Netflix Up Slightly on Q3 Profit
Netflix, the online streaming giant with a market capitalization of nearly $90 billion, announced Q3 earnings after the markets closed yesterday. Netflix stated that it will exceed $11 billion in revenue in 2017. Revenue increased to $2.985 B in the quarter up from $2.785 B in the prior quarter and $2.29B in the prior year; the company, also, stated profit was 0.29 cents a share, which is more than double what it was a year earlier—revenue is also forecasted to be $$3.274B in Q4.
This quarter marked the emergence of international stream's contribution to profit, which has been a money loser for most quarters—international stream had a contribution profit of $62 million, which is higher than -13M in the prior quarter, and Netflix forecasted a contribution profit of $115M in this segment in Q4.
Netflix demonstrated its prowess by demonstrating the original shows it has launched including: House of Cards, Orange is the New Black and Making a Murderer. It also announced returning of original shows such as: Narcos and Fuller House. Netflix's vision is to be an original content juggernaut and has $17 billion in content commitments over the next several years and has a growing library of owned content ($2.5 billion net book value at the end of the quarter—it plans to spend $7-8 billion on content (on a P&L basis) in 2018.
The tide is turning in content:
A trend has been establishing in consumers switching from linear TV to internet entertainment. Recently, there has been several notable events:
Disney: announced plans to launch direct-to-consumer services for ESPN and its other brands
Apple: is reportedly planning on spending $1 billion on original content
Amazon: is streaming NFL games
Last year, the number of original scripted series on linear TV (across broadcast, premium and basic cable) began to decrease as online services increased. Netflix is betting and hoping the trend continues. Netflix's stock is jumping around between slight losses and profit for the day. The stock currently trades at $202.17 at 10:15 AM.