Netflix (NASDAQ: NFLX), the streaming service, beat third-quarter profit forecasts after the US close today, but its shares fell around 5% after hours as fourth-quarter guidance came in below consensus. It also cut its 2026 advertising revenue target to about $2.7bn from about $3bn.
The shares stood at $65.21 after hours today, against a regular-session close of $68.69, which was itself down 1.7%. The guidance shortfall is a plausible driver of the fall, though the link is not confirmed.
The third-quarter shareholder letter showed revenue of $12,874M, up 12% on a year earlier and in line with the $12.87B analyst average on Yahoo Finance. Diluted earnings per share were $0.87, against the $0.82 consensus and $0.59 a year ago.
Operating margin, profit from operations as a share of revenue, reached 34.6% from 28.2%. The letter said the margin was ahead of Netflix’s forecast mainly because of the timing of expenses. Revenue growth has slowed from 17.2% in the third quarter of 2025 to 11.8%.
Guidance is where the shortfall sits. Netflix forecast fourth-quarter revenue of $13,442M and EPS of $0.67, with an operating margin of 26.0% that includes about 120 basis points from headcount reductions.
| Measure | Netflix | Yahoo consensus | Result |
|---|---|---|---|
| Q3 EPS | $0.87 | $0.82 | Beat |
| Q3 revenue | $12,874M | $12.87B | In line |
| Q4 revenue (guide) | $13,442M | $13.52B | Below |
| Q4 EPS (guide) | $0.67 | $0.73 | Below |
| FY2026 revenue (guide) | $51.1B | $51.21B | Slightly below |
Fourth-quarter revenue and EPS guidance both sit below the Yahoo Finance consensus, though inside the range of estimates, and the EPS guide matches the low end. The full-year revenue guide is slightly under consensus.
The advertising target was cut because some ad product capabilities are rolling out more slowly. Full-year free cash flow, the cash left after investment spending, is now guided to about $12.0B from $12.5B, which the letter links to a real estate transaction in the fourth quarter.
Buybacks and India offer a counterweight. Netflix repurchased 63.9M shares for $4.8B in the quarter, its largest ever, with $22.3B of capacity left. In India, view hours rose 24% and revenue about 18% excluding currency swings.