Netflix’s third-quarter earnings failed to excite investors, a week after a major content executive shuffle and its biggest round of layoffs since 2022.
The streamer turned in results above expectations for the third quarter, but provided weak guidance for the rest of the year. Netflix said its earnings beat was primarily due to the timing of expenses.
Netflix’s revenue growth slowed for a third straight quarter, and the company projected it would continue to decelerate in the fourth quarter.
Shares fell up to 6% in after-hours trading on Tuesday.
“While Netflix is growing, the pace of that growth is slowing,” Forrester’s Mike Proulx said. “That’s a wake-up call for the company that once defined the streaming market and is now in need of growth reacceleration.”
Here’s how the streaming giant’s Q3 financial results compared to the company’s forecast:
Revenue: $12.87 billion vs $12.86 billion estimated ($11.5 billion in Q3 2025)Earnings: $0.87 per share vs $0.82 per share estimated ($0.59 per share in Q3 2025)
Netflix told investors to expect earnings of $0.67 per share in the fourth quarter, below Wall Street’s $0.73 per share estimate. The company’s $13.44 billion revenue projection for Q4 was also lower than analysts’ estimate of $13.51 billion.
The streaming leader cut its annual advertising forecast from $3 billion to $2.7 billion, citing a slower-than-expected rollout of its ad products.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said analyst Ross Benes of Emarketer, Business Insider’s sister company.
Heading into Q3 earnings, Netflix’s stock was down over 44% in the last year as investors worried about engagement growth and stiff competition from YouTube and other free streamers.
Netflix said in its third-quarter shareholder letter that it knows “there’s some investor concern about our view hours growth” but added that engagement “remains healthy.”
“We do seek to accelerate growth in view hours as well, and we’re confident we’ll do that by relentlessly focusing and executing” its strategy, the shareholder letter said.
The company has invested in video games and podcasts but didn’t mention either in its letter, outside a disclosure section on “forward-looking statements.”
Netflix’s results came less than a week after it shook up its content leadership team and cut about 1,000 workers.
Content chief Bela Bajaria is leaving her role after more than three years, Netflix announced last week. The company said Monday that film chief Dan Lin is also out.
Bajaria will be replaced by Peter Rice, a former Fox and Disney exec who ran Disney’s TV division, including ABC and FX. Netflix hasn’t yet said who will replace Lin; Rice will oversee film in the meantime.
“It’s our goal to go from very good to great,” co-CEO Greg Peters said of Netflix’s content slate on the company’s earnings call.
The leadership changes come as Netflix battles slowing viewership growth. The streaming powerhouse generated 97 billion viewing hours in the first half of the year, which was up 2% year-over-year.
Netflix co-CEO Ted Sarandos said at an industry event hosted by Bloomberg last month that Netflix was “not growing as fast as I want us to, and we’re working on making that move faster.”
“Revamping content strategy is not enough to fix this challenge, but it is a worthwhile start,” Benes said.
Netflix layoffs were across its product, tech, HR, and legal teams. Co-CEOs Sarandos and Peters said in a memo to staffers that the company was downsizing so it can be “disciplined about where we prioritize our people and resources.”
Other media companies have laid off employees in the last month. NBCUniversal cut a few hundred global streaming tech employees in early October, and Disney trimmed its tech and HR teams in late September.
In the second quarter, Netflix’s results were roughly in line with analysts’ expectations. The stock sank 8% after the report as Netflix said it would cut back on how frequently it shared viewership data.
