TheStreet and RealMoney tech columnist Eric Jhonsa is live blogging Netflix’s (NFLX) - Get Netflix, Inc. Report closely-watched second-quarter earnings report and video interview with analysts after the close on Thursday, July 16.
For the second quarter, analysts polled by FactSet are expecting GAAP EPS of $1.81 on $6.09 billion in revenue. But the company’s subscriber growth numbers usually have a much bigger impact on its share price following earnings than do its revenue and EPS numbers.
The current analyst consensus is for Netflix to have added 8.26 million net new subscribers in the second quarter, compared to the company’s guidance in April for 7.5 million net adds in the quarter. Netflix added a massive 15.77 million subs in the first quarter as the coronavirus sent millions of people around the world home with copious amounts of free time.
Netflix admitted, however, that its outlook for the second quarter was only “guesswork” given the unpredictability of the direction of the global pandemic. For the third quarter, the analyst consensus estimate is for 5.27 million paid net adds.
Among the other key things to watch for are Netflix’s international subscriber growth numbers, corporate free cash flow and forward looking guidance.
In terms of international growth, some analysts are seeing signs of particularly strong growth in Mexico on the strength of local-language original content. Netflix recently began breaking out by region, and international markets are viewed as key to Netflix's future success as the company saturates the U.S.
Apart from subscriber growth, Netflix's Q1 release contained another pleasant surprise for investors in the form of better-than-expected free cash flow. The company said that it will burn roughly $1 billion less than expected in 2020, mostly due to delays in producing original content because of the pandemic
Finally, in terms of guidance, while projections are likely to be uncertain, as noted, management may still reveal more about trends they’re seeing and expecting in terms of subscriber growth and engagement. This includes how much of the massive gains in Q2 were a pull forward from the second half, which could reduce the outlook for Q3 and Q4.