Netflix reported its third-quarter earnings on Tuesday, exceeding analyst expectations for earnings per share while aligning revenue figures. For the quarter ending September 30, the company recorded earnings of $3.66 billion, or 87 cents per share, compared to $2.55 billion, or 59 cents a share, in the same period last year. Revenue reached $12.87 billion, marking a nearly 12% increase year-over-year, largely driven by membership growth and a subscription price hike implemented in March.
Looking ahead, Netflix anticipates a more than 11% rise in fourth-quarter revenue to $13.44 billion, bolstered by continued membership growth, pricing strategies, and advertising income. However, the company narrowed its revenue forecast for 2026 to $51.1 billion, on the low end of previous estimates and below Wall Street’s expectations.
Despite the positive financial outlook, Netflix’s shares fell nearly 6% in extended trading, reflecting investor concerns amid recent organizational changes and stiff competition from platforms like YouTube. The company acknowledged these challenges in its shareholder letter, emphasizing the need for strategic clarity and improved execution to maintain viewer engagement.
As part of a restructuring effort, Netflix announced a reduction of about 1,000 employees, constituting 6% of its workforce, and the departure of Chief Content Officer Bela Bajaria, with Peter Rice stepping into the role. The layoffs are expected to negatively impact operating margins in the upcoming quarter.
Netflix also revised its projections for ad revenue in 2026, lowering the estimate to approximately $2.7 billion due to delays in ad product capabilities, though it highlighted robust growth potential for its advertising business.
Why this story matters
Key takeaway
Opposing viewpoint
