Revenue
Earnings
Netflix expects net income of $956 million, or $2.15 per share, for Q4 2023. Analysts are predicting EPS of $2.21 for the fourth quarter. The company reported EPS of $0.12 in Q4 2022 and $3.73 in Q3 2023.
Points to note
Netflix expects operating income to be $1.16 billion and operating margin to be 13.3% in Q4 2023. This compares to operating income of $550 million and operating margin of 7% in Q4 2022. In Q3 2023, operating income was $1.9 billion and operating margin was 22.4%.
In its last earnings report, the company said it expects paid net additions for the fourth quarter to be similar to the third quarter, plus or minus a few million. Paid net additions were 8.76 million in Q3. Global average revenue per membership (ARM) in Q4 is expected to be roughly flat year-over-year, mainly due to limited price increases. The strengthening of the US dollar is expected to weigh on revenue and ARM in the fourth quarter.
Netflix has been rolling out paid sharing across all its regions and the cancel reaction has been better than expected. Borrower households converting into full paying memberships have displayed healthy retention. The company is also optimistic about the vast opportunity it sees for its ads business. In the third quarter, its ads membership increased nearly 70% quarter-over-quarter. Updates on these areas are worth watching.