Netflix beats Q3 profit forecast but cuts ad outlook; shares fall about 6% after hours
In short
Netflix reported third-quarter earnings per share of 87 cents, above the 82 cents expected by analysts compiled by LSEG, on revenue of $12.87 billion that matched expectations. It cut its 2026 advertising revenue forecast to about $2.7 billion from about $3 billion, and its shares fell about 6% in after-hours trading.
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Netflix reported third-quarter earnings per share of 87 cents in a shareholder letter on 20 October, local time, above the 82 cents expected by analysts compiled by LSEG. Revenue of $12.87 billion matched expectations, Yonhap, Newsis and Korea Economic Daily reported. Revenue rose about 12% from a year earlier, and net income rose from $2.55 billion to $3.66 billion. [ 1 , 2 , 3 ]
Despite the profit beat, the shares fell. Yonhap said they closed 1.7% lower at $68.69 in regular trading on the 20th, then fell to $64.62 after the results, below the 52-week low of $65.10. Yonhap gave the after-hours fall as 5.6% in its opening paragraph and 5.9% later; Newsis, Korea Economic Daily and Bloter put it at about 6%. [ 1 , 2 , 3 , 4 ]
Netflix lowered its 2026 advertising revenue forecast from about $3 billion to about $2.7 billion, saying the launch of some ad product features was later than expected. Korea Economic Daily quoted co-CEO Greg Peters as saying the ad business had grown impressively since launch but was somewhat short of this year's aggressive target. ZDNet Korea said Netflix still expects ad revenue to rise more than 80% this year. [ 1 , 3 , 5 ]
Netflix set its full-year revenue forecast at $51.1 billion, up 13%. That is at the low end of the earlier $51.0 billion to $51.4 billion range and below the $51.2 billion analysts expected. It forecast fourth-quarter revenue of about $13.44 billion, and said the job cuts would lower the fourth-quarter operating margin by about 1.2 percentage points. Bloter gave the fourth-quarter forecast as $13.4 billion, below an expected $13.51 billion. [ 1 , 2 , 3 , 4 ]
In the shareholder letter, Netflix said it was aware of some investors' concerns about viewing-time growth, but that engagement, covering the quantity, quality and diversity of viewing, remained healthy. Yonhap, citing CNBC, said Wall Street is watching stagnating viewing amid competition from YouTube and others. ZDNet Korea quoted chief financial officer Spencer Neumann as saying the company wants viewing time to grow faster. [ 1 , 3 , 5 ]
Last week Netflix announced cuts of about 1,000 jobs, around 6% of staff. It also said chief content officer Bela Bajaria is stepping down and Peter Rice, formerly of Disney, will take over as chief content officer. Bloter reported that Rice takes the post on 26 October, that film chief Dan Lin is leaving, and that Rice will also oversee film until a successor is named. Co-CEO Ted Sarandos said no fundamental change in content strategy is needed but that execution in the United States must improve. [ 1 , 2 , 3 , 4 , 5 ]
Why it matters
Korean outlets say investor attention has shifted to slowing viewing-time growth and competition from YouTube. Netflix says engagement remains healthy, and its executives say the focus is on better execution of content, especially in the United States.
Key facts
- Third-quarter EPS was 87 cents against the LSEG-compiled expectation of 82 cents; revenue was $12.87 billion, in line with expectations. [ 1 , 2 , 3 ]
- Net income rose to $3.66 billion from $2.55 billion a year earlier, and revenue rose about 12%. [ 1 , 2 , 3 , 4 ]
- Netflix cut its 2026 advertising revenue forecast to about $2.7 billion from about $3 billion, citing later-than-expected rollout of some ad product features. [ 1 , 2 , 3 , 5 ]
- The full-year revenue forecast is $51.1 billion, at the low end of the earlier $51.0 billion to $51.4 billion range and below the $51.2 billion analysts expected. [ 1 , 2 , 3 ]
- Fourth-quarter revenue is forecast at about $13.44 billion, with an operating margin about 1.2 percentage points lower because of the job cuts. [ 1 , 3 ]
- Last week Netflix announced cuts of about 1,000 jobs, around 6% of staff, and a change of chief content officer from Bela Bajaria to Peter Rice, formerly of Disney. [ 1 , 2 , 3 , 5 ]
- Shares closed 1.7% lower at $68.69 in regular trading on the 20th and fell to $64.62 after hours, below the 52-week low of $65.10. [ 1 ]
Confirmed by several sources
- Third-quarter EPS of $0.87 beat the LSEG-compiled expectation of $0.82, while revenue of $12.87 billion matched expectations. [ 1 , 2 , 3 ]
- Netflix lowered its 2026 advertising revenue forecast from about $3 billion to about $2.7 billion. [ 1 , 2 , 3 , 5 ]
- Netflix's annual revenue forecast of $51.1 billion is below the $51.2 billion analysts expected. [ 1 , 2 , 3 ]
- Netflix shares fell about 6% in after-hours trading after the results. [ 1 , 2 , 3 , 4 ]
- Netflix announced a cut of about 1,000 jobs, about 6% of employees, and is replacing chief content officer Bela Bajaria with Peter Rice. [ 1 , 2 , 3 , 5 ]
- In its shareholder letter Netflix said it is aware of some investors' concerns about viewing-time growth but that engagement remains healthy. [ 1 , 2 , 3 ]
Still unclear
- Whether the fourth-quarter revenue forecast is below market expectations. One outlet says the forecast of $13.4 billion was below an expected $13.51 billion, while others give the figure as $13.44 billion without such a comparison.
- Whether third-quarter revenue growth fell short of expectations. One outlet says revenue growth was below expectations, while others say revenue of $12.87 billion matched expectations.
What local media are saying
Timeline, local time
- Yonhap publishes its report on the results and the after-hours share fall (21 October). [ 1 ]
- Newsis reports the lowered ad and outlook forecasts (21 October). [ 2 ]
- Korea Economic Daily reports the share fall and the lowered advertising forecast (21 October). [ 3 ]
- Bloter reports on the content strategy and the leadership change (21 October). [ 4 ]
- ZDNet Korea reports on operating profit and viewing time (21 October). [ 5 ]
- Asia Economy publishes its analysis of Netflix's strategy and viewing time (22 October). [ 6 ]