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The Sandman: Netflix Q3 Earnings Report a Good Sign for Season 2?

Published Tue, 18 Oct 2022 21:45:13 -0500

As we await word on the status of the second season of Neil Gaiman, David S. Goyer & Allan Heinberg's live-action series adaptation of Gaiman's The Sandman, we've been trying to avoid playing the "wild speculation" game to avoid either getting folks' hopes up too much or pooping on anyone's Corn Flakes. But after Netflix posted some better-than-expected financials for the most recent quarter, we started thinking that maybe we had a good sign in front of us for the series' future. Here's a look at what headlines earlier today:

the sandman — THE SANDMAN (Image: Netflix)

After a Cruel, Cruel Summer, Netflix Rebounds: After the previous two quarters saw subscriber losses, the streamer reported global subscriber levels of 223.09M at the end of the most recent quarter (up from 220.67M in the previous quarter). In addition, reported revenue of $7.93B and earnings per share of $3.10 exceeded Wall Street expectations of $7.84 billion in revenue and earnings per share of $2.19.

$17B for Content Feels About Right, But Sarandos Says Streamer Willing to "Revisit": "What we're seeing is that both the scope and scale, as well as the range and the cadence of hits, is improving, so I feel better and better about that $17B of content spend because what we have to do is be better at getting more impact per billion-dollar-spend than anybody else. That's how we're focusing on it. I think we're spending at about the right level. As we re-accelerate revenue, we'll revisit that number, of course, but we're a pretty disciplined bunch about that." – Co-CEO Ted Sarandos

Netflix Has Gone From Negative to Positive: While the streamer has had the reputation of riding out debt and a negative cash flow, Netflix has actually turned things around. At this time last year, the streaming service had a free cash flow of -$106M. One year later, Netflix reports a free cash flow level of $472M. By the end of the year, the streamer expects to have that number above $1B, with expectations for "substantial" free cash flow in 2023.

So why is all of that a good thing for the Tom Sturridge-starring The Sandman? Simply put, reversing course after two disappointing quarters is no small feat, increasing subscriber numbers & revenue beyond expectations (and that's before the new ad-supported plan becomes an option). As for content spending, though a solid number, I can't see that $17B being at least somewhat revisited if growth continues (and "tent pole" franchise possibilities become available), especially with the streamer's pretty impressive turn-around when it comes to free cash flow. And while you could argue that a decision was most likely made well before today's report was made known to the public, internally? Netflix would have its hands on more than enough data analysis to be able to project where things were headed and make decisions accordingly. Again, all just pure speculation and nothing more. But a financially happy Netflix is never a bad thing when you're waiting to see if your favorite show is returning. #RenewSandman

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