Netflix cuts annual ad forecast and projects profit below expectations
The streaming company’s shares fell almost 6% in after-hours trading as it reported third-quarter results on October 20.
Netflix lowered its advertising revenue target for 2026 to about US$2.7 billion and issued a fourth-quarter profit forecast that missed analysts’ estimates. The company disclosed the outlook alongside its October 20 earnings report, citing slower-than-planned introductions of advertising features for the reduced ad projection.
For the December quarter, analysts had anticipated earnings of 73 cents per share, but Netflix projected 67 cents, Reuters reported. The company put its net income forecast at US$2.79 billion; estimates had called for US$3.07 billion.
The third-quarter results showed revenue of US$12.87 billion, a 12% increase that met forecasts, Netflix’s shareholder letter said. Reuters said the growth rate was its weakest in nearly three years. Earnings per share came to 87 cents, above LSEG’s average analyst estimate of 82 cents.
Netflix had previously targeted roughly US$3 billion in annual advertising revenue. It now expects total revenue for the year to reach US$51.1 billion, placing it at the bottom of the guidance range provided after July’s second-quarter report.
About 1,000 employees lost their jobs a week before the results, representing roughly 6% of Netflix’s workforce. The company’s 26% operating margin forecast for the fourth quarter factors in a reduction of about 1.2 percentage points related to those cuts.
Netflix spent US$4.8 billion on share repurchases during the third quarter, a quarterly record for the company. Separately, it plans a March start to an expansion of its cheaper subscription with advertising, reaching 15 additional countries in 2027.
