Netflix is changing how it reports one of its most-watched metrics. Wall Street analysts have mixed feelings on the move. (NFLX)

Business Insider Finance 1 month ago
  • One of the most-watched metrics for Netflix investors is the streaming giant's quarterly subscriber additions and guidance. 
  • Tucked away in the bottom of the company's most recent letter to shareholders, Netflix announced it planned to change how it reports not only subscriber, but also revenue numbers. 
  • Moving forward, Netflix plans to report subscribers and revenue by geographic region, compared to its previous format of segmenting the metrics by domestic and international.
  • Markets Insider spoke with three Wall Street analysts to get their take on the changes. 
  • Watch Netflix trade live on Markets Insider.

Toward the bottom of Netflix's letter to shareholders summing up its third-quarter performance, the company announced a change to how it plans to report some of its most important metrics moving forward. 

The streaming giant said starting next quarter it intends to break down revenue and subscriber numbers into four geographic regions: Asia Pacific (APAC), Europe, Middle East & Africa (EMEA), Latin America (LATAM), and the US and Canada (UCAN).

In prior quarters, Netflix has divided those numbers into two buckets, domestic and international. Several Wall Street analysts are applauding the shift as a step toward greater transparency. 

Mark Mahaney, managing director and analyst at RBC Capital Markets, views the regional breakout for revenue and membership as a positive step toward providing greater insight into Netflix's business. 

"That means there's more disclosure here," he said. "It'll probably highlight how much of the growth is coming from international markets. That's a really key piece of information to know about Netflix."

One drawback, Mahaney said, is that investors and analysts won't be able to see margins for the US versus international. But he acknowledged it would be difficult for the company to allocate costs to the increasing number of shows and movies that are being launched globally. 

Bernie McTernan, an analyst at Rosenblatt Securities, agrees with Mahaney that the breakout by region is helpful for investors to understand which markets are providing the most growth for Netflix. 

"We have estimates in our model, but those are just estimates," McTernan said. "It's great to actually have the real, hard data."

Netflix also said it plans to provide subscriber guidance only on a global basis rather than by region. 

"The move to report and guide to 'global paid subscribers' will potentially obfuscate the trends in the competitive landscape domestically," Patrice Cucinello, the director of technology, media, and telecommunications research at Fitch Ratings, wrote in an email to Markets Insider.   

McTernan said it would be great if Netflix provided guidance for each region, but from a disclosure standpoint, the benefit of revenue and subscribers being reported geographically outweighs that drawback. 


Source link
Read also:
Forbes › 1 week ago
It’s common business practice to tie performance metrics to strategy. The problem occurs when businesses go overboard with the metrics. There's more to measure than just metrics.
Business Insider › Entertainment › 2 months ago
Netflix reports earnings for its third quarter on Oct. 16 after the markets close. Wall Street is looking for Netflix to rebuild investor confidence after the company missed its own forecasts for subscriber growth during the prior period. The quarter...
Business Insider › Entertainment › 1 week ago
Next year will be a defining one for Netflix, which will face more competition than ever from formidable media and tech titans like Disney, Apple, and WarnerMedia. The streaming service will have to prove that its business model, which relies entirely...
Business Insider › Entertainment › 1 month ago
Needham predicts that Netflix could lose 10 million US subscribers next year as competition from HBO Max and Disney Plus drives more churn. The Wall Street firm surveyed Netflix users in the US and found that 30% expected to turn their Netflix...
Business Insider › Finance › 2 months ago
Netflix has much to prove in its upcoming third-quarter earnings report as it looks to impress investors before facing increased competition. Goldman Sachs expects subscriber growth to fall "modestly below guidance," and UBS noted weak international...
Business Insider › Finance › 3 weeks ago
Netflix shareholders have spent the better part of 2019 fretting over the launch of multiple new streaming competitors including Disney Plus. According to data from two Wall Street analysts, since the launch of Disney Plus about 10 days ago, the...
Business Insider › Entertainment › 2 months ago
Netflix said in its Q3 earnings report on Wednesday that "Stranger Things" season three was the show's most watched season yet. 64 million member households watched the season in its first four weeks of release, according to Netflix. Visit Business...
Business Insider › Entertainment › 1 month ago
On Instagram, influencers can buy followers, comments, and likes on a post. So instead of using these metrics to measure the success of an influencer marketing campaign, many brands are instead focusing on other metrics like saves and comment sentiment...
Forbes › 3 weeks ago
While click rate, conversion rate and, of course, ROI or ROAS are all vital metrics to measure and optimize toward, there are just as many metrics that measure negative outcomes that should be given more attention than they typically receive.
Business Insider › Entertainment › 3 weeks ago
Success in streaming video is going to look very different as more companies, including legacy media giants Disney and WarnerMedia, and tech giant Apple, enter the streaming wars. There will be at least three different versions of "success," analysts...
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google
OR