Netflix beat third-quarter earnings expectations, but shares fell in after-hours trading as the company lowered its 2026 advertising forecast and narrowed its full-year revenue outlook. The report followed layoffs and a change of content chief.
Netflix reported third-quarter earnings of 87 cents per share, above the 82 cents analysts polled by LSEG expected. Even so, shares fell about 4% in extended trading Tuesday. Business Insider reported that the stock fell up to 6% after hours.
Revenue matches estimates, outlook narrows
Revenue reached $12.87 billion, in line with estimates and almost 12% higher year over year. Netflix said the gain came from membership growth and a subscription price increase that took effect in March.
The outlook disappointed, however. Netflix expects fourth-quarter revenue of $13.44 billion, up more than 11%, and now sees 2026 revenue of $51.1 billion, the low end of its earlier $51 billion to $51.4 billion range. LSEG's estimate for the year was $51.2 billion.
Business Insider added that Netflix guided to fourth-quarter earnings of $0.67 per share, below Wall Street's $0.73 estimate.
Ad forecast cut after a slower product rollout
Netflix also lowered its 2026 ad revenue guidance to around $2.7 billion from roughly $3 billion. The company blamed a slower-than-expected rollout of some ad product capabilities.
Last week, Netflix laid off about 6% of employees, roughly 1,000 workers, and Chief Content Officer Bela Bajaria is leaving that role. Netflix named former Disney executive Peter Rice as the new chief content officer. The company said the headcount cuts will have a negative impact of about 120 basis points on fourth-quarter operating margin.
In its shareholder letter, Netflix said: "We know there's some investor concern about our view hours growth". It added that engagement remains healthy.
CNBC reported it is not yet clear how Rice will address concerns around viewership.
Sources: CNBC, Business Insider
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