The key facts

  • EPS of $0.87 beat forecasts, revenue $12.87 billion (+12% y/y), net income $3.66 billion versus $2.55 billion a year earlier
  • Shares fell more than 5% amid concerns about slowing viewer engagement and revenue growth
  • About 1,000 job cuts planned (~6% of staff), Bela Bajaria is leaving as content chief, to be replaced by Peter Rice

Profit above expectations, revenue in line with forecasts

Netflix on Tuesday reported third-quarter profit for the period ended September 30 above market expectations, while revenue matched forecasts. Earnings per share came in at $0.87 versus 59 cents a year earlier. Revenue rose nearly 12% year over year to $12.87 billion thanks to subscriber growth and the price increase introduced in March. Net income rose to $3.66 billion from $2.55 billion a year earlier; the company attributed the profit growth partly to the timing of spending. According to FactSet figures cited by AFP, both revenue and net income ($3.7 billion) exceeded investor expectations.

Market reaction and investor concerns

Despite the strong financial results, Netflix shares fell more than 5% on Tuesday afternoon after the earnings release, which failed to dispel investors' concerns about slowing viewer engagement and revenue growth. 'We know investors have concerns about the growth of our viewing hours,' the shareholder letter said. Gabelli Funds portfolio manager John Belton told AFP that Netflix had 'significantly underperformed the market over the past 6–12 months,' and that investors are worried about 'weak engagement trends, slowing revenue growth, slower margin expansion and, most recently, changes in the content leadership.'

Engagement and company priorities

Netflix said viewer engagement remains healthy despite intense competition for consumer attention, and expressed confidence in its ability to accelerate its growth. The company did not disclose overall viewing hours for the quarter, but noted that in India the figure rose 24% year over year. In July, Netflix reported that subscribers watched 97 billion hours in the first half of the year — 2% more than in the first half of 2025. The company stopped publishing subscriber numbers in the first half of 2025. Three priorities were named for accelerating viewing-hours growth: more entertainment value, using technology to improve the service, and stronger monetization.

US and international markets

Co-CEO Ted Sarandos acknowledged on the analyst call the need for 'better execution in the US,' while emphasizing that the company's content 'mostly works' in Latin America, Europe and Asia. 'The US works too. It's just not growing as fast as it could or as we would like,' he said. According to Nielsen figures cited by AFP, in July Netflix reached 7.8% of US streaming TV viewers, compared with YouTube's record 14.2%. The World Cup boosted overall TV viewing in July.

Advertising, personnel changes and plans

Netflix fell short of expectations for advertising revenue growth. 'We are currently a bit behind our ambitious annual plan. We are still growing' in advertising, said co-CEO Greg Peters, adding that new ad formats are helping growth. For the fourth quarter, the company forecast revenue of $13.44 billion (growth of more than 11%) driven by subscribers, prices and advertising; the full-year forecast was narrowed to $51.1 billion (13% growth) from the previous range of $51–51.4 billion. The results followed organizational changes announced last week: cuts of about 1,000 jobs (roughly 6% of staff), including seven senior executives responsible for television deals and content, according to The Hollywood Reporter. Content chief Bela Bajaria, who oversaw 'Stranger Things,' 'Bridgerton' and 'Squid Game,' is leaving; she will be replaced by former Disney executive Peter Rice. 'Peter Rice understands talent relationships, and in a competitive market creative talents have a choice of where to work,' Sarandos said. Competition from other streaming services is pushing Netflix to expand live sports more actively — agreements to stream the Olympics, the World Cup, NFL and WWE — as well as games and short-form content. At the same time, Sarandos emphasized: 'Roughly 95% of our spending and nearly all of our revenue are focused on the core business, where we see a long runway of future growth.'