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Netflix Reveals Regional Data, Displays Overseas Strength

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Netflix (NFLX - Free Report) recently provided details of its international business in a regulatory filing.

The company disclosed subscriber numbers and financial performance of the last three years of four geographic segments, US and Canada (UCAN), Europe, Middle-East (EMEA) and Africa, Latin America, and Asia-Pacific.

For the first time, Netflix will release financial data of the four regions in its upcoming fourth-quarter earnings release. The company used to report results under two regions — US and Global.

The report shows that as of the end of third-quarter 2019, the United States and Canada were the largest market with 67.11 million paid subscribers as of Sep 30, 2019. EMEA came second with 47.36 million subscribers. Latin America and Asia Pacific had 29.38 million and 14.49 million subscribers, respectively.
 

Netflix, Inc. Price and Consensus

Expanding Global Footprint to Boost the Top Line

Despite the United States and Canada being the largest market for Netflix, the region had the lowest customer additions, with membership increasing 14.9% since the end of third quarter 2017.

Conversely, the company witnessed strong growth in its international markets. Notably, membership increased 132% in the EMEA region and 61% in Latin America since the end of third-quarter 2017.

The Asia-Pacific region, Netflix’s smallest market, witnessed the highest growth where membership increased 148% to 14.49 million subscribers.

International growth was largely driven by Netflix’s investments in developing regional content like Spanish TV series Money Heist, German series Dark, and Sacred Games in India, with Sacred Games helping Netflix gain 1.2 million subscribers, as per MTM.

Notably, in third-quarter 2019, Netflix generated revenues of $2.76 billion from its international markets, up 39.8% from the year-ago quarter. The company added 6.26 million paid members, which increased 23.5% on a year-over-year basis.

For the fourth quarter, the company expects to add 7 million paid subscribers in the International Streaming segment.

Further, Netflix’s focus on its international business is expected to help it counter competition in the highly competitive video streaming market, which, per Grand View Research, is expected to witness CAGR of 19.6% between 2019 and 2025.

Notably, the streaming landscape has become very crowded with the launch of Disney’s (DIS - Free Report) Disney+ and Apple’s (AAPL - Free Report) Apple TV+ in November. Moreover, AT&T’s HBO Max and Comcast’s (CMCSA - Free Report) Peacock are set to debut next year.

Zacks Rank

Netflix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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