Competition impacts Netflix Q4 guidance as Q3 represents 'sigh of relief'

Mining Exploration Insights - October 2020

Linking Climate Transition Risks and Credit Risks

US Operators Bolster Downward Trajectory for US Cable Capex Forecast

CUSIP Requests Surge in September Led by Higher Corporate and Municipal Totals

Competition impacts Netflix Q4 guidance as Q3 represents 'sigh of relief'

After a second quarter that marked Netflix Inc.'s first drop in domestic streaming subscribers, investors and analysts have been focused on the impact of new streaming services on Netflix's growth prospects, and executives sought to assuage those concerns as it reported a third quarter slightly behind guidance.

The company added 6.8 million paid streaming video members globally during the third quarter, compared to a prior forecast of 7.00 million paid net additions. That included 500,000 net U.S. adds, or 300,000 below the company's guidance. International streaming net additions came to 6.3 million, compared with Netflix's earlier 6.20 million projection.

"It was the most accurate member forecast we've had in years," CEO Reed Hastings said on an Oct. 16 earnings webcast.

The company saw elevated churn, or movement of members out of the platform, continue in the quarter after a domestic price increase early in the year, driving slightly weaker-than-expected U.S. growth, CFO Spencer Neumann said on the webcast. The unexpected rate of churn helped drive the company to forecast full-year membership additions of 26.7 million, down from 28.6 million in the prior year.

Adding to the "prudent" full-year outlook is the rise in competition, Neumann said.

In the fourth quarter, Netflix will compete with new services such as The Walt Disney Co.'s Disney+ as well as Apple Inc.'s Apple TV+. AT&T Inc.'s WarnerMedia plans to launch its HBO Max streaming service in 2020.

"Fundamentally, there's not a big change here," Hastings said of the competition, pointing to the fact that Netflix has already been competing with various streaming platforms as well as broadcast and cable television.

"The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long-term, though, we expect we'll continue to grow nicely given the strength of our service and the large market opportunity," the company said in its same-day earnings release. It pointed to Canada, where membership growth there has been almost identical to the U.S., even though its biggest U.S. streaming competitor Hulu LLC does not operate in Canada.

Despite the third-quarter miss in U.S. memberships, partially offset by better-than-forecast international growth, SunTrust Robinson Humphrey equity analyst Matthew Thornton called the results "better than feared."

Fitch debt ratings analyst Patrice Cucinello said the results represented a "sigh of relief" after the second-quarter decline.

Increased competition across the television landscape is growing competition for talent and production resources. That has driven costs for a television show up about about 30% from a year ago, chief content officer Ted Sarandos estimated on the webcast. Despite growth in costs, the company maintained its full-year cash-flow deficit forecast of $3.5 billion.

Outside of membership growth, the company beat expectations on profitability. Netflix's third-quarter revenue totaled $5.25 billion, up 31.1% year over year from $4.00 billion and in line with consensus expectations. Net income came to $665 million, or $1.47 per share, up from $403 million, or 89 cents per share, in the third quarter of 2018.

The S&P Global Market Intelligence consensus EPS estimate for the third quarter was $1.05 both on a GAAP and normalized basis. Netflix said its EPS benefited from a $171 million noncash unrealized gain from foreign exchange remeasurement of its euro-denominated debt.

Netflix expects fourth-quarter revenue of about $5.44 billion, driving net income of $232 million, or 51 cents per share. The company projects it will add 7.60 million global paid net streaming subscribers in the fourth quarter. The consensus EPS estimate for the fourth quarter is 85 cents on a normalized and GAAP basis, according to S&P Global Market Intelligence.

Netflix stock was up more than 9% in after-market speculation following the earnings webcast.