Netflix reported third-quarter earnings for 2026 that surpassed Wall Street expectations on profit, while revenue met forecasts. Despite these results, shares of the company dropped nearly 6% in after-hours trading, as investors focused on the downgraded outlook for ad revenue and overall guidance.
For the three months ending September 30, Netflix posted earnings per share of 87 cents, exceeding the analyst consensus of 82 cents per share, with revenue totaling $12.87 billion, matching estimates from LSEG. Year-over-year, revenue increased by almost 12%, driven by expanded membership figures and recent price increases introduced in March.
3Q26 net income reached $3.66 billion, up from $2.55 billion a year ago, with the rise attributed partly to the timing of certain expenses. However, Netflix provided fourth-quarter net income guidance of $2.79 billion, with earnings of 67 cents per share, below analyst projections of $3.07 billion and 73 cents per share.
Netflix expects fourth-quarter revenue to climb over 11% to $13.44 billion, supported by continued growth in subscribers, pricing, and ad business. Nonetheless, the revenue forecast for full-year 2026 has been narrowed, now anticipating $51.1 billion from its earlier range of $51 billion to $51.4 billion, and missing the $51.2 billion expected by analysts.
In the past week, Netflix cut around 6% of its workforce, almost 1,000 employees, and named former Disney and Fox executive Peter Rice as Chief Content Officer following the exit of Bela Bajaria, with film chief Dan Lin also departing. The company acknowledged that these workforce reductions would negatively impact its operating margin by roughly 120 basis points in the fourth quarter.
Management said the slower-than-expected integration of certain advertising product features led Netflix to reduce its 2026 ad revenue expectations from approximately $3 billion to $2.7 billion. Despite this, executives reiterated plans to accelerate engagement and monetize the platform, highlighting that Netflix’s ad-supported subscription tier remains a central pillar of its offering.
Addressing investor concerns, Netflix highlighted healthy engagement levels across its content but recognized a need for improved performance, especially in the U.S., where no net subscriber additions were recorded through September, according to data from Antenna. Company leadership noted that while the core streaming business remains strong and profitable, the strategic focus is now on returning to core entertainment offerings and refining delivery.
Netflix reaffirmed its intent to license additional third-party content and indicated no immediate need to overhaul its current approach, but emphasized the importance of stronger execution and operational excellence.
