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- Netflix posted revenue of $12.87 billion, according to Wall Street estimates, and a stronger-than-expected profit of 87 cents per share, compared to 82 cents per share expected by analysts, according to Yahoo Finance.
- But the streamer lowered its 2026 revenue forecast to $51.1 billion, a 13% increase over the previous year but the lower end of its previous guidance. It also forecast fourth-quarter revenue growth of 11.5%, a slowdown from a 17.6% increase a year earlier.
- The latest quarterly results come days after the company laid off 6% of its workforce and fired Chief Content Officer Bela Bajaria and head of film Dan Lin.
Netflix shares fell more than 5% in after-hours trading on Tuesday after the streamer lowered its full-year revenue forecast to $51.1 billion, a 13% increase over the previous year but the lowest of previous guidance. Advertising revenue for the year is now expected to come in at around $2.7 billion, down from previous guidance of $3 billion.
It also forecast fourth-quarter revenue growth of 11.5% to $13.4 billion — a slowdown from a 17.6% increase a year earlier — and a profit of $2.8 billion, or 67 cents per share.
The forecast, which was below Wall Street expectations, topped a stronger-than-expected third-quarter profit of $3.7 billion, or 87 cents per share, boosted by growth in subscriptions and advertising, as well as price adjustments. Revenue grew 11.8% to $12.87 billion, according to Wall Street estimates.
The latest quarterly results come days after the streamer fired its Chief Content Officer Bela Bajaria and head of film Dan Lin, as well as 6% of its total workforce, as it struggles to grow engagement on the platform – its biggest cuts since 2022.
In the first half of 2026, Netflix’s subscription growth grew by just 2%. In July, the company said it would move from biannual to annual publication of its communications reports starting in 2027 as it looks to focus on revenue and operating profit.
“We know that investors have some concern about the growth of our viewing hours. Member response to our price changes in 2026 is consistent with previous changes and our expectations, an indication that our engagement – which includes quantity, quality and variety of viewing – remains healthy and that we will continue to deliver strong value to members,” the company wrote in its quarterly shareholder statement on Tuesday.
Costs related to the layoffs are expected to exceed the operating margin in the fourth quarter, which is expected to fall to 26%, although that is up from a margin of 24.5% in the previous quarter. The company said the organizational changes will allow it to “invest aggressively in high-impact areas” to improve the service and “drive growth and innovation.”
To encourage engagement, Netflix has expanded its live events and sports rights and added games, podcasts and content from French broadcaster TF1 to its programming lineup. In addition to TF1, Netflix struck a new content licensing deal with Disney and said it would be looking to expand its offering with more third-party partnerships. The company will spend a total of $20 billion on content in 2026.
Going forward, Netflix’s content strategy will be led by former Disney and Fox executive Peter Rice, who will replace Bajaria.
“His creative instinct and business acumen are incredible. He is truly an operator of scale, quality and quantity, and he does it across every imaginable form of entertainment, network, premium cable, streaming, theatrical and TV movies, and live sports,” Sarandos said. “But more importantly, Rob, Peter Rice understands talent relationships, and in a competitive market, creative talent has choices about where they want to work. We want Netflix to always be the place of choice for them to do the best work of their lives. Peter is the right person to lead those efforts in the US and around the world. That’s a key part of what I believe Peter can improve.” in terms of looking ahead.”
Netflix is also continuing to scale the ad-supported series, which will be launched in 15 new countries in 2027. The first installment of new market concerts will take place in March, which will include nine countries in Europe, the Middle East and Africa region, Colombia, Peru and New Zealand.
In addition, the company also updated its homepage, updated its mobile app with a direct video feed to help subscribers find and sample content faster and acquired Ben Affleck’s AI startup InterPositive as it looks to leverage the technology to fuel growth. By 2026, GenAI workflows were used in approximately 300 of Netflix’s titles, with the largest amount of work in post-production.
Although Netflix’s $83 billion deal to acquire Warner Bros.’ streaming and studio assets fell through.
More to come…
