The quarter looked fine on paper
Netflix delivered third-quarter revenue of $12.9 billion, net income of $3.664 billion and diluted earnings per share of 87 cents. That cleared both the company’s earlier guidance and Wall Street’s roughly $12.87 billion consensus. Revenue grew 11.8 percent year over year.
For the fourth quarter, Netflix guided to $13.442 billion in revenue, net income of $2.787 billion and EPS of 67 cents, implying revenue growth of about 11.5 percent.
The ad outlook lost the afternoon
The sharper problem sits in advertising. Netflix now expects $2.7 billion in 2026 advertising revenue, down from its earlier $3 billion forecast. Investors pushed NFLX down after hours; shares closed at $68.69 and kept falling to a new 52-week low.
- Q3 revenue: $12.9B, net income: $3.664B, EPS: 87 cents
- Q4 revenue guide: $13.442B, EPS: 67 cents
- 2026 ad revenue: $2.7B, down from $3B
- Stock close: $68.69, then a new 52-week low after hours
Engagement and layoffs feed the caution
In its shareholder letter, Netflix acknowledged investor concern about view hours growth, but said member response to 2026 price increases has been consistent with earlier price changes and expectations. Leadership said it still wants to accelerate viewing-hour growth.
Top third-quarter titles in the US and Canada included The Last House at 91 million views, Death of the Pastor’s Wife at 45 million and The Idaho Murders: College Nightmare at 38 million. In EMEA, A Toxic Love Story led with 43 million views and The Gentlemen season two drew 33 million.
The human cost: roughly 6 percent of staff was let go, mostly in the prior week, with costs recognized in Q4. Chief content officer Bela Bajaria and film head Dan Lin were among the exits. Co-CEO Ted Sarandos had earlier said, “overall, we’re not growing as fast as I want us to, and we’re working on making that move faster.”
What media planners should watch
For ad buyers, the $300 million reset from $3 billion to $2.7 billion is a signal about how fast Netflix’s ad-supported tier is scaling. A lower ad forecast can mean smaller inventory commitments than sellers hoped, slower pricing power, or both. If Q4 layoff costs and softer ad revenue collide, expect more pressure on Netflix to show engagement growth rather than just subscriber stability.
The lesson: when a subscription engine decelerates, the market quickly reprices the advertising story too.
Source: The Hollywood Reporter
