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00:00And right now, we are two minutes away from the end of the trading day.
00:03Romain Bostic here with Katie Greifeld, taking you through to that closing bell.
00:06It's a global simulcast.
00:08Carol Masser, Tim Senevich, they join us now.
00:10Welcome to our audiences across all of our Bloomberg platforms, television, radio,
00:13our partnership with YouTube, an eye on the broader markets,
00:17and an eye, Carol Masser, on Netflix, which reports earnings in just a matter of minutes.
00:21Yeah, absolutely.
00:23We are definitely focused on it.
00:25Keep in mind, the stock's down 22% year to date.
00:27It's off more than 30% since hitting a high on 416.
00:30Why is that important?
00:31That's the last time it reported earnings, and there was some disappointment in terms of its profit outlook.
00:36So we are definitely homing in on that one.
00:39But I think it's interesting that here in the last few minutes of trading,
00:43you see some buyers coming in, pushing those major averages off their lows of the session.
00:47I'm always keeping an eye on oil prices, as you guys know,
00:50especially of late as we've seen things flare up in Iran and in the straight-up Hormuz
00:55as the U.S. continues its barrage on Iran.
00:59Katie, today, oil prices not changed significantly, actually.
01:04Brent at 84.30, WTI 79 a barrel.
01:08Yeah, pretty quiet overall when it comes to the cross-asset picture.
01:10I mean, you saw a little bump up in yields.
01:12It really felt like it was all about chips today.
01:14I mean, I know that, Carol, it's optimistic to say, you know, we pushed off those session lows.
01:19But overall, it was a pretty ugly day, and a lot of that, once again, traced back to those chips.
01:24We are seeing some pretty significant drops in names like NVIDIA.
01:28Sandisk down more than 10 percent on the day.
01:30Alphabet down by about 4.5 percent just a few minutes ago.
01:33We saw a big spike down in shares of Amazon, though no real news as to exactly why.
01:38Right across the screen, for most of the major indices,
01:41with the Dow going to finish the day lower by about two-tenths of a percent.
01:44The S&P lower by about five-tenths of a percent.
01:47The Nasdaq Composite and Nasdaq 100, each down roughly about one-and-a-half percent or so.
01:52And the Russell 2000, that's going to finish the day flat on the day, but in the red.
01:57And I'm just going to point out, you've got more names in the S&P.
02:01The majority are actually higher today, despite the overall index lower, Katie.
02:05Yeah, it's the same story when you take a look at the sector level as well,
02:08really showing that you can have this broadening out beyond tech,
02:12and you might not necessarily see it at the benchmark level
02:15because you have information technology down by about 1.8 percent as a sector.
02:21That is weighing down the rest of the index.
02:23In terms of what did gain today, you had health care as a sector higher by about 2.2 percent.
02:28Consumer Staples was your big winner on the day, 2.9 percent higher.
02:32But again, that's not going to be able to offset that big drag that you saw from tech
02:37and from also communication services.
02:39For so much of the day, we saw that the Sox, everything, all 30 components of the Sox were lower.
02:45Skyworks Solutions and Corvo, though, eked out ever-so-slight gains.
02:4828 of the 30 names in the Sox fell.
02:50Broadcom, Micron, Marvell, and NVIDIA leading the pack lower.
02:54Netflix share earnings crossing the wire right now.
02:57We'll start with the most recent quarter, the second quarter revenue.
03:01A modest miss, $12.56 billion.
03:03The street was looking for $12.58 billion on average.
03:06It looks like for free cash flow for the most recent quarter, $1.53 billion.
03:12That's a big miss.
03:12The street was looking for $2.72 billion.
03:16EPS in the quarter, a beat by one penny at 80 cents.
03:19Here's your forecast.
03:20For the current quarter, the company sees EPS of 82 cents a share.
03:24The estimate on the street was for 84 cents a share.
03:27With regards to revenue for the current quarter that we're in, the third quarter, $12.86 billion.
03:34The street was looking for $13 billion.
03:36Similar story with some of the other numbers here, guys, as we start to parse them.
03:39But it looks like a miss for the second quarter and a slight guide lower for the third.
03:43All right.
03:43So what's interesting is there was a miss last time around, and we did see the stock sell off.
03:48Lucas Shaw out with a story already on the Bloomberg, reminding everyone what Romain said.
03:53Netflix forecasting a second consecutive quarter, second consecutive quarter of slowing sales
03:57growth, projected revenue of $12.9 billion, earnings of 82 cents a share.
04:02He points out the shares have declined more than 40% over the last year due to concerns
04:06about its future, despite still having more subscribers and viewership than any other paid
04:12streaming service.
04:13He reminds us, too, Lucas Shaw of Bloomberg, investing, Netflix, that is, investing in new
04:17kinds of program, live sports, video podcasts, and is leveraging generative AI.
04:22To deliver higher quality output more quickly and at a lower cost.
04:26But I got to say, well, investors may be buying some of this, because right now the stock is up
04:30about 1.6%.
04:32But again, it's been pulling back since it reported earnings back in April.
04:36Yeah, just looking at the investor letter, it kind of repeats a lot of what Carol said.
04:40But some additional details about those video podcast creators like Danny Goh and Salish
04:45and Jordan Matter, cloud TV games, too.
04:47The company said, and Carol mentioned the idea of leveraging AI, but remember they did make
04:51that big acquisition of Ben Affleck's company.
04:54Now the company says it's leveraging AI to provide a more personalized, immersive, and
04:58interactive experience for members.
05:00Also, to make those ads more relevant for people who don't pay for the service without ads.
05:05Also, improve the quality of the series and films.
05:08They call the entertainment industry dynamic and competitive, and they're staying ahead
05:11by executing against delivering value, leveraging tech, and improving monetization.
05:15Yeah, and when it comes to monetization, let's talk a little bit about the ads business, that
05:19coming up in the statement as well.
05:21The company says, building out our ads business continues to be a top priority, and we remain
05:26on track to deliver approximately $3 billion in ads revenue in 2026.
05:32And we were having this conversation with Alicia Reese over at Wedbush earlier in the show.
05:36There's been a lot of concerns around engagement.
05:39Of course, Wedbush's view is that basically this ads ramp up outweighs that debate, but
05:47we know that that is top of mind for investors and certainly has weighed on the stock.
05:52And I'm just taking a look at their release, of course, of what we watched in the first
05:56half of 2026.
05:57We should point out that this semi-annual report, they're now saying it's going to be
06:01annual, which is kind of interesting because the idea here, they continue to give us less
06:05visibility into some of these things, pulling the subscriber numbers and now going to an
06:09annual basis on that.
06:10As far as for the semi-annual report that came out, the company says the audience has
06:15watched more than 97 billion hours of Netflix in the first half, their highest few hours
06:19to date for any half.
06:22And, well, you can pretty much guess what some of the biggest, most watched names were
06:26on that.
06:27The night agent, Lincoln lawyer, Bridgerton, of course, leading some of those names.
06:32Bridgerton.
06:32Hey, let's talk about revenues and where they saw growth around the world.
06:36U.S. and Canada revenue was up 10% year over year.
06:40That estimate, though, did come in a little light.
06:43When we talk about Europe, Middle East and Africa, that was up 14% year over year.
06:48That was spot on at about $4.03 billion.
06:51Latin American revenue was up 21% year over year, a little bit higher than the street
06:56forecast in APAC revenue.
06:58That growth was up 16% year over year.
07:01And that, too, came in a little bit light.
07:03So it looks like around the world, maybe not hitting those numbers when it comes to revenues.
07:09So, Romain, you mentioned the change in disclosures.
07:12The company saying it's in the letter, quote, evolving our view hours disclosure.
07:17So the change, they're going to report these industry-leading title by title and total view
07:21hours data, including weekly top 10 lists in more than 90 countries, separating the
07:27publication report from our earnings results to keep the focus on our primary financial
07:30metrics, which they argue is revenue and operating profit.
07:34I think a few years ago, if we would have said, what are the primary metrics, it would
07:40have been total number of users.
07:42And they don't report that anymore.
07:45They don't report that, but the financials aren't holding up.
07:47They also said last quarter that they wanted to have much more of a focus on cash flow.
07:51And those cash flow numbers, at least based on what Bloomberg's reporting, missed pretty
07:55big.
07:55And so it raises a lot of questions that as you pull back visibility from what people
07:59are watching or how they're watching it, and now you're saying, OK, well, the financial
08:04numbers are what we should be pointing to.
08:06What am I looking at here that's positive?
08:08I do think it is interesting that it seems like less disclosure is sort of the trajectory
08:13that Netflix has been going down, that decision to stop breaking out subscriber numbers now
08:18when it comes to the What We Watched report going to be annually versus twice a year.
08:24You know, I can see where the company is coming from, focus on the numbers themselves.
08:28But to Romaine's point, you know, if those start to dip as well, then, you know, you're
08:33seeing that after hours right now.
08:34Well, all you have to do is put it into an AI model and you can come out with the
08:37numbers.
08:37So it's not like it takes a lot of work anymore.
08:39Anyway, we talk about some of the reporting that Lucas had done about, you know, the idea
08:43of engagement and this being an issue.
08:45And that feeds into the numbers.
08:46And we've talked with a lot of analysts that are a little bit concerned about not having
08:49that visibility and being able to track this.
08:51Maybe the ad business does become more of a dominant business.
08:55But how do you assess that?
08:56And you have a sense of, you know, what people are actually watching, why they're watching,
09:00how they're engaging.
09:01There's also a big question about how they're going to pay for content.
09:03I'll move big pusher into live events that are as costly and in some cases more costly
09:09than some of the scripted programming that they have.
09:11Right.
09:11We talk about the costs of any kind of sports coverage, right?
09:14It's a lot of bidding.
09:15It's a lot of expensive.
09:17It's very expensive, I should say.
09:19So go back to free cash flow.
09:21One point fifty three billion.
09:22Again, I want to go to that number that you are highlighting down.
09:26Thirty three percent year over year.
09:28The estimate was for two point seventy two.
09:30What was the most watched movie in the first half, Carol Master?
09:34I don't know.
09:34War Machine.
09:35Then it was The Rip.
09:36Then swap.
09:37K-pop Demon Hunters, which is a surprise, was only number four.
09:39Yeah.
09:40And then when you talk about the actual shows, the non-movies, it's his and hers.
09:44Bridgerton was number two.
09:45Stranger Things was at four.
09:47And then it kind of drops off after that one.
09:49I haven't seen one of those titles.
09:51Have you seen Miss Rachel?
09:52No.
09:53I mean, I know who Miss Rachel is.
09:56Do you not let them entertain themselves?
09:58There's plenty to do without, you know, this is just a Tim household.
10:03No TV, no junk food.
10:04It's just, you know, sitting there, eat your carrots.
10:06You know I'm that type of dude.
10:08He's very careful what goes in those kids.
10:11Good for him.
10:12Hey, the one thing I want to, I'm curious if it'll come up on the earnings call.
10:14Remember it was in April, too, that they authorized, I think, an additional $25 billion buyback.
10:20So I wonder if they pare back on that.
10:21So we'll look for some stuff on that.
10:23Yeah.
10:24And we know you're watching Bridgerton, Romain.
10:26You can share that with all of us.
10:27I don't know what that is.
10:29Yes, you do.
10:30Is that like downtown Abbey?
10:33No, much better.
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