Netflix, Inc. (NASDAQ: NFLX) is gearing up to report third-quarter earnings after the bell on Monday, and investors will be watching for three key things in the online streaming service’s report: deals with cable providers, growth in the subscriber base and the future direction of the company.
Netflix is reportedly in talks with cable providers where its online video service would be available on set-top boxes, according to the Wall Street Journal.
“Well Netflix, again, they’re now getting into a lot of different ways to distribute their content," said Keith Bliss, senior vice president and director of sales & marketing at Cuttone & Co., Inc. "They’re now striking deals with cable providers. You won’t have to have a USB and Internet connection to stream it onto your TV now. They’re going to set up their own bandwidth inside of cable boxes, which is very interesting. Netflix is becoming the 21st, or maybe even 22nd Hollywood at this point, a virtual Hollywood.”
Netflix won three Emmy for its original series “House of Cards,” and analysts expect the streaming service to issue strong results for the latest quarter, as the company’s stock price hit a record high of $336.48 on Friday. Netflix is expected to report fiscal third-quarter earnings of 49 cents per share on revenue of $1.10 billion, according to analysts polled by Reuters. During the same period a year ago, the company issued a profit of 13 cents a share on revenue of $905.09 million. In the same quarter a year earlier, Netflix stock was valued around $68.
“The other thing we need to look at is what does their subscriber base look like," Bliss said. "I was traveling last week and you just hear more and more people sitting in the airports while they’re waiting for their plane on the phone with people saying ‘I’m watching Netflix, so I can just wait here all day long.’ That’s a captive audience, which is really something that a lot of TV networks and production providers have tried to obtain for a long, long time. Netflix seems to have it figured out.”
Investors will be watching for continued subscriber growth after Netflix said it grew to nearly 30 million domestic members and 8 million international members during the second quarter. In addition, the company said in its last earnings statement streaming revenue was up 26 percent domestically and 155 percent internationally over the prior year.
“I’m looking for good earnings out of them," Bliss said. "I’m also looking for what their future direction is, and I’m also looking for a little bit more clarity on these deals that they’re starting to strike with the cable providers.”
Netflix will host its third-quarter earnings conference call with investors at 5 p.m. Eastern on Oct. 21, 2013.
On Monday, shares of Netflix were up 5.81 percent to $352.87 in afternoon trading.