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Shares of Netflix, Inc. (NASDAQ: NFLX ) rose slightly on Tuesday. The stock has gained 15% year-to-date and 3% over the past three months. The company is scheduled to report its first quarter 2023 earnings results on Tuesday, April 18, after the market closes. Here’s what to expect from the earnings report:
results
Netflix has guided for revenue of $8.17 billion for the first quarter of 2023, which represents a growth of almost 4% from the same period a year ago. Top line estimates show sequential growth of 3.8%. Analysts also projected revenue of $8.17 billion for Q1 2023.
Profitability
Netflix has guided for net income of $1.27 billion, or $2.82 per share, for the first quarter of 2023, which compares to $1.59 billion, or $3.53 per share, reported in the first quarter of 2022. Net income of $55 million, or $0.12 per share in Q4 2022. Analysts project EPS of $2.86 for Q1 2023.
The company has guided for operating income of $1.62 billion and operating margin of 19.9% for Q1 2023. This compares to operating income of $1.97 billion and operating margin of 25.1% reported in Q1 2022. In Q4 2022, operating income of $550 million and operating . the margin is 7%.
Points to note
For the first quarter of 2023, Netflix expects revenue to grow 8% on an FX-neutral basis, driven by growth in average paying members and average revenue per member (ARM). The company expects a slight increase in customers for Q1 2023 compared to a decrease of 0.2 million customers in Q1 2022.
The streaming giant added 7.7 million subscribers in the fourth quarter of 2022 and therefore expects less net paid for the first quarter sequentially as some growth will be carried forward from Q1.
Netflix also plans to expand its paid share to other markets during the first quarter of 2023 and expects this to change the pattern of monthly subscriber growth ending in 2023.
Netflix also expects membership growth in the near term to be affected by some cancellations as it launches paid services in each market, but as borrowers sign up for their own accounts and as additional member accounts are added, overall engagement and revenue will increase.
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