Netflix made more money than Wall Street expected last quarter, but it’s bringing in less from ads than it promised. In its third-quarter report Tuesday, Netflix posted $12.9 billion in revenue, up 12% from a year ago, and earnings of 87 cents a share, up from 59 cents, according to its shareholder letter filed with the SEC. Analysts had expected about 82 cents on $12.87 billion in revenue, CNBC reported.
The weak spot: Netflix cut its 2026 advertising forecast to about $2.7 billion, down from about $3 billion, blaming a slower rollout of some ad tools. Its full-year revenue forecast of $51.1 billion is a hair below the middle of its earlier range.
How did Netflix do in the third quarter?
- Revenue: $12.9 billion, up 12% and in line with its own forecast.
- Profit: $3.66 billion, up from $2.55 billion. Operating margin jumped to 34.6% from 28.2%, partly because spending landed later than planned.
- Buybacks: $4.8 billion, its biggest quarter ever for buying back its own stock.
- Next quarter: $13.4 billion in revenue, with a 26% margin that includes about 1.2 points of cost from its recent layoffs.
Netflix no longer reports subscriber numbers every quarter. It said cancellations improved from a year ago, including in the U.S., and that its audience is “approaching one billion people.” It also admitted investors are worried that viewing time isn’t growing much and said it’s working to speed that up.
What does this mean for Netflix subscribers?
Mostly, that this year’s price hikes stuck. Netflix said members reacted to its 2026 price increases about the way they did to past ones, which is company-speak for people grumbled and kept paying. With ad money coming in slower than planned, don’t expect prices to come down. On the content side, the fourth quarter includes three NFL games, among them a Thanksgiving Eve game and a Christmas Day doubleheader, the Tyson Fury vs. Anthony Joshua fight, and the final season of “Emily in Paris.”
Why are Netflix layoffs part of the earnings story?
Because they cost money now to save money later. Netflix said its recently announced job cuts will shave about 1.2 points off its fourth-quarter profit margin. We reported last week that Netflix is laying off about 1,000 workers. The company still expects operating income to grow more than 20% this year.
The BeezLoop Take
Netflix is a money machine. Profits are up nearly 50% per share, and it spent more buying back stock last quarter than ever. The problem is growth. People aren’t watching much more, ad sales are behind schedule, and the stock was down about 25% this year heading into the report.
For regular subscribers, the takeaway is that Netflix’s growth plan right now is charging more and cutting staff, not adding much more to watch. That works for a while. It doesn’t work forever.
The open question: can live sports and events like the NFL games get people watching more, or will Netflix keep leaning on price hikes to grow?
Also on BeezLoop: why Wells Fargo told investors to sell Netflix.
Sources: Netflix Q3 2026 shareholder letter (SEC filing) · CNBC · Schwab Network (video)
