Earnings Preview: Netflix

| About: Netflix, Inc. (NFLX)

Netflix (NASDAQ:NFLX) is expected to report Q2 earnings after the market close on Tuesday, July 24 with a conference call scheduled for 6:00 pm ET.


Analysts are looking for EPS of 5c on revenue of $888.9M. The consensus range is (2c)-14c for EPS, and $878M-$901M for revenue, according to First Call. Although the company reported better-than-expected EPS and revenue in Q1, Netflix said DVD members declined to 10.1M in Q1; the company said domestic streaming members rose by 1.7M to 23.4M. Netflix forecast Q2 EPS (10c)-14c with total domestic streaming subscriptions 23.6M-24.2M and reiterated its goal of 7M net subscriber additions in 2012. Netflix said it had no plans to sell or spin off its DVD division. During the quarter, CEO Reed Hastings said customers watched over 1B hours of movies and TV shows online in June, and the LA Times said Netflix is testing a redesign that would separate movies and television shows into separate tabs on its site. The Associated Press said the company is still "haunted" by its decision last year to raise U.S. prices for video subscription services, which triggered mass customer cancellations and a sell-off in its stock; the AP noted that the stock is over 70% below its peak price of about $305 a year ago.

Analyst Views

ITG Research says Netflix checks indicate domestic ARPU declined in Q2 as more subscribers traded down from higher priced plans. Barclays believes Netflix will report a gain of about 700,000 domestic streaming subscribers. Analysts and investors will listen for comments from the company on its Q3 forecast, whether it still plans to add 7M net subscribers this year and on its international expansion efforts.