International User Growth to Aid Netflix (NFLX) Q3 Earnings?

Netflix NFLX is set to report third-quarter 2020 results on Oct 20.

The company’s international subscriber growth is expected to have been steady in the to-be-reported quarter due to the coronavirus-induced safe-distancing and lockdown norms that drove consumption of media content on the Internet.

Further, the availability of low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is expected to have spiked Netflix’s subscriber strength in Asia-Pacific (APAC).

Click here to know how the company’s overall Q3 performance is expected to be.

Netflix, Inc. Revenue (TTM) Netflix, Inc. Revenue (TTM)

Netflix, Inc. revenue-ttm | Netflix, Inc. Quote


APAC Momentum Expected to Drive Top Line

Courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint, Netflix has been dominating the streaming space despite the launch of new services like Disney+ from Disney DIS and Apple TV+ from Apple AAPL, as well as existing services like Amazon AMZN prime video.

Moreover, robust regional-language content portfolio has helped Netflix improve its competitive position in APAC, Europe, Middle East & Africa (EMEA) and Latin America (LATAM).

Notably, APAC revenues surged 63% year over year to $569 million in second-quarter 2020. Moreover, revenues from EMEA and LATAM increased 43.5% and 16% to $1.89 billion and $785 million, respectively.

The Zacks Consensus Estimate for APAC revenues is pegged at $623 million, indicating 9.5% growth from the figure reported in the previous quarter.

Moreover, the consensus mark for EMEA revenues stands at $1.97 billion, suggesting 4.1% growth from the figure reported in the previous quarter.

Further, the consensus mark for LATAM revenues are pegged at $833 million, indicating 6.1% growth from the figure reported in the previous quarter.

Additionally, the third-quarter earnings call is expected to provide a sneak peek into Netflix’s content plans and spending strategy.

Markedly, this Zacks Rank #3 (Hold) company has been spending aggressively to build its original-show portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This, in turn, is expected to have negatively impacted profitability in the to-be-reported quarter.

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