Netflix Inc. Earnings Report (Q3 2021)

Netflix reported a solid set of earnings reports for Q3 2021, meeting analyst expectations.
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Netflix have just called their earnings report for the third quarter of 2021.

Revenue came in at $7.4bn ($7.3bn in Q2), with forecasts expecting revenues to reach $7.7bn in Q4. Q3 revenues represent a 16.3% year on year growth.

Operating income levels reduced slightly this quarter, coming in at $1.7bn ($1.8bn in Q2; $1.9bn in Q1). Forecasts project a figure of $500m in Q4. Operating margins fell to 23.5%, with Netflix forecasting this percentage falling to just 6.5% in Q4.

Net income was calculated to be $1.4bn, compared to $1.3bn in Q2 and $1.7bn in Q1.

Earnings per share (EPS) came in at $3.19, up from $2.97 in Q2. Analysts were expecting an EPS of around $2.56.

Netflix Financial Earnings 2021 Q3
Photo By: Netflix Financial Earnings 2021 Q3

Additions to paid net subscriber figures globally was 4.4m, vs 3.84m expected.

In its letter to shareholders, Netflix said:

“After a lighter-than-normal content slate in Q1 and Q2 due to COVID-related production delays in 2020, we are seeing the positive effects of a stronger slate in the second half of the year. In Q3, we grew revenue 16% year over year to $7.5 billion, while operating income rose 33% vs. the prior year quarter to $1.8 billion. We added 4.4m paid net adds (vs. 2.2m in Q3’20) to end the quarter with 214m paid memberships. We’re very excited to finish the year with what we expect to be our strongest Q4 content offering yet, which shows up as bigger content expense and lower operating margins sequentially.”

Netflix attributed high revenue and profit numbers to the continuation of high profile shows such as Sex Education and Money Heist. New shows such as Bridgerton, Maid and Squid Game also drew in huge audience figures, with the latter becoming Netflix’s biggest show ever.

Netflix Show Figures 2021 Q3
Photo By: Netflix Show Figures 2021 Q3

Netflix also gave an update on its plan to expand into game development:

“We’ve begun testing our games offering in select countries. It remains very early days for this initiative and, like other content categories we’ve expanded into, we plan to try different types of games, learn from our members and improve our game library. During Q3, we acquired Night School Studio, the maker of critically acclaimed games like OXENFREE, to help build out our game development capabilities.”

“Assuming no new Covid waves or unforeseen events that result in large scale production shutdowns, we currently anticipate a more normalized content slate in 2022, with a greater number of originals in 2022 vs. 2021 and a release schedule that is more balanced over the course of the year, as compared to 2021”

Shares of Netflix Inc. ($NFLX) were trading $4.64 higher (+0.6%) at $643 after hours, once the earnings report was released publicly.

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