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Shares of Netflix Inc. (NASDAQ: NFLX ) fell more than 1% on Tuesday. The stock has gained 33% over the past three months. The streaming giant is scheduled to report its fourth quarter 2022 results on Thursday, January 19, after the market closes. Here’s what to expect from the earnings report:
Revenue and profit
For the fourth quarter of 2022, Netflix has guided for revenue of $7.8 billion which represents a year-over-year increase of only about 1%. On a constant currency basis, revenue growth is expected to be 9% YoY. The top line estimate shows a 2% sequential decline. Analysts also projected revenue of $7.8 billion.
For Q4 2022, Netflix has guided for net income of $163 million and EPS of $0.36 which compares to $607 million and $1.33 in the same period last year. In Q3 2022, the company reported net income of $1.3 billion and EPS of $3.10. Analysts forecast EPS of $0.44 for Q4 2022.
customer growth
This is a highly watched metric in Netflix’s earnings reports. 2022 is not off to a good start for Netflix in terms of subscriber growth. After surprising and upsetting investors with two consecutive quarters of customer losses, the company bounced back in Q3 2022 with a net addition of 2.41 million.
For the fourth quarter of 2022, Netflix has predicted net additions paid to be 4.50 million. This compares to 8.28 million reported in the year-ago quarter. Global paid streaming memberships were estimated to be 227.59 million in Q4, representing a YoY growth of 2.6% and a sequential increase of 2%.
In its Q3 earnings report, Netflix stated that starting in the fourth quarter, it will no longer provide guidance for paid members as it plans to focus on revenue as a key top-line metric.
Ad-supported plans and account sharing
In November, Netflix launched ad-supported subscription plans in 12 markets including the US, UK and Canada. The plan, called Basic with Ads, starts at $6.99 per month in the US with about 5 minutes of ads per hour.
The company is also working on monetizing account sharing and starting this year, it plans to offer users various options such as transferring profiles and creating sub-accounts to pay family and friends. Responses to ad-supported levels and their impact, if any, on customers as well as updates on account sharing initiatives should be taken into account.
See also: This is one of the things that could give Disney ( DIS ) an edge over Netflix ( NFLX )
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