Netflix Earnings Preview: A Deep Analysis of Key Drivers

The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

Netflix (NASDAQ:NFLX) will report Q4:12 (December) results after  the market close on Wednesday, January 23, and host a conference call at 3:00pm PT (Dial-in: 760-666-3613, webcast: http://ir.netflix.com).

We expect Q4:12 results at the high end of guidance. Our current estimates are for revenue of $926 million and EPS of $(0.10), compared to guidance for $919 – 943 million and $(0.23) – 0.04, and consensus for $934 million and $(0.12). We saw little marketing spending until the end of the quarter, suggesting the company was tracking close to the high end of its domestic streaming subs guidance of 26.4 – 27.1 million (net adds of 1.3 – 2.0 million).  We believe Netflix rationalized technology spending to boost profitability, and expect shares to rally on the beat.

We expect Q1:13 net domestic streaming subscriber growth guidance of at least 1.75 million at the high end. We expect Q4 adds of around 1.7 million, and expect management to guide to continuing domestic growth. We expect Q1:13 EPS guidance around flat, and do not think the company will provide full-year guidance for EPS or subscriber additions. Again, we think shares will briefly rally…

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